Littelfuse (LFUS) 29 Jan 202019 Q4 Earnings call transcript

Ladies and gentlemen thank you for standing by and welcome to the Littelfuse Inc., Fourth Quarter Fiscal 2019 Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today Trisha Tuntland, Head of Investor Relations. you. Thank ma'am. ahead go Please

and morning. And earnings Heinzmann fourth XXXX Vice the and welcome call. With to President Executive conference Sethna Dave and Littelfuse me CEO; quarter Meenal Good CFO. today President are

This on available year of and fiscal quarter conference XXXX webcast Investor the will results our Relations morning be release our a call is of website. for A report earnings fourth and our our website. in copy available section also of today's

forward-looking These release statements. may forward-looking this of XX-K obligation include cause will today to materially Please about press information. discussions risks forward-looking actual significant today's and detail differ no uncertainties. to could from and statements update and risks more Our involve Forms that our any important results assume XX-Q expectations. review for our We

the remarks in our financial non-GAAP measure to Also measures. financial refer earnings our non-GAAP our of release Relations is today A comparable these reconciliation in website. the Investor GAAP provided section most of measures to available

I over to will Dave. call turn now the

Good morning us joining today. and for thanks Trisha. you, Thank

mention virus I'd of top their to and associates, our first the and company the safety, China. continuing, Before our global of mind, wellbeing given communities families outbreak is the in like Corona for health

We're is priority to to proactive first continue Our protect our taking people. to We'll people. our measures take actions. necessary

monitoring to limit situation the disruption global closely In are our customers. teams addition, continuity business to

our we strategic short-term electronics performance initiatives profitability XXXX, business I growth, focused ability Littelfuse to Now align generation. and driving while while remain as serve, update teams across of markets a strategic cash costs, long-term company. containment demonstrating industrial transportation, balance investments. our global on to challenging several advancing to and an end costs the manage on actively environment We conditions our will navigated macro in provide long-term

guidance. Our the quarter adjusted delivered of our quarter $X.XX high-end million EPS at of with fourth our recorded sales was expectations; and of performance consistent fourth $XXX we

we recorded margin year, and full an the adjusted $X.X XX%. billion achieved sales For of of EBITDA

the Our XXX% disciplined EPS and cost million our management inventory channel actions conversion of of exceeding to a in adjusted generated free representing help corrections the income net We target. from $XXX $X.XX. soft demand impact cash flow, XXX% mitigate deliver

environment million and our repurchases. markets Since balance our our This XXXX, we that returned free cash a reinforces through of end confirms we during ongoing to strength economic our global We have of of stakeholders. to shareholders the capital seen of soft commitments in to value a impacting $XXX share serve. deliver dividends deployment period the sheet, late demand volatile

demand, production. rebalancing In automotive segments for conditions and end response manufacturers to uncertain during customers electronics These have automotive and lowered our within electronics been volumes channel impacted partners and XXXX. inventory have

expectations. line our Across product generally quarter fourth segment, our electronics in sales with were our

quarter, to with bottom. the During OEM EMS, and market we partners distribution, destocking see as appear end to inventory continue demand

suggest sell expect As modest levels in in was and improvements that to now should the dropped align approaching selling the mid-point through meaningfully XXXX. and book end the inventory through the a of electronics quarter bill range above first X.X. normal to the channel and exiting quarter by begin of sequential our result, fourth distribution we the electronics with recovery These are

our channel of global electronics product our Our deep teams. in extension And our an partners our strategic our segment. factor relationships a distribution long-term across with sales view that's partners remain as significant we

customers strategy relationships than distribution. and volatility These of more in valuable serve are XXX,XXX greater While execute this jointly fulfilled every through in in XX% exposes sales as us customer more partnerships this we profitable demand drive to segment and given quarter. growth sales than our

which reflect an was sales in down with levels build decline, line from generally our year. compared continue global automotive expectations. also Sales digits were quarter our mid-single to to last Fourth car segment product ongoing

Our GM delays business. content customer electrification build increasing in our to strike the commercial due impacted business sensor of global the vehicle car fuse in passenger our softness by to by was was related program offset outperformed and car vehicles. which business This growth

end worked we we through As continue automotive the improvement on period this profitability of focus product market soft demand, for segment. to

progress and update significant the made on Meenal We momentum. during achieved this year. double-digit provide and margins operating quarter an our Later full for year the will

year We of car car to down. be down expect digit global the for low production expect to global production XXXX, be quarter first modestly single and we full

achieved end product to exceeded growth industrial segment performance. growth of continues and organic X%. strong Our market fourth quarter, we deliver the In

were an of recent across range industrial conversion. XX% operating also operational applications power continued our achieved and margin driven above execution of energy renewable a including broad results We by strength performance. These and

We continue are to drive profitable confident long-term this growth. will business

XXXX, design storage, solar, end drives, energy across executed in strategic During several centers we We motor secured and initiatives. our target key vehicles, electric wins data markets. telecom

that our on facility capabilities. expand across activities new broke ground and business We semiconductor a will our continued integration

Operational fundamentals. to As earned oriented fourth for the global for the manufacturing our consecutive a Testament remains the foundation association excellence year. award our of culture, excellence execution we strong business

five developing we period expected contemplated of our growth and a in experienced and soft strategy, When XXXX. this demand year

drivers fit efficiency, key long-term ever remains enabler remain ensure targets. access. geographic growth disciplined market closely We of building, world expansion and and align platform our confident of that secular technology to key We a market consolidation, M&A of are increasing strategy. or examining the our remain end the themes of above M&A with resource Strategic criteria growth safety, connected core opportunities our

to course and on optimize These actions and during are XXXX. past of profitable growth our embarking through this structure made several company will capabilities for position our actions During the thereafter. others and year, we worldwide to investments expand our XXXX undertook cost

with of drive and associates footprint, growth that strong Our long-term leading global backdrop technologies, business. secular close customer trends relationships help against the our the talented

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

Thanks, Dave.

on XX% We over decline basis customer ongoing sales year the continue the XXXX. product finished were guidance million of of across quarter year a with reflecting inventory fourth down and ongoing reductions. reported reflect sales organically. end quarter market in last our our challenges from with and highlights segment to some Sales fourth our Now, down XX% line our end electronics $XXX channel

expected, auto in continued production impacted declines, automotive by in As sales sensor global markets. in delay product end programs auto were vehicle softness commercial

Our continuing grew it's X% industrial market product segment growth trajectory. above

the reduced Euro. due also over exchange weaker Foreign year X% our growth last sales of to

tax of from exchange. essentially Fourth foreign $X.XX these, adjusted midpoint at EPS, at the range. of the quarter of quarter GAAP partially from expected diluted finished offset contributed EPS our of $X.XX Benefits guidance range. unfavorability our was we EPS diluted of than Outside high-end $X.XX for a rate by lower the was guidance $X.XX, of

finished margins sales associated the were a product slightly margins seen the our segment foreign years. volumes operating leverage of impact sequentially exchange was both electronics in had we've Adjusted year-over-year two below our XX.X%. the to operating lowest adjusted basis GAAP quarter margins expectations were across the margins XX in Lower point biggest and headwind as X.X% with as guidance. versus and

was demand sales numerous channels XX sales our declining XX% across For the organically. macro XXXX, This in led coupled first at and end and overall factors end XX% full by year decline of market $X.X impacting customers. billion inventory down our with years destocking finished

GAAP at finished decline mitigated adjusted the the at $XX operating margins between operating diluted cost EPS in ongoing margin year XX.X% reductions diluted during EPS versus our expenses. margins finished GAAP with were variable in adjusted was We XX.X%. and and $X.XX and $X.XX million year. split XXXX for reductions operating

was adjusted rate effective year, XX.X% our the rate our GAAP was XX.X%. tax and For

additional Our regulatory tax rate largely Tax favorability to items versus Act. in our related updates U.S. the discrete certain adjustments forecast was to due and

Now X.X% operating for and additional highlights year. XX.X% let quarter me were segment some quarter for full the for the provide and products Electronics the by segment margins fourth year.

through margin We was sales main associated year, decline discussed across coupled margin decline operating the the we've from and expenses. both top-line IXYS year. of volume with with reduction synergies As both impact and of restructuring versus the gross acquisition driver moderated cost the our leverage last

see to improvement return segment start a growth, commensurate our to expect in operating we sales in margin. see As a we

and for year at margins the finished and operating segment quarter product XX.X% Automotive respectively. XX.X% the

seeing year. XXX improve several continued the exchange the operating are than foreign XXXX offset of in we margins past undertook last versus the more as basis reduced to activities points margins by benefits improvement We which cost the This headwinds through reduction quarters year.

reductions path have cost additional that further of with in We margin for starting segment. the to mid-teens the back this will our back half savings operating continue in drive initiated activities This the will target year.

margins a and growth the undertaken the achieved led reduction to for full operating past year XX.X% XX.X% for with product -- industrial segment. organic market above over margin have we've best-in-class activities growth cost segment respectively the quarter years coupled few Our and

free resulting quarter the during for on cash in cash to XXX%. $XX cash year million million flow, a free conversion the flow generated we of $XXX Moving and in

working deferral demand We focus finish Our acquisitions. structure was well the our and strong on in earmarked maintain strategy capital growth capital XXXX ongoing to coupled with a remain optimization organic of positioned of combination strength of achieve of the and dual capacity our environment. capital light for expansion of strategic certain our accelerated

$XX year $XXX back the an During advantage shares share. U.S. leverage the the at We well net on hand took back year million over in cash year, of the under buying of per of market $XXX to with finished X.Xx. price cash $XXX repatriated in this We with we debt average million volatility, million

For to shareholders the dividends. our $XXX million year, share via and we returned repurchases

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

Meenal. Thanks,

Systems continues level opportunities. and are to with near efficiency brings on the Now transportation. growth systems. propelling on end requirements in I'll beginning we significant the electronics and provide commentary electrical electrical Advanced content term an connectivity architecture enhancements key ADAS Assistance transformation, markets automotive, safety, outpace horizon Increasing revolution and or served of two Development global for for are expectations, cockpit Driver key factors upside beyond

and across manufacturers battery In the had strategic in protect new In we quarter, business wide fourth design applications electric of range wins space, on-vehicle to a for launch chargers regions. won nearly we systems vehicle a broad all are vehicle opportunities. our where range XXXX and content manufacturers we The of Japan. Europe plan in positive in in new for electric of remains designed XX with automotive a models the

responsiveness We quality three won secure and winds Japan our in and portfolio power wins excellent key across seat for several and and Our customer from fluid circuit new sensors, engineering for vehicles. wheeled systems business automotive power helped and in Europe China, in the strong reputation speed had ignition protection With wins in motors motors. new lift including we Korea, India relationships position support, our two window solar, to customer semiconductor reliability, and level protect sensors. sensor product for a quality design and

year. last the vehicles, quarter, versus during most of we end to across continued commercial demand and to markets soft Turning fourth see our geographies

conditions of and expect majority persist off North truck market revenue heavy build and America We construction. to through to as these in duty peak the continues rates the come XXXX agriculture of slow

with new helped America, business a design delivery in to we in secure European upfitters, a our and recent continued of all and and end our continues win packaged beyond the with off truck commercial this across North and key volume expand used us its vans a helped vehicle bodies Our North strong solution manufacture vehicle China, of configurable with operations. manufacturer or three buses; a markets, walk-in push wins time with shelf providing regions customer truck success maker; our performance relationship product America diverse business in durability a in

us higher our the and long-term opportunities, markets. we for increased electrical deliver meet With to requires expertise protection specifications majority our are engineers transportation that our transformation ongoing global differentiated front markets, positioning of opportunity industrial power, and application well affords the are these and industrial we power customers, strategic end of of the applications. conversion. growth leveraging our evolution end protection demand positioned in execution an seeing evolving funnel for value and to Across content of safety by strong technical This across

in storage sensor for Korea. in to as America see temperature new deliver quarter, assemblies During in continues secured solar win and as growth use Europe. automation automated industrial design the application in We systems. good Energy as America for design well secured projects we factory North North wins wins we to continue HVAC activity a wins with for

in systems. business motor a industrial power won business Asia new manufacturing captured of manufacturer the manufacturer commercial semiconductor compressors, We European we addition, test pumps and and conveyors for equipment. and with America positioning of measurement and tool with drives new North key In

We also winning and on industrial other increased motor our applications platforms power with semiconductor number industrial business a by additional existing footprint of manufacturers. drive leading

power gas, and and markets flat, Looking digits. construction renewable grow drive expect ahead, conversion U.S. single mining, this digits and year motor oil we markets to non-residential precious low double to to energy the metal be grow

of our a customers, increasing trusted full partner the industrial for across expanded end need technologies a range the we see markets. to As product

funnel continue existing is with gain and a expand As to business result market to we robust addressable opportunity the customers. to new our share invest and

electronics end for activity we win good design of across see Lastly, applications. markets, continue a to range

power generate that speeds protection, are and data storage more found products end and many telecom in infrastructure and markets. control circuit opportunities Our data electronics faster ecosystems. are Applications great connected require providing becoming and increasingly more in greater and sensing cloud

and driven home for protection During of strong applications in our relationships as our and saw business and XG Korea power across well new as the electronics field semiconductors well for customer fourth our consumer as as products teams. engineering automation won and we stations. data wins secured XG we responsiveness offerings We close battery quarter, our design circuit building wins center base in by protection

are sensor America and programs on-time. We with number in a robust launching with in in meter demand well in connected connected as for which devices XXXX, also China. more during themes use were activity systems of smart programs XXXX and application designed circuit smart delivered products. for security solutions a home products is The introduced new new customers. smarter as continued is North our driving Design our We

market these growth. are XXXX programs a we additional With demand, bring end stabilizing pickup to expect we which in of seeing

and our distributor on Our with our relationships product forward into diverse are capitalizing reaching leveraging far electronics by business access strategic look demand offering solid. end markets. broad fundamentals We to improving

turn I'll over guidance. the our that, Meenal talk of call With to to

Thanks, Dave.

Now let from impacts me that currently we start with outbreak. seeing are Corona the virus

week monitoring potential local the authorities updates closely impacts one from as site. production still have at Year interruption Holidays New are our China business the authorities extended evolving. are We Local

as as could implications. and include extended supplier impact staffing shortages Additional production customer well stoppages,

We within our have holiday guidance. impact the New incorporated Year of cost the longer

our year to we first quantify able Outside situation; This of potential business both to forecast assume our usual. as this, our at time. forecast not fluid this full quarter is a further and are impacts

to year X% XX% of XXXX, first an onto versus decline. organic total Now of sales about We moving expect we $XXX last the million million sales a foreign the be versus in point XX% $XXX last to quarter decline and mid a headwind sales reflects exchange estimate year.

is $X.XX sequential an to quarter. adjusted the expansion. diluted of adjusted assumes EPS to Notably, rate our adjusted and tax $X.XX, First with EPS X% in quarter the reflects this midpoint expected to of margin in effective be X% sales range range operating improvement growth, the XX.X% XX.X% guidance growth for

foreign EPS Our rate. from about dampened exchange is growth and an headwind stemming tax of higher $X.XX both by a

sequential items, be growth these Excluding EPS would XX%.

been X.X. low and and remaining to to depleted we're through For builds be few bill running the burn has digits. single the quarter, global book our our next the down the inventory the above months. excess Across is in estimating product electronics segment channel of over OEM We car majority to believe expect

provide sales the economic are for to conditions full me let over on grow the digits low forecasting we current the in additional year. single guidance last macro Based XXXX Now year. some

assumes phasing first of back returning half XXXX with a sales decline the in Our in XXXX. the of growth half

I'll some end assumptions. color market add on our

car builds year the to will of end align to most global quarter. anticipate year. low for We single We expect and inventories down be OEM to over vehicle normalized the next channel this soft digits levels and for markets be commercial

transportation However, outperform do expect us end the content to enable markets. growth weaker we to

see few due growth, year-over-year to a typical margin our items. dampened EPS operating expansion We to the expect levels leveraged and versus

and projects the these slated Overall, during of manufacturing stronger rate IXYS XXXX footprint currencies this of for supply these programs begin discussed communicate year. will and synergy in The expect we year our $X.XX we the versus generate from and the new We year-over-year headwind as to XXXX. footprint chain approximately to as actions tax well a reduce we combination costs $X.XX dollar $X.XX. projects EPS to higher a and transition U.S. savings EPS additional have by with prior

of a projecting XXXX tax rate are to XX%. We range XX%

We full million $XX amortization for interest of and million we've in are the $XX our year count. share for estimating expense XX.X and expense year million assumed

$XX footprint for We last capital elevated to in million the expect year. investment programs of spend I level we expenditures to resurrection the This and programs million capacity expansion $XX incorporates a the year. of mentioned deferred of some

activities executing our proactively cost additional levels value to stakeholders. our with all continue remain closely ahead, Looking structure on strategy, our focused dynamics. we align market adjusting delivering for environment, long-term evolving monitor to Amidst spending macro growth an we and

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

Meenal. Thanks,

during segments made significant in summary, execute as we strategy we challenging business XXXX our our progress market. to growth In across a continued

operational highlight of Green, ahead, of Directors through that with Maria pleased Ingersoll-Rand President leadership position of great Littelfuse and of addition fundamentals the for growth are wealth XXXX. this, effective Board and Vice profitable will of our a global importance our to Senior a company Maria consistent Board. retired our that company evolution to brings Board the of General public business X. strong experience, February and to our Looking be confident going we our I'm join and course continues Counsel value company excellence the The

the want value beyond that and for in On note, to forward stakeholders. for thank around additional their Littelfuse Littelfuse in globe all I our we XXXX contributions to their and look as XXXX commitment associates create I

for open we'll call the questions. With that,

go from I Thank Research. from Harrison Please show comes [Operator you, Longbow Instructions] sir. question Shawn our ahead. first

it something go to back with Good low at typical. but March be like to electronics in implied operating least I less in the to associated understand, the I in margin quarter to XXXX are profit everyone. than guidance low. And Wanted delve was the the more have it little to and find to Hi. this volume that high, business? lift going the is margins surprisingly seems bit morning a in incremental

walk So through that if kind expect through margin could as demand me should it you to the progress of of drags XXXXs, we and you normalizes. how kind there rebound distribution

Hi, Sure. Shawn.

of So seen electronics, just XX of seen We stepping back haven't across that decline right? in years. this sales the type in our decline we've level

from had margin So OEM seen strong. not the the but macro channel we've across is EMS the end perspective that the significant inventory absorption a factors impact see just destocking and that like just that's variable of we plus also electronics with combination customers the and an fairly

of we've The there's that other thing margin still said a our going had little synergies already point that would bit lower amount we've I really IXYS coming running the to, is to recognized while -- fair out to a been the work fold. And with a that's committed into we've last primarily that that gross got batch that impact margins. we on there's

gross a also uplift we to to to as see see and So margin efficiencies programs into get the those well. those as over XX expect XX place next start months we

as actions the as half the off first here perspective there down into that takeout else is pushing bottom it, would off of the the bottom? you limiting than if or it from ramp something the be leverage cost that's we incrementally something the cost less of profitability, year, guess I leverage some feels a anticipate. Is

to but foreign a I That's also talk just foreign about other tailwind a XXXX been XXXX levels we've headwind would for at exchange, were would now 'XX we've is back big in when drag some were for the seen in I and back 'XX, electronics. also better foreign the That's where we've I I A even saw to if headwind say, been pricing go exchange. overall and look mean piece but market, normalized in exchange. We shortages about come nice more company, us. across a had going pricing talked I the now if into year the got there us.

to full you expect distributors your Okay. view, in quick up. either customers just would kind the you year just seen that anything else? of is you've for selling not stops begin a being of And guess and then versus due versus or back the destocking to the follow or consumption sell normal through kind Dave, EMS baseline destocking OEM year I really the headwind

Yes.

the fourth pretty of these the point. amount prepared talked during we little bit in that challenging. reach channels destocking get inventory a the to go quarter, work. a was first happen of bit course, of certainly confident We of we're we're when There's of out but equilibrium remarks, that quarter took we through which quarter, to of significant kind As to more needs reasonably still with the sorts kind first done

well as sell inventory kind of of you matching we'll in kind through. of penetration see fact some you begin get of growth first uplift half and But improvement momentum And first higher is at just mere out into selling quarter, you look bottom we some past that of end get the on the the the fourth that, back also market that, markets. quarter, so that to quarter with end an the just believe as year some correction

going still growth. kind that to see we is year will, the first begin and half the but half the out of first back challenging move kind into of you of We'll if as of to stronger be year. show the quarter So improvement quite,

Thank you.

take our caller Shawn. please. you, next Thank We'll

you. Thank

Christopher from from ahead. Glynn Our comes Oppenheimer. Please go question next

Meenal morning. Dave. Good you. Hey, Thank and

you And back top-line the potentially still year? in headwinds, organic And gave, last the half get fairly The the so nice teens the and half operating margin momentum back pretty margin suggest at year. even quickly, that's, that there pronounced. to in approach if back automotive, you mid with good this

we're for in margin expecting to see we're automotive. expecting continued XXXX, Well, expansion

programs well. footprint with our I'm but are which to as couple some business relate talked year of a of I IXYS part working they of on about part through mentioned, I my as that semiconductor and of things, the we've way which our automotive some commentary also we're of full some think acquisition,

programs most So much that's going to as us take do. as time a little

impact see second foreign the we IXYS through I with exchange, to impact, coming say the tend biggest piece automotive. the is

of say happens different that foreign that with depend going And of whole what host also before year-over-year like 'XX, would mid-teens basis. it's we expect some probably But this is exchange make progress I a to in a countries to absolutely be going to more improvement. we on XX see so from year. And

the the Okay. of you M&A pipeline. Curious then, those going if your And active you as properties, could to actionability, with breadth dynamics there. first well sectors, just have the sizes, on lot and said all. you footprint on on, operational comment be Because capacity a as

in stepped talked Sure. for potentially you to, where And acquisitions for are stages. has fact to what not and growth to That M&A of be strategy didn't improvements. yes, last and our to XXXX an that's of course, about, on position you acquisition we've the And but the visibility on last take the do year to think as changed several we look final that. critical have we to from we things that close where able years being back complete areas a fundamentally work didn't organic don't course, we're any, ability we kind if away that going have at and an the visibility of you drive

weren't XXXX, So we where when to make wanted away created we but the were quite quite them and discipline also to be. stepped active we sure during things

us types million deals right might technology certainly the we to million deals if the of a for do larger, think in be smaller And $XX $XXX still also that comes are stretch strategic, bring expect for prototypical in the range So along. prototypical that will to to market I is kind if obviously We or us. continue highly of access. it's we'll opportunity for spot sweet active.

of for, can expect use continue The good we we markets move that Certainly as optionality a see as driver to because end we quite are opportunities be active. that is news good so have growth to the many there forward.

Thank Dave. you,

caller Thank We'll take you, Chris. please. our next

Thank you.

from comes go from Ackerman ahead. question Cowen. Please Karl Next

Good Karl. morning,

made distributor I and good overhang channel. in the inventory of Meenal to I inventory prepared reported you margins elevated the order several think the Clearly to but year. your have for stability Hey, want for minute. across Hey, electronics. back at go appreciate that on color the peers morning. bookings. repaired did comments gross actually has caused I remarks in morning, good Hey, Dave a And in partners full your Meenal. some

are stability and in first, be happening yet? seems industrial auto what seeing So you markets Like to electronics. in

headwinds Second, of a juxtaposed And to I lines inventory we And across all to that enable believe factory dynamics think semis? I between it man electronics the you weakness in to when passives you or may would abate third, follow-up? have power loadings from margins product should expect improve certainly here. and and not,

Let bit to can things like about to and of market the talk conditions little that me start Meenal a kind speak that. to how translates gross margins.

business, industrial that don't we've market. been growing see well We above Our changing.

in segment. We continue the to have good momentum industrial

That's us have really we don't been issue XXXX. So overhang there. We an inventory not an in for in XXXX. don't that see

stable. reasonably that see to continue We

to to beyond able in not with although America globally efforts grow areas. growth specific design and nicely now right win been our industrial North So robust, are we've and markets

So if in XXXX. we can see that, continuing certainly

and just both Corona asterisk potential put On don't the and really, impact are an the of side, candidly, globally. China comments of in as I we automotive these all virus understand to the

make to I'll know we of kind based upon today that. comments So in regards what these

certainly XXXX. Automotive, growth car build we do not in see

little more a see we stability. However,

slowing. side we We're So the are sensor of the step reducing good level from side decisions some in some made had drop in is to The news challenges business and the of of confident pieces and seeing we business in car more have away car to some go. passenger highly remain bit build. specific content that we big part little the a through of in But beyond a applications. growth that, is, XXXX

in of growth XXXX. expect out So we automotive do

have wins markets And good in which we'll challenging. is falls the vehicle, in in that clearly although and bit XXXX, Commercial direction. gains not are with some moving segment more share a our design growth end

segment. the kind automotive down that'll a on bit So weigh little of

to through it back that in look sell inventory -- from that really kind we think the in really of sell just the stability and first would quarter talked We in improvements level. through And we're the looking -- year. see also for to course we're of the Electronics reach of about comment. the end begin previous And through, the corrections market half improvements come matching but largely.

of of are demand little and we on kind talk how gross So Meenal, margins. our we translating the see maybe kind bit see how where that's a about view that into inventories you patterns can looking.

Sure.

mentioned I that through companies sales versus to segment point the And so well. through our of XX% our then at wanted you're to our we've past in partners. the and electronic looking peer most Dave's of the look of peers go at channel I electronics, the about distribution add on comments we and than One as that that's expect in larger

have So peaks and some just peers. higher in and critical valleys us monitoring the some to more in we compared of peers. of lower even inventory channel that's stabilization correction to the inventory And why, of our then becomes the versus the and our for tend some

electronics, that, said growth. have talked see So margins and industrial, we is, having have about all we come across when strong across we've can definitely through variable you that

down see fairly then dropped leveraging very operating margin. and the rapidly typically You well, margins will improve gross

in commensurate see a So that's half, earlier, as Dave in we'll mentioned start definitely some in improvements of to we the to what growth see margin But little the that the that. see of we come some back gross expect first stronger as second with quarter.

helpful. more. If one in squeeze Very I may

several Why think synergies industrial With industrial are you. that we You for teams lines? IXYS these across as are, sales beachhead industrial sustaining have in product I quarters halfway opportunity. industrial integrated. tightly quarter. see senior Thank sales teams less rates mentioned in integrated. these the the wouldn't past you growth business acted that IXYS business spot for has next your the was being your And a I IXYS the a in given know than bright

Yes.

I think of were backend of getting of work on things well like that the IXYS. beyond is of of integration, kind integrated longer integration, footprint things the approvals halfway and systems sales take IXYS, final all, nearing from but kind do footprint of certainly we're stages the those customers have to integration work and those First We're of that activities, activities. we in the

been helped by have so IXYS. industrial industrial traditional access core We improvements customers that to have our from our seen in segment, products

in will, of So what to that's of if the we doing perspective, us health those grow a in synergy, sales have markets seen that from are the part beyond you for areas industrial. that some

one products sure clarify are electronics just make thing, semiconductor just our our segments. add being I wanted to is, IXYS products I other Karl, in and And might

the Dave the IXYS talking in So about was industrial segment. product segment, electronics

like And of we've so we about, experienced direct because more issues we've sales talked end we customers business maybe got some the less of seen our with channel there. so also destocking IXYS inventory than legacy OEM. But some just with that

our affected the business as segment. also that's well within So electronics IXYS

you very much. Thank

please. We the will take caller next

you. Thank

next Steven Research. question comes Our from Fox go Cross Please from ahead.

Good morning, Steven.

Good follow but tough to morning. on try. I'll that one, It's

would help guess of I the pricing, be guess semis year-over-year of couple as over of terms year -- I where and basis? to that versus has a the last returning for a pricing been quarters. margin power are we Like sort fuses does in year. decent think equalize And we So you a normal on your about when ago are pricing comps,

Yes.

I had about XXXX, right? see. when XXXX talked the we that So conditions all normally So what probably pricing half anomaly, would conditions, were we've pricing think in not was maybe we've XXXX of

seeing to XXXX, sure challenges. help That's what offset saw business. through can we're we in cost X% electronic work electronics those seen the return our normalized improvements what that certainly in of course we've history. X%, in the pricing our to range. teams And with today of more of our side And all increases and hard to which pressures, certainly be consistent X%, a So make volume that's

it's XXXX. of return normal of we saw and stages happening there really a to kind early been in that that the So

that of we it's to kind normal continue it pattern. and expect So

and And Got you the calling secondly, Dave, in accurate were it. guys in early helpful. then, That's the sort channel. of inventory

You're not you the kind guys than is now calling little of the by any of other anything consistent end conservative quarter, sort saying. it who that sounded But normalize of a recovery of slow, dramatic, with to depending talk what a were which this you of is steady mentioned sort which for guys. on you type more to recovery

talking think Is you're or in with Or anything relative you takes of specific fuses market in that do just content? general terms power to puts industry is there contemplating anything semis and and about you're outlook a comment that else there? to

a a improvement right? longer Yes. -- bit -- destocking mean get of no take contemplating you I don't inventory that. I No, you're all nothing just done, function inventory on the specific step we has to when we're sell-in Because reducing down. is

quarter. So expect see which place, to see you the We'll kind get of that that step takes that that improvement. function improvement first we after

the that improvement I begin of it And but market improvements today market in year. to we the end show yes, of Beyond are our really driven yes expecting improvements. the will out half that say of will back that would fundamental visibility as be think in improvement

kind commit, there year. view don't visibility back is want how end over not so our half the But we going to of behave our the great, are of in markets in the on to

the up would So, be that but we we're our see things that it think the call year are conservative, drive unless to much. not might being back some going that specific think I in we're to going view half of

So we back we'll and some in talk improves, visibility hope there's the that the about year as of half to upside certainly that.

helpful. Thank you That's much. so

you, We'll Steven. our caller please. next take Thank

Thank you.

question from Please Baird. Our David Liker ahead. next go comes from

on This for Wilson Hi. David. Erin is morning. back Good

organic want a first So, given my your just growth segment the question to little sales dig organic I bit X% decline. into automotive

then about the you your you as talked contextualize headwinds sensor sales least if like growth of versus commercial vehicle could the it at outgrowth I'm passenger So, commercial as be content wondering based within or half and my organic as maybe help fuse can segment. vehicle had well. on car looks this much math, decline further -- in

Yes.

drag. about that sensor talk let's seeing growth of up segment; in the by X%, forward, we bit are comfortable we talking segment. -- So, drag of impact well Certainly stage. been and couple as an quarters. organic look at about headwinds passenger last sensor for the as it creating car when our vehicle Sensor automatic we're a to What as the we about a a today of clearly the end a as, business headwinds, this on has commercial we've the it on call inclusive way,

content story growth the that XXXX, car continues in car builds water build. seeing Obviously, X% projecting not us. are growth, forward, and range pretty in X% that's we're as so clearly to look show looks we that beyond we to to forward, content but the hold Looking for solid

And that. pretty so confident in remain we

Okay, embedded virus can in second great. my your is, detail Corona And you to the surrounding extent have then, that's you possible assumptions currently guidance? just the the question

the an there on is not know we in week. China good all our the Year that we a a been part customer's extension holiday of course of has today of have that I through What say Chinese Yes. in would mandatory of impacts is, factory locations all in and locations, New extra our

Our of days -- kind for there. better that gestation to understanding period allows that, of place that X to to XX get of what's take the of Chinese going visibility get to government

have additional what's So that the now embedded week fact is right of China. in shutdown embedded where we the one

we to the to now just fluid. of hard worse, predict state because be. We that's forecasting, right our potential exactly changes It's in have haven't getting that certainly it's too has that this at don't what disability. going embedded It but beyond

questions. my taking for Thanks Great.

next Erin. we'll Thanks, take caller And please. our

you. Thank

from question comes ahead. next Stifel. Sheerin from Please go Our Matt

morning. this fact of looking which guidance terms Good given correction towards you out terms the costs for grow where and the are expecting be year that is that well electronics. the to the just things some up the and would of and shows I more modestly margin auto margin are you by and still segment, be And like this in slanted up were to expecting or stronger headwinds to year despite you. as in -- transition Thank costs revenue wanted that at industrial other that? a your each to it Yes. back to in segments then, get relative playing still profits margins operating shake out of year, also operating back-half you

Matt. Yes,

Let then, revenue talk a of kind bit growth talk can the little that. the bottom-line growth Meenal associated and about with me about

Our of Certainly we we growth segments. those dynamics in Yes, view those expect today We're not we varying three electronics comps. to three and that But growth segments XXXX. in guidance is the are the know earlier the of all all one expecting giving talked about each current on, in in degrees. I with areas. of

we in XXXX to the end electronics, half with you through so the we'll or first back the if a success showing we've half we year. to So at of in growth in in to first last was kind not had in in the growth kind it for comp level expect electronics from expect market have story first decline the certainly growth to good and have see an with so of but And going of build, content there. we're growth we industrial, steeply falling the car task, In challenge even outpace of that growth in half, continue electronics. automotive, look return the perspective,

margin why that. an talk Meenal, to From you perspective, don't operating

Sure.

single low leverage expansion would operating we levels So, have are it with typical the our Matt, digit is remarks margin my that growth guided the would year. We normal. see year-over-year would but full and of mentioned EPS what that in it's lower than said part for lower than we be I prepared sales we that growth,

rate footprint with of around have the an things have example, on mentioned, we see a single-digit a So couple bit might digits lower activities year, the we lighter typical being we And bit us the remains end we growth, then, a as because little today. tax low a well. our rate it I'll in 'XX, that undertaking, but dynamics market mid for really the call we're of foreign that as little EPS, XXXX of the would a -- general also headwind tax on one of exchange single in headwind footprint, might for I be them

we leverage, but and So to that's grow absolutely why a the it's expect a expansion. diminished EPS more of margin operating

Sure.

more leverage, strategic to maybe see So, just we're little a expect bit up because of get we certainly would to for bottom-line than dampened what like the set investments making long-term. to we

the that that, relative then, anything margins other And have integration talk there, you'll did comps. you next Okay. of in things. impacts this Is further incremental there year even year a looking to favorable about more IXYS some costs and transition

Yes.

mentioned So is, actions those slated. I of we've part got as remarks that footprint

the are these embark future these you we've from I of transition all not yet. pre-hiring to the in of to operating transfer the on we of going just, year ones about a is, because impacting perspective about of related year. do that are help to me segment electronics And $X.XX bulk that is far expect over about talk got part be qualifications some bit $X.XX that EPS. EPS of our past been "Hey, of costs, to quarters. The the to adjusted and to we've those question we're work. when projects, quarters. lot is year locations IXYS to the segment?" costs that a the means will activities And on, footprint some going combination few ISIS some adjusted new That's can And costs. product margin we have talking and So this in Others that and but a we've costs little have well, transition we linear shared By all

that through then? run to the going P&L you're So,

run being we up example, staff Got it it. through. ends duplicate Again, for be. These may Yes. are that costs

Okay.

Thank you. Okay.

Thank We'll caller please. our take next you, Matt.

Thank you.

comes Our David last Please ahead. go Jefferies. from question Kelley from

morning. with questions. Good an for Thanks question me. from taking my Maybe starting pricing auto's

tick last up an referenced you think quarter. I

competitive a You're maybe at seems or that even point, more just of persistent landscape bit you're or a curious that's at the this more the function as the market now subsided if seeing pricing moment. stable

of the would in being we've little today we has would had kind certainly segment. not say automotive more about of normal of automotive us, the past. it range. in pricing in a higher end on the pricing of say in we're a kind our I I We're segment the Yes. challenging the be seen out Maybe year-to-year for would than range talked range. view this

the there outsized -- state. current pressures as So and we're seeing of not kind

you on you. it. light bit Thank sensor commercial specific? or Got Okay. that referenced. you maybe then customers color And more is provide vehicle And delays, if the a also vehicle could program

and the system. there's passenger their delays. big issues, of the supplier because or from need are they they we're vary they're in about can't supply they world. And And car customer vary. actually one talking them the another Most programs where these of vehicle delayed program Littelfuse a in Yes. the are There's -- not delays everything components light handful delays,

So the new out introduction the of system. it's pushed

in OEMs And changes their of other to some have delayed launch of cases, systems. the

that So a to delays. impacted long-term, not there's a quarter are not going of bit. reasons. certainly variety extend materially, they're fourth are but There issues reasons, they're they our are That

me and maybe Okay, great. ending one question. Thank for kind you. level Last on a of high

if referenced bubble advanced guess, the could think high called about you how You adoption content your I ADAS as, content? So advanced as what's tube opportunities plus just about, you maybe grows. And kind of the in market the or the your content discuss data? of how you pacing about see more level opportunity hit expectations. of should two, level do some addressable like ADAS we think

Yes.

and The that up our in designed electronic applications. others is being first they remind you are are revenues actually thing segments into automotive technologies would electronic those that because show I those

the infrastructure in not the electrical it's if So will. of you vehicle,

would is traditional are whether processes I types manufacturing products, to sorts protection So, products slightly they're that protection. designing what of the current segment in of automotive with where they're these our in and voltage use different of say electronic protection, circuit temperature kind and business. requirements. are Those we things electronics shows automotive support qualifications over designs of And it up our over protection, over we

What would the content continues growth is, vehicle. in say the to in the grow systems I electronic

allows for potential still after as space, go that well. further us share in share to Our

kind unique They're areas. our technology, core the for So of our kind really of, particularly it's portfolio. aren't technologies automotive focused they in

content business. the our us see electronics So we part for the to in drive in growth that just lift of and opportunity continuing

All right, perfect. Thank you.

talking joining again with for interest a great We thanks call Thanks look David. in us soon. And to Have day. your and on you today's Littelfuse. forward

conference this call. and you participating. Ladies for concludes gentlemen, today's Thank

disconnect. You now may