Littelfuse (LFUS) 29 Apr 202020 Q1 Earnings call transcript

Good day, everyone. And welcome to the Littelfuse Incorporated First Quarter 2020 Conference Call. Today’s call is being recorded.

At this time, I would like to turn the conference over to Head of Investor Relations, Trisha Tuntland. Please go ahead, ma’am.

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

This today’s the website. Investor quarter, section of on our our morning, our A release will Relations results webcast also website. copy available of earnings in a call of first available is our we reported conference and for be

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

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

Before conferences, will proceeding, Xth road I’d like look in shows. outreach on with during opportunities. And Oppenheimer’s forward and these Growth including several May non-deal you we we Conference participating be engaging Industrial to to mention that virtual

I call the now to over will Dave. turn

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

These for the personnel go flatten their everyone thoughts and part medical sacrifice indeed to global the doing out global our my leadership times, First, are my associates gratitude the challenging and essential our help and impacted and COVID-XX these directly to want by pandemic to express and responders times. are trying to professionals, curve. other Littelfuse during first

with key urgency situation, our the three team to on focus severity acted has priorities. the of Recognizing leadership

families operate, to our global protect jobs. them, well-being health to preserve where while we first communities of the the Our is and and working associates, priority their

outbreak orders. with to country, we at the requirements home of measures range preventative recommendations China, a the government stay every including and in of compliance adhere implemented wide signs and earliest From in

our environment IT shift to quickly of working our and global support mobile most team us for functions. expand The strong remote flawlessly infrastructure support a enabled to

did a step. we result, As not a lose

China who extraordinary together in been to have limited from our suspended Employees teams, with and practices. can associates show we Our do us closely so, trade through have meetings, sharing and work in-person travel. experience, to participation their our best-in-class required all home We sites. and working guided learning’s visitors global postponed this canceled

Virtually locations In distancing, cleaning implemented we our strict customers associates have site, provided serve. equipment, and our manufacturing associates. PPE, all on protocols of we needed deemed the enhanced our social sites where for essential disinfection these personal to been markets due our and are protective or and

hospitals and we local providing critical-needed global medical masks equipment. of in locations the support These for families. actions to communities. are extraordinary We’ve our our to efforts by PPE of supported their consistent Around many of corporate to such initiatives all our our with world, our as PPE many associates customers donated and are produce

remarkable of during uncertainty. to our thank want each for of I leadership one this associates time tremendous their personally

protect employed. to our and measures our globe We associates proactive continue will people around take the to keep

the force. customers to Our mitigate chains. global continue to on the of and to hard onset working outbreak, we is COVID-XX the extremely second and to and serve is manufacturing of supply focused continuity recovery customers. deployed our priority the At critical operations, business needs of task disruption been team our support our has This

respond how of collectively proud this together very come challenge. have to teams I’m global our to

in are very strict with And continuing for operate. to controls to safe place, customers. produce our We’re we

great key of health to to infrastructure communications customers industries and required transportation our take medical The keep they knowing the equipment, world ventilators, the are pride products that we critical products moving role essential safe from vital manufacture and many serve, We of defibrillators devices in forward. our an in play and and chains care often like like and energy. supply

and many the manufacturing suppliers work our Like as of constraints to and are across footprint disruption virus. peers, customers, regions we seeing contain logistics the global some

all a is except locations varying our plants this Mexico. limitations, rapidly of While changing are with situation, in our operating for

is The situation very recent event, a is in Mexico evolving. which quickly

We expect during impact temporarily we the second in are disruptions production experiencing quarter. the us to

of normal February, note, early there levels positive to China during a On following March. returned manufacturing the plants in our reopening

impacts direct more like We’re also impacts to mindful availability. difficult is the and chain understand while workforce it supply we constraints, indirect that forecast of ramp plant, up the our supplier

manufacture continue our a time. As to to result, may any at change ability

our remarkable to sites operations, to It to all our of for associates’ the associates to customers. dedication world around and locations. the leadership enabled continue serve plans is contingency our limit return other supply efforts, in of leverage normal has us hard As that continuing can China we our we disruptions, to work our so global execute are chain

business. is health the Our financial long-term third the of priority

several our have past structural changes over portfolio we Over with commensurate the several nonessential past demand taken our while of the to with Along the levels. optimizations, actions cost decisive these reduce refining around weeks footprint and have structure years, spending. products adjusting made world we

will incentive and program, hiring we most in have expenditures Board our These temporarily executive solidly across capital increases, Directors leadership reduced of postponed reductions have until team. place our improved areas, We be reduced delayed in situation. compensation suspended merit and annual

weather us the us the outperform All of post these actions pandemic. prepare to the market position challenges near-term and to

given on us years, maintained our of provide preserving here strategies Meenal have during position update an quickly. context will focused the a difficult COVID-XX. will conditions are of the the uncertainty, is these even in financial also financial We level flexibility. our be on times. Challenging important over more we And conservative which not behind

a impact present, shelter-in-place fulfill We expect customer regions meaningful all demand. our limiting will orders the ability are that have pandemic economy. global At in on lingering some and to

impact our demand business through subside to While we softness limitations to we do XXXX. expect these the most weeks, coming of in expect

financial each growth potential is of our taken for success will customers on health, company highly the our we one pandemic. the beyond actions That position dependent the that confident I said, profitable levers am continue to people, another. and and prioritize mitigation other

provide will I company. first on an performance the Now our quarter of update

Our in financial the sales COVID-XX. to impacted performance reflects quarter which China. pandemic We recorded disruptions first related $XXX of by significantly was million,

disciplined EPS management cost margin actions helped Our operating an mitigate of $X.XX impact to the deliver adjusted pandemic [ph] XX% adjusted and the of of

our segment. in impacts China mainly Products COVID-XX affected Electronics

distribution, quarter, levels we EMS XX near XX inventory see normal destocking as During eek OEM of of bottom the range. saw and to inventory to weeks our with expected, and, partners continued electronics the

one, exiting ordering supply some first disruptions. book-to-bill electronics which well in of COVID-XX reflect anticipation the Our quarter may chain above was

working strategic We situation. closely to fluid are channel with our partners very monitor this

Our above products segment passenger performed automotive led car fuse by our market, business.

there of a burn On buildup excess believe Xs. the and at and significant economies. And time note, we The U.S. slowly shutdowns, pending likely follow through automotive pandemic-related the a again. Tier the of magnitude inventories. of it’s a the to will OEMs are require given amount is different inventory OEMs up China shutdowns reopening However, Europe positive will starting of

global pandemic demand As for ripple the financial likely impacts patterns affected. will of vehicles their economy, way through be the the

sales be expect remain second soft markets than down more for consumer car global remainder We as commercial anticipate year-over-year to the we production levels. vehicle year. the significantly of And quarter below production XX%

to the car XX% continue For our compared to be we down our growth year. ongoing more production prior global than the full to car opportunities. do, global year outpace XXXX, long-term however, expect build We expect with content to

Industrial Our by pre-COVID-XX, renewables healthy demand conversion. Products segment saw led and power

industry and conditions we U.S. as gas and oil the uncertainties Looking the macro anticipate on mining and construction. around ahead, pandemic weighs softer non-residential

seeing a are second in current quarter. Based pullback during the we on orders, demand

and With confident Longer industrial to business the term, second we are markets the we this will exception the continue of this half other of profitable gas, expect slow in oil drive recovery growth. year. during

progress quarter, the strategic our we During made significant footprint initiatives. on

the construction integration which activities the discrete We facility in our assembly operations. our of test in business expands across Philippines, semiconductor and new our module continued capabilities and completing

product New has installed, and have customer equipment qualifications. begun and been we

on the addition, complete third our schedule of are with quarter. expansion transfer to consolidation capacity products epitaxial In facility the in and expect we and

a embarking industrial consolidation also within business. site are We manufacturing on our

infrastructure long-term continue our us our strategic These position excellence of to and strategy. execution company’s operational build on foundation actions growth of the

are we new business to safe, well The themes the into focused opportunities. long-term of winning world secular time balancing future. our on we a challenges remain through, near-term Despite are persist greener, working more connected

are focus content architecture the These driving areas and and for opportunity and increase Sense next-generation power Control applications in conversion electrical the Protect and products. our complexity

these knowledge. It differentiated a OEM within As a is products a Edison and gold design-in of engineers that and offerings the have earned on our our of of product our our highly at recognition application winner the broad company by as the positioned is themes growth strength our we capabilities of based market reliable Awards. for leader, seat This substantiated the desk. our technical award XXXX company have range

developing sensors product application temperature from for that is acknowledged and improved our electronic were expertise digital our innovators deliver connections for deep us USB apart competitors. It and safety that fast-charging and applications. for set relationships Our reliability

design quarter, first able in across of the to During a we were wins range applications strategic all close wide regions.

environment the balance in engagement. design of is working As healthy to a activity strong level are Across ongoing that work to is activity. there and shifting we we from to conducive applications, are of industrial focus adapt OEM all design virtual finding as remotely, engineers operations a their design

support, technical in captured As drive product business for new storage we energy HVAC. and in and local applications new designs superior Japan a result won renewable in motor of designs

us from and support and customer and our Additionally, engineering relationships supplies business power new mining secure application welding equipment. to enabled

medical there and work for to intercom devices. with of business unmatched For business power wins and ventilators, is appliances relationships engineering and research led systems, secure servers the base devices ongoing, us enabled customers. development consumer XG new Responsive is in and level support supplies and application a and like product and portable differentiation electronics stations, applications, electronic a programs high customer collaboration

interaction. leverage we continue see relationships customer Within the transportation our and positive engineering to applications,

win focused in are differentiated to our long-term program global we and platforms. on We products, continue wins. vehicle electric designs opportunities new With

products selected global OEM. business truck and and and new In a Based Korea, captured solar wins support, comfort. for sensors, engineering our our with in on two several Europe light were big with for major we seat OEMs platforms positioning business

business our engineering of the development strength new efforts. in win with to vehicles continue commercial product We and

business won Class customer we make in As customized a North trucks result to of with heavy-duty ability America. eight for aligned products specifications, our

Europe, new pipeline secured power which products. beyond and distribution expanding trucks, and of our electric our supported growth design customer. America, for level strategic see activity continuing, a within by Across presence In our robust businesses, elevated forklift North we of product our business customer reliability this with is on focus us support our

teams macro global continue growth, focused we on cash and environment, As driving generation. remain to the long-term our navigate challenging profitability

initiatives strategic our several managed costs and balance the long-term strategic actively we across to business of have conditions advancing short-term serve, We the align execution ability markets with containment initiatives. demonstrating end industrial, to to electronics while our transportation cost

the on I call Meenal turn over financials, capital will to allocation our additional provide color and to outlook. now

Great. staying safe thanks are and hope Dave. for those close morning, and healthy. everyone today. and And you Thanks, I good joining to everyone, us

So of let comments. and long-term opportunities me start strong, with and some remains growth our business on strategy fundamentals hasn’t our changed. summary view The

us financial when the to this to markets come positioning Over posture, stronger to times. we years, out With uncertain through we improve. conservative navigate foundation, these we’ve maintained expect a start see well

our cover some current drivers. highlights and outlook our liquidity, thoughts I’ll followed on by capital quarter, I’ll with key our views and and close morning, near-term first This allocation from

XX% sales with down in on year affected quarter of Production $XXX government first the a disruptions directives down from reported organically. last and China. basis million, factories our finished XX% over We

These parts disruptions electronics across and our segment. automotive our affected segment of sales

channel based ranges we were January, down projected levels. to demand in in on normal weeks the of As current inventory

$X production unfavorable additional in First ranging freight $X.XX diluted benefit. last year, favorable while contributed costs, and offsetting expenses, EPS along We EPS collectively foreign lower GAAP $X.XX. diluted our prices, reduction with sales was higher supplies, quarter which cost lower leverage from commodity costs. was Partially COVID-XX-related and adjusted versus efforts, EPS had was this from exchange

Our rate tax GAAP was adjusted tax XX.X% and rate effective was XX.X%.

XX% across jurisdictions. year rate full our in a earnings projecting lower are low-tax range the due We to upper expected tax

taking foreign Across leverage. versus were last the margins Operating benefiting past Notably, from actions year. cost across actions favorable our as also automotive been points in as basis segments, from automotive improved we volumes our electronics margins affected by well all quarter. the the the year, and XXX of cost lower took our impacting benefited exchange segments we’ve reduction over

we cash. extra spend drew million likely down time Now This let with capital mind. me covering ended $XXX that includes allocation expect million the revolver the liquidity in as top late and some $XXX they’re quarter. first from of in quarter We I first our

for view a uncertain funds, we ensure While took environment. we during cautious these macro use this liquidity to have immediate no

in in XXX%. generated we conversion quarter, a rate the operating During cash $XX of million and $XX flow, cash free million flow

Our past working of a capital several metrics were XXX consistent days. conversion cash with with quarters the

into During X-year late process April, of that $XXX started our amended to as we also million part We our structure. normal an entered activities last facility. credit optimize year capital

with amended lowering ratios our and Our and additional continues fees. liquidity debt revolver provide to covenant us while improving overall flexibility

We drawn remaining million million in years, end debt next have the XXXX. the first several The maturities of $XXX of over with at about maturity next quarter of our down the $XX on are our the spread revolver.

our in structure debt-to-EBITDA With X.X this the below times leverage. well net finished debt place, we quarter

Our gross our is under ceiling. X.X times, leverage well covenant

on activity for business, funding expenditures need we support organic are to to continuing support capital build design and opportunities to priorities current these Our growth programs. capital growth new our

in to reduction continuing growth well our as support capital new products initiatives. strategy long-term to invest as We’re cost

we’re capacity XX% reduced But our view. expectations. reduction to capital versus due other January near-term programs deferring volume to expansion year, the a million We’ve for $XX investment

Acquisitions creation our market even slow logistics. value likely for uncertainties around seen and remain the market for dynamics. and the be short-term the long-term given and We’ve basics valuation will in growth but activity deal given tabled of priority our deal dramatically, down clarity top shareholders,

away and close We’ve were seen progress deals we deferred in a we to quarter. by transaction get sellers, stepped this expecting from

of emerge eye the may funnel dynamics. We line are the on keeping down our and amidst prospects number in some financial close see current a a targets

with years. share share several in had authorization. on our past to one what year with for a This buybacks, Moving authorization we one expiring replaced million the consistent is we’ve place

we the from impact repurchase During the in the suspended to expect while and We late near remains $XX shares duration million first but quarter. of in repurchased activity our unclear. our quarter, the first shares don’t our COVID-XX term, buyback

a Board our the As noted unchanged. disruption second our But consider in our Board and approved in Directors quarter change dividend, macroeconomic if of is our rate the press our release, intensifies, would dividend dividend.

is a structure Overall, we’re We’ve capital implemented But allocation we complacent. to executing positioned ensure liquidity sheet reasonable our balance with capital feel while our objectives. leverage. well not

conditions We’re keeping could a and priorities. close market our how they watch on evolve capital

let’s move on our So to outlook.

we withdrawing we’re guidance. market full provided Given provide of time, our clarity we specific the to lack year January, operational and in are quarter at this and guidance unable second

However, and transparency provide you insight into our is possible much our with to goal business. as as

operations let quarter sales estimate So versus second we’re me today markets. XX% than and you our share quarter what our be quarter. the end with more estimate down we seeing across down our second sales internal We first to

directives Our are market certain chain. supply main countries, our in demand factors and government gating automotive affecting

by car sales down XX% automotive builds second be substantially Europe. be year, expect We to to the estimated down quarter, more with in than led U.S. last and the

of that the we are. X Tier some experiencing in and, believe cases, customers their production are same our also inventory excess We shutdowns due many to carrying challenges

in our levels to On are of Philippines month expect side, we return running during in normal levels Italy and our the to production and the factories in partial at production May.

shut Mexico we on and in currently this continue These times evolve at expect in and factories safety in least and to late began Our through health based March often at mid-May. April views. and are local varying directives down,

critical many as essential work authorities produce to continue components with closely We we products. government in used

countries, government as and evolve conditions However, these as well. health the safety across do instructions

supply Given in exceeds ability current the our automotive these end markets. limitations, production demand to excluding

demand closely. continue monitoring see demand are and end reasonable closely levels and production We customer to levels

XX%, than be or committed our typical volume costs of operating many jobs associates. our not given beyond of margins levels maintaining running our our our at we’re the decline steep production. Though we’re higher to line, decremental income top the running full Looking current about operations and we’re to expecting for capacity,

productivity and We’re implemented measures at year compensation that and reduce all productivity in at operating we’re safety additional by due aggressive running of locations. we’ve actions world. expenses last offset we’ve also levels of some spend. And These incurring operations $XX reductions discretionary hits, To year. COVID-XX-related lower steps costs the our to million taken partial to around and full targeted these versus expenses of

spend in addition XXXX. our out in expenses the to took operating XX% of XXXX, is we reduction totaling This in versus $XX a million

As evaluate we market actions will needed. conditions other evolve, as

million $XX expect in expense to $XX amortization of a million of upper I We expense as interest And mentioned million. the range. for earlier, XX% rate the year, $XX tax

flow will disruptions our be flow financial the with free and cash actions the strong believe drive remain third to to ongoing starting again, quarter. cash this guidance production our expect with to we’re year. would quarter, subside continue for We and taking goal the after positive provide We performance

control economy, but we nor our can the can can’t we virus We control control business. the

our are We our take to while actions with our and of working confident needs employees, our to around I’m positive these all see a number balance of customers, to costs will us momentum recovery. start And and the the expectations of diligently globe, reduce suppliers stakeholders, a difficult we position had as shareholders. we’ve to

also I’d And time. Littelfuse to a every family. to around extraordinary thanks the unprecedented proud dedication and for they I’m by efforts day I’m of to our teams the add during our part the this a be associates world. inspired like demonstrate

turn And it for I’ll back Dave with that, some to comments. last

customers get will the Thanks, with Meenal. the world, and support of this suppliers. our talented hard perseverance, the around In our dedication work period through summary, we ongoing with associates and of

our learning’s going beneficial this to during will crisis be historical Similar confident business I��m forward. challenges, that our to

a through resilient Littelfuse times, remains challenging these we company. As work strong,

together, we time, priorities are for deliver high project remains will it’s confident at for stakeholders. and that difficult of there all While uncertainty to our level working by continue this demand we a on to us

for we’ll open that, questions. up With the call

Karl question Cowen. of the line first your from of And Instructions] [Operator is Ackerman you. Thank

Karl. morning, Good

morning, taking Good Dave. Meenal questions. and Two, I if Thanks may. Hey. my for

Just, inventory the end that’s the for I the indicated plagued quarter, business on an first guess, correction you quarters. electronics industry four see inventory. that Last to should nearly

Obviously, levels expect Electronics in supply with And I please. chain distribution and COVID-XX Or line inventory own of lasting follow-up, inventory point? of should at we the in second demand. half have the channel sell-through impacted a some But within in has Products the rationalization the your are this further year?

Karl. Yes, Okay.

about further have expected last in we the And markets that. electronics last a inventory about the during chain channel We in inventories we supply So quarter. in first quarters. talked saw weeks for we the several of quarter, the talked lot as decline

And about XX normal XX, range to stage. prepared as the at I remarks, talked see a us in end and to the range this at kind we of XX that XX we’re of the is low for very

actually taken that there’s So further first was the inventory during quarter. out

the We’ve of bottom reached that. kind side of

So time portion market. believe that business we any at of overhang the in inventory this in don’t electronics kind there’s the our of

are those However, get challenging order above They’re to Book-to-bills patterns partners, are arms our for distribution our us. coming little more around. a for clearly in partners to distribution one. your one above

coming believe, but forward in buy requirements, of case disruptions business some efforts are our those those, to further from also there of essential Some we in COVID-XX.

they has limitations Got think the in seeing has ‘XX, Italy. this the than downturn, last the some done That’s being in of downturn with higher as it. particularly whole performed and had company were, downturn Littelfuse given I being and of the Dave, this you’ve margins Mexico than trough obviously helpful. much the better production a opportunity downturn and

decline the to OpEx half Thank $XX the versus second for As the year, half? for planned year, expect about we spend you. should million first being we curtailed the to discretionary half given second comp think and be of of OpEx

Yes.

going views on million we’re So where year, for full based quarters $XX benefit that’s we at right seeing. which right And reduction current we’re Karl, demand now. what our is on now, all to and the the about talked

a Having year. eye, for cost to expected what start we said quarter look than see we’ll the and continue actions. if see to or in that, means of And the absolutely second close continue that deepens, the what it we at watching further longer we’re to the disruption keep rest happens and

please. question next our take We’ll Karl. Thanks,

is next line from Your Longbow Nick the Todorov of Research. question of

morning. Good

up is Gausia at amount quarter? This on and they the the the Nick. much for there first second in would much way Is any morning. quarter dollar good how estimate Chowdhury impact the the build Hi, excess inventory of it auto to how OEMs,

burn on I you a then take And to long think take? any inventory. would it significant you’d estimate that Is off expect said of had amount there how to that time

on a serve, It’s a serve. we question, in the we Yeah. get because, great answer OEMs Tier difficult global serve, footprint very the that we one kind know, to bases the you of that customer have we a Xs and it’s an as exact

challenging. trying quite get So where that is picture to an of exact is,

when but really down we that build well our conversations is about global However, mismatch XX%, there what we see. that you a car And know increases content several do were our know we there. that over is track see from is there there. And was X% down revenues we inventory only yes, that,

I really estimate two, quickly there’s that could but out speeds, ramp-up weeks And channels automotive. second think quarter. that they the out come quarter, much in right come three now we out, take their in may third how in of it the inventory of some on maybe the probably depending would in extra

think two exactly to our belief it in that is. But is of it’s challenging kind to So I a see weeks it’s range. where little three

I then if then with returning, you if you China trough within And that’s of could then by the second being the auto, any with region, also do half and in looking especially about Great. you. been year? normalizing And could agree quarter likely auto? the color Okay. provide ask back Thank how the

trying car and a quarter and certainly, to QX sort to reading we regard exacting pretty you project we’re challenging same that. pretty to get to car difficult talking same materials Sure. people to with of view all the all It’s the that. on with to are be regards expect that build. builds Yes, But

pattern up. China. mark back customers Yes, the to China is from demand question in continue really beginning to The what’s end ramp of the is kind

Europe quarter to North back see the and kind drop continuing up steep very second of of it’s obviously, we and the during ramp year. the back America, do the into So with ramp half shutdowns, that off.

as already, actions about, as you to West. the operations of in seeing some trying We’re up they’re back open the too, slowly read

we expect is quarter So likely the trough. second do the that

a think fourth of following the is challenge on and quarter, that wildcard that, just Third take as take a expect That’s It back just bit to will through difficult be more crawl quarter, well. a how slow project. is buying the the economic year situation global patterns. we bad I to this it will the year. Really, than how that impacts little

scenario what years be build from plus meaningfully a But with in around to get perspective, is were XXXX, expecting two be range we’re the probably million for improvements we’re X scenario vehicles to years to ago. we XX but going planning it’s planning car certainly back X, to maybe in where down of the year,

of So that’s I kind think our view. current

We’ll please. Gausia. take Thanks, our next question

is line the Oppenheimer. Christopher Your with Glynn next of question from

Chris. Good morning,

Hey, morning. good

word your of lot going a through work and doing activities Dave, you the an you activity I going describing you’re think on. luck good used term interesting design-in elevated this. like sounds design-in good had it So on?

base? elevated, use could pulse game competitors Wondering the your customer Or smaller just way of you cycles dive little if innovation design bit? falling is and kind the a kind out that across the of into of of term it are

or is off certainly design It’s a where, bit had activity to and own discussions been things engineers, both time area as that, spending engineers they’re fall working well as like Yes. we’re would from lot for our as design-in off home, application of home, maybe customer from in concern where create fall and a working would start of activity are would challenge because Chris, an our engineers us. design a

of that. time around spent we energy a lot So and

to customers. very training, lot hard for our engaged, make We’ve lots of lots work that sure a using very much application are tools, our worked doing teams of of

So to segments. the our across sure level receptive a really right our to And experience customers make try engaged that probably level. elevated very at we activity we’re from seeing we’re

think backside kind are core over experience doesn’t time, pandemic doing to lot they with. to When of else a someone probably look base this the without outperform challenging likely design-in to a of is the situation. opposed Our absolutely in that I worked years our goal to of less that And they’ve on with activity. customers happen their yes, supply more experience have you’re as

of the well we probably But think across situation. So pleasantly activity, board. been kind of level with we’ve think side our design for advantage. And bodes the to on I really ability the that the our back of surprised it worked to outperform

view, of about that. little here, individuals for Thanks And out just terms and mandates could stipulated Starting Curious around. hear coalescing just are that. to of playing had distancing a I if of of give more a how you in then versus unique question of measures Mexico. your Dave, the both some the characteristics there decisions that are culturally

Sure.

quarter in implemented the great China kind first we on. the We of early the in early the a deal work in actions challenging We trying to China. our learning’s those to these ability situation keep to all, difficult and and globe learned in of safe got across first to so return exposure And employees from environments.

itself. outbreaks Mexico or have or fortunate or before Europe we no date, in areas. employees Knock in it’s virus Philippines well whatever kind who that U.S. whether the happening actions, took wood, the on were reported the those in getting we or So we’re fact have quite of to

on fortunate contribute actions to think we’ve that. We and So we’re has maintained the helped that. taken

dining make we in The output weeks, to the requirements implement Mexico, reduced situation of of of several within distancing literally you in in in instance, last like really area, things, per our proactively, have sure factories, production within those the had could person that and shop had things where some Mexico, the our a we floor things. facilities, as bathrooms, well dining one table, for those as types sorts

for we a scaled audits, they passed So lot the in of those very order to things. governments we Mexico, already actions back And comments operate. in and in had to positive safely of and production several But your taking. were several we’ve passed feedback we accomplish implemented of had our those we facilities, audits and order local that do

week, they much on seen more We’ve regional deemed assertive position the in the Mexico take a just essential. what governments last

have And equipment so they really medical food therefore, been mainly and on focused processing.

strategic therefore, so place. they’ve controls And in implemented more

and we’ve shut have so down operations. those controls, So heeded we our Mexico

But and seen that gone we’ve other things, the rapidly through very world when day-to-day. what changes we’ve of those evolves in parts

to come will care from emergency happening in Mexico. to that have and And and of crew people the be take expect maybe shipments. to in there, it ability so we skeletal then Our scale

manage to supportive we’ve our very access Our we try when and Mexico in of how proactive teams been them very can. to been we have because in operate keep safe

very So fluid situation.

expect of coming through in kind weeks so way We it to our work the

next question please. our take We’ll

Our is Loop with next line Harrison from of the Capital. Shawn question

Morning, wanted to second expectation some see finer then about the number the auto quarter. would destocking your first If production in and in content the quarter. we and just use everybody. terms you to it, that for to business of try employ I thinking IHS overbuild on point would the the be

quarter? potentially And production here kind to in year-over-year. it best of so underperform that out about way you decline how of would the troughs the in Is June terms think the

Yeah.

everyone fluid a I certainly the situation by And possible. very, And think different it’s customers. way, with a in just position. is very our it’s

are are they and shut they ourselves, Some in of where like operate them, can’t at operating all. down, Mexico

that that place during of put inventory of is growth But second that yes, during car belief and access our I was possible could first certainly our those the underperform build in quarter. quarter, because revenues think kind the it’s our

we what don’t To extent, know.

the and highly with gaining confident gaining we’re still our products, that our fact we’re applications in content. We’re

that. see where there So certainly or a quarter we’re could continuing to things again. two mismatch be But

could terms the have relative content production over remind past been And outgrowth of in auto me, what Dave, you averaging to few years? you if of kind

Again, the we general, and in is on depends very like OEMs car build. a that things and increase from content kind But in changes that. growth the the it X% fluid region, content expect range our beyond of

there of costing how That’s on is I here maybe way in little Okay. is late. And shutdown quantify I’m in sorry, bit a it, dollar June the helpful. the call a Meenal, in Mexico much kind the you then, got quarter the I terms But missed of amount? to

of quantify, greater dollar decremental to company. normal quarter? offline of just this a kind of kind impact Mexico the XX% what margin the P&L highlighted you I means than of for know the being maybe to But being

Yeah.

situation We because And daily Dave we mentioned by at earlier, now. quantified states. the plant different Shawn, so have on this many right changes haven’t frankly, we basis a different haven’t plants

So again still while, skeleton day we extra days. door with next product start some the happening to two were few in in that the could an screws, get cases, operating and out for or

I point. number is give be any this wrong to at So you going

our in is are in plants this this now. right not that state with Mexico, So of production situation, any a partial but just

period? would another Littelfuse to you it time ask or Maybe to decremental what way kind given without any for be expect shutdowns across is, normalized of the incremental

I’d little incurring shutdowns, lot of attempting Those say we’re costs also the it’s estimate. to in a to a now, other plant COVID-XX right because tough also addition we’re change. that

shutdown perspective of lot on started because through Some I slides things from talking the costs, flights product of flights. bellies of production, international a I near freight from a about that were freight the the of passenger our but and our separate mean,

right every as continue and costs to up goes they go the week So are freight through now, by. roof

and And even lot - right Dave with talked safety lot of our these plants about put a place. operating in are now, we protective that measures a

So us other of that that’s at running, gamut protective well the the of two those or terms of number full not and running face as are not masks as a right? of just equipment out cases, One productivity, it’s fronts. supplies there. lot on a We’re maybe there full people in cost in of we’re for shift typically is the just come cost the

quantify the that incurring and to it’s of right change. factory totality it continues now, a cost hard individually in in we’re a the to business location or a So

than And the worse typically situation decremental XX% in a certainly, environment. is it would be normal

Okay. That’s you. fair. Thank

Thanks, Shawn. We’ll our take please. question next

the Fox Next question Steven with line of Advisors. is Fox from

Good Steven. morning,

Good morning.

is think up serving advantaged. you’ve in you’re Do to disadvantaged how do that and see everyone boat? same follow maybe competitively? some the of in or it now about When customer compare Or regions, certain you on that. you in a shutdowns the Just where manufacturing had, find issues you does

quarter? mismatch And this from think like that may just you. think a risk there ramp-ups North of cover that, box have their you out is that? and about a potential you can with on top your Thank Europe America significant Or of the needs you as customers, do in you

situations these all maybe over four a very extending for when fulfill standpoint, or it’s three very, demand when last months time. right? that situations experiencing or that’s not at Because fluid, competitive a the periods From are those plant, can’t these Sure. shutdowns that we’re weeks. particular maybe we on typically a They’re are situations

we our back better. of So extra actually most we we in worth China, and our the including respond in had to shut and had an ability and of of down because weeks’ shutdown, in couple China of ramped react competitors was where outperformed up, to like competitors, case

probably we of that gained position sort I So actually some a think situation. during

Yes, making we than a that’s maybe certain in reverse that Philippines ramping a quickly might XXX% but there were it’s we’re a production lines product that at month kind China, up. back that to in less the where making And competitor be are are of ago.

really if low competitive for that. there’s aside the ramp you clearly, we quarter, the talk we’re our in support think of the your in quite car on of the that electronics prepared the the stated side. as to demands risk side, remarks, where passenger business, don’t because periods we during a question world up, industrial So to of rest set times part second second are We of sustained concern did the with dealing on regards us

dictated quarter, During the our be to will second ability by our revenues produce.

orders of expect our course the and that quarter. rate during be ability the second be We out. quarter produce than the at its way will will a works that, during do demand So higher to our

end the do will be ability of patterns. we kind as demand quarter to that that above So produce our expect probably we

see So sequentially, we’ve that that’s numbers. to That’s in be And outlook kind short-term to done things on kind that of that. in reflected modeling we of high the expect down range. level challenges this those XX% do of reflected kind and in

very helpful. much. That’s you Thank very Great.

question We’ll take next Steven. our you, Thank please.

The next question is from the line of Matt Sheerin with Stifel.

Good morning, Matt.

morning. thanks. Hi, Good

on kind two up if, at you’re overall particularly as to and numbers big it cutting in the back at a get two that the of or to cost years cut consolidation any I of of following Dave the that But the company, Just infrastructure know OpEx. looking efforts, terms taking are to footprint? looking your unit year to you saw three for says, takes you of a auto ago,

or And I end of integration the in IXYS. know that middle also you’re towards the of the still

terms So at? infrastructure anything portfolio overall you’re going that looking on the in in of

our about, people openly talk workforce employed the near during on with call the to We those couple have, priority We think you A it’s do. fact our and Matt. of and of term, right? pretty our that. right like shutdowns think things things keep the Sure, we the with to that about in thing to

things. So doing those we’re

are we’ve at of level. in may after However, periods, if lower and through also ongoing as the actions longer to staff kind and sustained we revenues periods of these a level employees are resize with term straightforward our that our take we to have lower well been get levels yes, a reduced if shutdown demand lockdown our organization to

do won’t we take the mean doesn’t need if it So that that’s case. may to We actions.

fact earnings expected little our going than going about our talked we’ve coming year, we be because last working talked was that performance standpoint, for be we in this fact, hoped year fact, about were the to had had into bottom we the line footprint work a we less on. for a call, actually, From we to this footprint

IXYS that and work too. business, certainly our work of and bit of for that that’s planning that, little work business. business, is footprint Yes, the footprint in continues the industrial the about with there we’re be a on talked in doing our the auto We’ve footprint to the ongoing. integration certainly semiconductor also contemplated There’s side side

So we’re always looking at those things.

We have activities around those.

things ongoing sorts an those about talking be to basis. us on of expect So

to heavy kind very and given And local imagine Great. is production I this difficult environment, do mandate. the of Okay. in shutdowns lifting that the

So I over we quarters that’s should guess, the next something, then? expect few

be around so. Yeah, time hard around, in like patterns a If bad, right? demand to train a things you’re moving And and pretty I but And and think period it’s it’s you’re to are it’s and people lower, people. things great in good where that. moving

and accelerate other are lot a sorts So a if have that times people of where and try little them we be got things. keep one they may projects these other coming during from be just to out but you where, to the of the practicality projects try those to there to can’t country of, delayed bit, possible, of country we moving,

that the be we’ll next about for about M&A from years. strategy, likely, to our next But several see the for several us. yes, is expect footprint work be We’ll quarters, sure for that this talking talking

electronics Meenal, what lastly, percentage Mexico tell auto represents just footprint, And us that revenue Great. the the the you segment? of regarding for and could both

Yeah.

So parts service and also they our our our our Mexico are automotive of electronics plants segment industrial segment, segment.

But a it segments. heaviest products cover really From about our they services So it’s perspective, say all is the the the I’d around company about auto. or of sales. XX%

Overall.

Okay.

But it’s heaviest auto. in Yes.

you. Thank it. Got

please. take next Thank you, We’ll Matt. question our

is the The next of David Baird. Leiker from line with question

Good David. morning,

about thinking Obviously, kind of expense about Good to significantly around I expense This the question Welcenbach versus David. thinking of declines. just reductions specifically, how SG&A. engineering sequentially. pretty guess, of My on was is the engineering morning. you’re for And balance Erin is cadence OpEx the down

of think Dave. activity of business that level So kind balancing mentioned, the new just with about the way elevated to you

Sure.

Let of about reducing activities. of and little perspective, From absolutely expense talk me R&D engineering an then the our rest bit to R&D respond not and kind the it. let a we’re first side side Meenal R&D

long-term be So that we on opportunities the continue to we content have. very introduction focused and

So our quite are strong activities there.

redeploy there. that. draw our engineering There as bonus has things There simple are we as the actions have took on the semiconductor actions that changed a out we’ve specific us take portfolio, of cost side particularly couple allowed and taken some that our some program, product semiconductor side been in so impact things to to power of an our down and have we suspension costs some things like as

for reduce time. cost sure, over area But it’s looking we’re to not an

And to increases there. time, percent the us to to the probably R&D see side. in continue small investments We make over in of look in expect spend fact,

Meenal, the about maybe rest. talk can So you

A it a of as A about SG&A lot from half related we’re of year. well is first Dave we’ve - of lot my the Yes. reductions And program now, discretionary I’d talked the made, the temporary cases, heavier in to it say of spend. lot the piece, reductions just compensation projecting bonus right as compensations. on comments,

spending lot money, going the where traveling, trade a right? aren’t you’re a we’re of see, cuts you’re where to to that, not people from. that’s if things And like lot So that’s of not to come continue going shows,

faster in of bit Is things that more quarter, a pick to it pick little more but continuation continue it the that up it’s up reductions see half. on we half year. the a possible spend slower? the of in the in back and kind little Depends we the than start in of how Is third to back to think, going

question. my taking for Thanks Great.

We’ll Thank our you, Erin. take next question please.

line from is question next the Our David Kelley of with Jefferies.

morning. Good

Morning.

I Just you action macro year. were of this transition given a previously changed targeting quick believe Has discussion. $X.XX $X.XX follow-up the footprint to the on that disruption? costs

delayed but a are It to get still macro of some plants, moving with they I cetera. say good of might local be disruptions. would But forward estimate down that $X.XX we $X.XX because with now. a the et little is at bit just them, the some right XXX% of mentioned, absolutely Dave disruptions because may of all the

Great. And the auto on following excess Thanks. then just discussion. up inventory Okay.

more towards China. hear that more But skewed to heard from curious than the you’re seeing something if like broad globally. it comments, Just maybe that’s was We’ve it’s your from that. sounds others build

electronics your as have we some embedded your sales segment. into think auto auto exposure, then you And about

if there curious as well? Just impact you’re seeing the

that Yeah. traditional parts build but in it’s say and What vehicle electrical it kind the is is in world. I probably of infrastructure China that I heavier other and of inventory our sensors than in would of seeing would we things, are globally, the kind automotive, the say of

think do probably it’s skewed So Asia. I towards

through the in channels automotive Xs in distribution the electronics. the of our it We is little components. of fulfill reason less electronics, being electronics And automotive see a choose Tier to many

that and they’re through And flowing have of case, disties. the in coverage through kind they

seen haven’t side where more impact electrical It’s infrastructure we that seen on that there. the we’ve directly so And happen. it quite as

the just couple to March? potential then you. weeks any that to-date? I QX electronics flow even me book-to-bill, pass have Could pullback? pre-buy. Thank of see Or last about strong Okay. before you along. last Kind seen And discussion, of get substantial talk on from any trying you of of Great. the one Did order you changes sense in a

rates order second a first the But perhaps of the book-to-bills quarter seen end back still, bit above We’ve slow one. quarter. that into in we have well Yes. the and are

have conversations We senior distribution our at partners with folks have I conversations. pretty regularly.

to and at where for then times while. a they after And them they’re order maybe somebody see bit orders continuing places in patterns. They push see relatively do strong they out have a

changing little but a So pretty bit? is it Maybe, there. still out robust bookings

Great. right. Thank Appreciate you. the color. All

Thank for questions, look forward with you your We safe interest David. healthy. to joining us call your Appreciate and again today’s Be in stay on and Littelfuse. talking you soon.