Littelfuse (LFUS) 2 Nov 222022 Q3 Earnings call transcript

Good day everyone ,and welcome to the Littelfuse Third Quarter 2022 Earnings Conference Call. Today's call is being recorded. At this time, I will turn the call over to the Head of Investor Relations, Trisha Tuntland. Please proceed.

Good morning, and welcome to the Littelfuse third quarter 2022 earnings conference call. Dave and and CFO. are Sethna, and today Vice-President Executive me Heinzmann, CEO; President Meenal With slide in Yesterday, quarter, our of and and reported website. a is we results copy our for earnings section Investor Relations the our third presentation of available release A website. conference on today's of will also webcast available be call our X Slide to advance our disclaimers. Please for

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

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

Let's third start were results, which with our of an above quarter expectations. which delivered We Slide recent highlights. overview X, strong provides

quarter, China wins, and by organic COVID from growth revenue outperformance XX% of our of achieved recovery growth progress Our the operational second growth was despite on a business faster-than-expected and and shutdowns driven from headwinds. FX continued in global initiatives. X% We

success, highly-skilled we to and particularly outcome products quarter. continuing targets. our the broad our long-term market-leading growth of proud world to to our earnings for and and the acquisitions like around our which margins thank above people our demand tremendous associates outstanding I'd another range customers. created of have I'm deliver of an sustained capabilities is solutions expanded deliver We through while strategic our for

strategy, global which the to of Our year-to-date our a growth Slide on X. power markets our is end and double-digit across our performance, sales including breadth earnings execution of team's testament and is record shown the

markets and and for structural We our we growth serve are organic safety. both acquisitions investing connectivity, through organically of the and end expand sustainability, within the growth, growth themes diversify to opportunities

As markets increase to content in geographies. continue and result, our and share high-growth gains a we product

date returns. to and will color long-term on provide achievements ongoing strong profitable and outlook. significant growth us top-tier position fourth for Meenal Our our financial performance shareholder quarter additional

goal we on published Report our of gas Sustainability Last is manufacturing to a reduction greenhouse goal, this To website. which implementing been accomplish by our audits X, XX% plans. a conducting Slide and at energy available help to XXXX Moving year we've we all on achieve set XXXX. action locations

development, double diversity, than and by percentage these on the efforts focus of black We with talent our to water percentage also our conservation around support employees female initiatives increased our our our our goals, States United lower reduction established belonging. XXXX. launched of additional and intensity initiatives, we and levels to goals contributed We XX% to and and energy increase programs and more our which to waste XXXX. investments inclusion and in leaders in around African-American expanded expanded global Consistent

the to robust are a achievement. long-term committed are We of proud value ESG our strategy and of

across dynamics and from some quarter, channel to solid end-market and of with I'd get customer, partners set through market, seeing. the distribution highlights into a we POS like demand our channel markets. Starting robust broad is Before the discuss are sales we remains

centers, industrial safety, applications, with and, data building connectivity, aligned telecom We like vehicles, enabling safety efficiency, have strategically and electrification ourselves of energy infrastructure, infrastructure. automation, greater and sustainability, factory charging customers'

products. appliances demand personal consumer-oriented life in As and like discussed quarter, to continue softer we last see end-markets

our seen our range from of reductions China. experiencing products target are driven and of levels Industrial are we vehicle and operate below Tier X.X, inventory year's target to rebalancing book-to-bill lead-time partners. This of some book-to-bills Xs electronics inventory Within also our above in quarterly we a channel continue leading some electronics softening have are continue end-markets, our our unwind inventory one. partners, our noisy product distribution our We Within broader running sales. is by partners, our in more Across last ranges. around passenger to solidly is and distribution within our recently fluctuations in environment. build inventory to global

auto do chains next year. to car supply we see improve, to global build and expect continue stabilizing production As modest growth

themes electronification, growing and market ADAS, the outperformance. expect of long-term electrification, continued we With

industrial X, Now our in markets we sustainability. on design are focused end Slide end applications let's our move to highlights on expanding on presence wins we in serve. the markets Within and leadership

kitchens systems During continue to expand chains. the with our our storage and third HVAC. safety, business alternative of for offerings and designing In of energy residential broad for captured energy. the restaurant and positions applications. we systems commercial In efforts range electrical commercial major business area safety quarter, for secured our market

reputation sustainability general With industrial automated business quality. business customers and leading to with portfolio, grew technical content drives, We continue increasing diverse and intensifying in equipment product motor infrastructure, expertise are applications our their and our our this utility with and for industrial electrical secured safety. also in and given focus I test on expect we

on Turning Slide to end-markets our transportation X.

of leadership the and electronification in our growth vehicles. increase vehicle the leveraging to passenger of both market electrification continue We

Over automotive range electronics our across our the business. we have our especially businesses of of portfolio all from technology our the expanded leveraged offerings, years, and

of years. growth. supported seen led result, three this double-digit design content a $X. outgrowth vehicles average has last content to As over the have across wins to we content year's increasing This continuation This

Our our outgrowth. expanding double-digit support ability opportunities extended portfolios, our that new continue and pipeline to business of

management onboard quarter, our the the technical our chargers based with And battery strength OEMs we in business portfolio systems. on captured of key business During third substantial in leadership. secured the product

the opportunities our The off-board content. portfolio vehicle differentiated power and grow new our of C&K C&K products For further significant capabilities and fuses, addition charging, our expand relays, switches of electric secured product semiconductors, like range engineering will from acquisition business. to

high-growth to applications. to forward tremendous our playing products a continuing vehicles, enabling ongoing our to is Company grow the with look transition electric With leadership breadth We our the role our of that are global customers' with multiple them on and solutions and based with long-term telematics, and OEMs we applications. end and in electronics, for automotive our infotainment, vehicles convenience Within market. comfort innovative passenger our relationships secured this business

We also safety. an captured on wins ADAS applications ongoing with focus in

In addition, vehicles, markets. strategic the we in start key won business stop commercial flexibility. in In our buttons speed captured end interior with and business C&K to we vehicle

the trucks, Within of breadth performance with secured several wins products Carling and based portfolio. our products the legacy business on of of as as well we electrification the

and our systems, management telematics, switches. C&K systems keyless grew for business two three-wheelers For we Asia, battery and electric in with

secured on a our For trains, the construction business strong market-leading we and our solutions business products our ownership. In we based lower equipment, in of breadth won we portfolios with and trucks, the with relationships cost Carling our of across businesses. high-quality railway heavy-duty won traction. In project

significant well in from strong Given wins portfolios positioned for transportation continued acquisitions, capabilities are long-term investments our business expanded growth. very and we applications, including and

product Slide requirements business end to on Moving opportunities drive X, connectivity wins. electronics content markets. continue new and Greater to

quarter, for product features. building our third on systems we business and the data based centers During expanded automation

captured push With bicycles. and business and the battery tools we ongoing in power, towards sustainability electric power

content we for secured safety. within range broad expand infusion safety, are to our pump well-positioned electronics a sustainability, our centered we of Switches. across to With with application medical extremely C&K applications business also connectivity, As wide pertains portfolio, it our and

markets Our, significant range a represent end have diverse wins new business been and applications. of and

our with to to to and return our the color see will coupled growth also activities focus acquisitions I that will as additional customer's from pipeline opportunities of our financial to on and sustain we now Meenal build We our outlook. long-term engineering growth. continue the business We development. identified new new call enhance organic teams turn fully expect business new performance over provide product the

us Thanks, Dave. and for joining thanks Good everyone today. morning

Let's XX. start Slide with

both year organically. on sales We of last quarter. continued over up the for Revenue and X% earnings million, performance $XXX exceeding high-end and up our our growth XX% third and strong the guidance was execution

operating operating EBITDA to were XX% XX% were XX.X%, and Our trend C&K margins Switches reduced target. GAAP Adjusted XX%. EBITDA foreign-exchange Carling added continuing revenue were XX% our margins above acquisitions while margin margins X%. solidly adjusted XX% the and nearly

share up diluted year. over earnings X% last quarter adjusted Third $X.XX, per and $X.XX was GAAP-diluted EPS was

topline continued our ranges target this long-term and Our quarter. above growth again margins

cash to to focus pressures, cost elements allocate inflationary range. the with capital we lingering strong ongoing chain EBITDA generation balance at last we offsetting and cash year. growth target flow, generated capital of including and investments as cost, in We hand on price to million of We our $XXX competitive cash on $XXX can $XXX debt We've free in generation. on continue positive advantage million versus quarter also for of also cash the and flow a our low of control We vectors sheet a acquired our growth challenges. quarter, we while shareholders. the our flexibility up to and several invest supply and of for the return cash continuing net remain us to to third XX% our is ended leverage The record the in end had businesses. Through operating strength million provides newly another continued quarter

vehicle the Slide Commercial continue Tier within over of growth at to Let's XX% year's continues by outperformance and segments. solid by XX, XXX over trends we robust acquisition. Operating both XX% volume Passenger margins across margins generally electronics, X.X% vehicle of on strong move organically, EBITDA grew build. with organic EBITDA nearly On to margins was points. remained our included XX. ongoing margins third-quarter unwind last Transportation continued headwind basis with on along to In Slide organically across FX X% XX% to pricing segment. segment commentary up X% of performance Carling different last ongoing year. and be tempered nearly our Operating see flat inventory Xs our X% and

expect over initiated actions, inflationary in us our efficiencies, a growth segment across still sales prior the pricing margins XX% on quarter. outpaced organically vehicle broad-based number efforts. China is and to over as focused cost-reduction Operating The offset passenger - exceeded across growth in with the within points. trajectory driven on the expanded let margins quarter. continued EBITDA from up Slide price XX% our we've recovery is actions improvements both While and well in quarter. basis our these COVID segment Year-to-date, XX, to business shutdowns of sales fourth we XXX realization. as manufacturing We've inflationary margin pricing XX% costs, swifter actions segment and On strength see XX% Industrial impact end-markets

normal Turning and run-rate to the mid-single-digits. the quarter seasonally forecast, sequentially has Slide down sales our XX fourth

inventory within rebalancing incorporates Electronics Our some levels. forecast of our channel segment

We unwind see varying And them as we've incorporated continued within segment. also expect Transportation we our Tier signals auto inventory today. the X economic

$XXX exchange. of was foreign X% both assumes in full year's range the impacted expect which quarter quarter, the a X% For X% organic adjusted to midpoint. acquisitions XX% up at from week. fourth last we $XXX assumes XXth the from year. last to negatively for year our tax We're million, growth from rate versus also XX% headwind up million and in sales XX% be and This projecting $X.XX range an of to by fourth EPS $X.XX Growth and quarter the about

included $X.XX year the a last XXth tax from quarter a additional fourth holiday and week. both benefit Our

in added margins Excluding dilute year, up XX% our well basis at reminder, are they implies midpoint both for adjusted XX% full-year $XX.XX, over operating share And The guidance implies last portfolio to of of we've of the last versus quarter XX% year records past these billion year. substantial about one-offs, points and This year as acquisitions $X.X XXX both two would earnings sales be Company. EPS growth. the over accretive, over our earnings growth a midpoint. last per sales adjusted fourth and just the

Turning full-year to estimates few XXXX. Slide XX, for the a

year. positive Our forecast for incorporates price-cost the

interest We are expense million in $XX and amortization $XX projecting over just million in expense.

of our around for $XXX XXX% conversion flow cash the We are estimate a million capital and million in forecast year. a to $XXX expenditures free maintaining

achieving sales towards top-tier summary, XX, acquisition, we're to organic and objectives. million XXX can Looking continued earnings We've of neutral points final ahead sales and to XXXX, headwind growth. margins our to Incorporating versus current earnings be outperforming generally exchange in $XX on million. the we rates. estimating for projecting driven expense are our with We're progress expanded XX% debt, changes a growth it based year-to-date, on resulting basis I'll exchange increased year-over-year that, And C&K we growth we've back XXXX Dave year, expense XX%. to adjusted about of turn to tremendous for And strategy on last estimate five-year XX% areas we and and our some making amortization interest XXXX $XX around $XX at rate of In control performance with rates. current comments. interest million foreign Slide

talented for sales end We've in overall successfully summary, and earnings sustained have time, the presence growth, delivered markets the Littelfuse and throughout over dynamic Through growth, honed XX, our Meenal. and and this our resulted manage through the leadership profitability last Consistently target years, associates, year. our Slide of high-growth playbook on in have annual our record managing strategic the prioritizing long-term compound organization. resiliency expanded this excellence In while record to we growth. and environments, of Thanks, strength business double-digit our investments cost has operational of strategy, investments structure. performance model improved several

our the resiliency business. us of stakeholders. of I our earnings teams, continued Q&A. growth growth to the business, last to strategy, double-digit value and will and investments diversification With our for confidence that, years, the positions which X, of success turn the This attractive deliver gives operator all the for in speaks prioritizing leveraging in XX call XX, and longevity over back the track experience to ongoing will us end-markets, our of Our and record, sales, our

from Instructions] line Stifel. first Matt of from Sheerin the question And [Operator comes your

is line Your open.

visibility give everyone. the My and couple just Yes, in Good book-to-bill in terms correction electronics, could quarters, we at Could seeing the any regarding when channels. thank you inventory morning us tell you a see was you're about how out, was you that that us question that out? you you. mentioned first - there also distribution of idea what bottoms below of an that talking X playing is and correction

Matt. Sure,

the of to robust. is, we're So talked point-of-sales behind bit Kind softness. let me softness beyond pretty side baseline some and POS the in of that China, But with continuing pretty start be our on a with in electronics partners about book-to-bill. in some little solid seeing of bit from that our through things. - data our types remains a applications consumer-facing general, channels We've distribution

- some bag driven look at the fact brought bit of you that a going it's our If a well below products. lead Really, it's down book-to-bills, of times passive standpoint particularly from by our we a and one. is it's rebalancing little the bit mixed on, there

book-to-bill of rebalancing a clearly there However, our still around the products things on bag are side some so a from of of semiconductor mixed remaining there, partners. seeing one, it's we're so there the that some bit is

have As or it, see would us length like and far look back cycle cycle as of the history different, not think I exactly it's of see the look things I'm we that perhaps bit and that, that the might might into the visibility But market rebalancing we any how of kind what this the to say. long can sure so dynamics great in a history what length like. are not clear in we

on are the - the Understood, your of that's helped on the okay. bookings perhaps higher pricing trended And ASPs pricing But what's your we back next topline. what some normal? I and seeing And looks as down, like? year-on-year the and year know your you pressure then have for into ASPs, given get OEM coming costs environment contracts take your to input on

there Yes. the I And costs that different coming are different from pricing segments are still down are would but business. that there across our are of of up. say course environment going input some a it's others

kind dealing headwinds that not would we're inflationary say So I of with. we're past

So of kind of pass that environment couple in have of when can. of the The successful passenger as along side costs we've passing the of In those, move industrial we on this, side, multi-year in it's car we pressure the will to that quarters, change electronics not and customers seeing we've forward do there. seen where pricing where passenger are in changing car those along really see along pass next changing the in we either. see about so on our are challenging to been We've particularly more those pricing much. the the we openly been in adjustments environment the pretty that sticky. along further going certainly in difficult some that able like side talked don't we've don't feel too business contracts, and We We to things. side transportation, the to get fact pass be made we those gains

about pricing pretty feel we So good the right we're environment now. in

question next Williams Your comes from from line David of Benchmark. the

Your line is open.

of quarters quarter my macro I the morning. question here think like out you execution. through environment, would of for question we guess, kind to with we some now, results very, you do the the demand looking in you very that this of gone see recession do what some slower-growth Thanks will terms - kind inventory on of be growth? of most maybe but obviously, expect to two the thinking be is enter congrats period about Good as impacted? letting rebalancing the if maybe segments where lots there's a me a And that if of first is which you're and or moving we three kind slower solid better-positioned now feel are a you've ask environment you pieces and of

Yes.

a it's think I question. good

we're focused outsized of and of time. segments about, growth have over we've end and that often periods As on kind applications markets talked highly

those build open shifting our those about don't electronics our side, seen of core business to So kind slowness. that that consumer-facing we strategy areas been has lot strength part fact is the we see the continue mega-trends small much. which see a we a around, that and already too of in the We've relatively of

areas. core So there hanging the pretty about good those feel environment we in in demand

are for going some work to side of period even through in be time all relatively in impacted there's continuing in the as the that, last inventory inventories growth little us not a XXXX, where and concern. a from side. going year happen that that's so, on quarter we've into much or us don't kind And We industrial kind some headwind the for to of Pass pullback that of the and seen of be vehicle there rate to fourth a a time their probably a built the bit into take see a way one that asset. any maybe electronics quarter, should that's quickly on but really continues to our that was certainly far or behind car car. passenger where kind As rebalancing, inventory bit commercial so that's leads

some the for the color IC Thanks this improving morning of call could and something period seeing Great. supply chain help kind about a talked is if I maybe there. curious and to Vishay that be you're content listening those dynamic just of? to maybe of that, around seemingly ease And bit seems that other that the inventory which was that - in if digestion the speaking pulling they that you're earlier had

of impact, it's of much relay our that while if impact on products, or it's base. some that on tight to Yes. of not we help to are the customer fairly that some right free using what it first I our look be other might customers. there impacts think types order buy really you products so that Clearly, areas more impact think different continue continuing. likely I are more us, direction, for and that supply some fairly things of complex us it's the sensor some our may - that headed is, some components across they our Are areas up semiconductors and of certainly modest in have semiconductor do It's are our but

in expect are could global up bit some may availability some it really year a and seen build like which So growth of of the driving so is coming by there. bit as a free and the that do things car we've that driven modest more in components that we help that, growth

Joshua the Buchalter from Cowen. question comes Your next of from line

line is open. Your

I last taking question. for response. of on my follow-up kind Thanks have morning. Good a that

are whether like want verticals. fair me to any get in to impact much your you're that how to procuring sounds Is haven't of able you indicating that it semiconductor who [indiscernible]. transport sort some of quantify products electronics of therefore and parts been withheld there or your customers is some way So to

Yes.

been absolutely look think two that question crisp on their customers back been of ability they that's give supply an I on if a in a produce wanted impacted or the to. Really, to I shortages chain answer and to years, challenging year last what impact. has to because our have the clearly

will demand and a begins picture. that economies overall ease, of that slowing with is bit less to think and little As that impact an balance I become

know driven we're we not coming if up some that by So the side, we know are from low freeing to in produce you and But will demand car passenger products, seeing ability major was that. of vehicles. like inventories the that's really dealer

into that of think will But. year. drive and do cargo we balance out next will the that So some the going it growth

I think it's a little difficult to say otherwise.

XXXX digestion I stepping organic growth growth. where gave the to to environment acknowledging you. in you bit is in decent way you've number business Thank through inventory X% of your a X% think you. now, I the had still that since grow target, it's in period would the organic period Thank of Understood. outperformance quarters? a still a last back an normalized guess going year-over-year been material right how to stepping above of guess, target the expect but about you're sustained sort back, you growth the couple and

we about organic when rates Yes, put out would to we we cyclical between the is operate and strategy, industry. expected know talked we within what through we that I X% a X% five-year a cycle growth say

about we're where times of very business I on to X% our over-achieving And good model. five-year I going achieving X% And to that our important think strategic are there kind We XX, going or the that about also what's last Slide of be horizon. it's depending slide, and look be that so of X% to on resiliency it some that in think over the talking we're may X% to where was at to well X% marketplace. behind that there ahead times X% feel

we a at last the driven that, XX XX over look And bottom-line growth years, the if chart. you years, last you and If it's growth. double-digit have top-line last or XX-year five over double-digit look years,

So and the our strategy I strength the business demonstrates resiliency quite think, it growth of of certainly frankly model. our

the we about feel absolutely So to positive horizon very X% it. X% organic over the growth

from Your next question Instructions] comes from the of Kelley line [Operator David Jefferies.

is line Your open.

you mid-teens good morning talk longer-term, And confirm taking actions The Hi, remind given about that team. margins my Thanks initiating to the opportunity you're if just that's think of could timeline you opportunities transportation, questions. us, transport bit I you the for outgrowth of those? wanted you've that the magnitude how and EBIT the referenced. in as say, can think about just The a cost-reduction case sort business that more process? also, of that still

Good Sure. Thanks, David. morning.

did managing we well actions we digestion inventory that cost structure that So, of what think few over its in the are inventory align and as a to our aligning talking structure which initiated bit inventory, and yes, little really cost the and production mention to terms our we and adjusted - their we've our quarters. we've reducing about levels what levels seeing to of being I really as own when next unwinding see our customers were we're some about through we're production the structure we cost

price. that we're about that's talked lot element we've So some we've had, I there've say, a that, other adding one the that's of would impacts doing, to things in it, that to but been I what say addition would

continue while really there's We with come our as mentioned work there. be cost still continue down, seeing some customers we're to that earlier, other costs Dave to up

so, contracts price of And lot and on we a back in coming there. continue on still the to - focus

we improve doing, between the in quarter that forward. and So that again we're fourth going to margins work expect

thank longer is Okay. how quick think And still Got now EBIT sorry. that margin mid-teens just so term? you just you. follow-up, it, the a about all in target,

is market three, long-time a absolutely happen and there levels do that car as margin shifts we're it's being for to Yes. you. margin. have example years. some the No. We also it's four production mid-teens a that there lowest Thank and Yes is mid-teens there been at long, of still in to to an is aligned and that one work know been

definitely way margins is other that we weighing back meaningful the a going see So bit the thing bit then help that's us we come a move the volume also and little just have drive trajectory to more to a there, on to growth continue in our some and going mid-teens. and back of to to as synergies Carling that's target acquisition that's the

Okay, a meaningful And more slide really your Thank slide, you. really one outgrowth got historical transportation. it. follow-up The double-digit thank X, opportunity, from here, then in helpful you. just step-up targets

You referenced you anticipated incremental referenced?. seeing here your product stronger business previously than share also market you new pipeline opportunities, are the given

Yes, David.

from would say by we're it's we're of also electronics of driven the segment a But our the a portion apply step over come three car messy kind while and been storyline certainly And the as is that's don't well - been segments, electrification electronics of of you business. in that us. three our all the think inventory that's inventory They for averaged years look - it's transportation out we we some I us to the really also at I up positive the coming seeing traditional vehicles, builds a of our passenger we EV years demand into and like a last growth dramatic have and outgrowth that's applications. from products kind a for driven rebalancing come that's over but as performance double-digit But kind and that some out look seeing world. outgrowth say out technologies our is, on the on our industrial, if couple definition content and outgrowth. the electronification, what of of of of transportation by strong last some come would now within perspective, going - years, I

us to don't So market led a we double-digit and in able we're uptick in perspective, market-share picking seeing years, space. the in think have year good auto to continuing outgrowth. the areas, a winning transportation share design electronic couple some an good traditional seeing I where to market-share that's shifts, are pretty make been up in will really about seeing see and over feel the be we're we're our is From but news necessarily of last if that of our wins components this lot performance you the outgrowth of

there on So growth content it's bit but just also mix there. a share of a market

positive good about feel So, it. and story, very we very

from comes of Junk next from Your Luke Baird. question the line

Your line open. is

with my taking that market-share specifically, combustion double-digit Good morning. on and Thank about for you be general speak what your morning that? then expectations? question if could is, content, that's you've is there or might lifting more think second I'm I'm maybe questions. EV assumption this around piece the the in to in content if on on And sustainability wondering the to of you. what cars incremental so a is EV ask some Thanks in And in we content, about a outgrowth cars, outgrowth and is I'll past hearing talked just transportation. of a it there change driving multiples start in follow-up increase

Yes.

growing of we traditional Electronics is would think has particularly vehicles, opportunity say, us that I I about the on electronification in vehicles, yes, side. would there as in an the say been, yes, content If uptick So well. for

averaged has EV, and $X, vehicle level is clearly upwards an to reaching kind content the being we on growth think all vehicles, accelerated and moving the So content double-digit the the pace in helped of about around our story across as adoption But of forward growth. growth now there average types EV of drive at us. for content that vehicles traditional up of and certainly content

sides. both for and vehicles, gains us are the larger there on aspects traditional but Certainly, gains we're So gains both on I are on electrification there think side of there's seeing it. on

but for the margins and Thank coming sale that. and called animate Okay. year to so Carling, year-on similarly are we follow-up understand year-over-year flat you fairly the just XXX just And look pieces in points other my out sequential of probably for a sequential plus one basis question then hoping FX, look change the transportation, driving down. sequentially that margin walk margin is - better want walk you to on then the the basis if

touch on put quarter, know if just expectation the on I in I for want is baked of lift point piece wanted just a guidance? So a to this, last margin but finer want fourth you that you. rolling, cost that, and what's as the to then don't to in Thank action understand into

go Okay, back questions. then start and your - I'll let so me on

I auto with your on a that's been hey, first really margins on heard. question trend, unpacking, little think margin what's the I what maybe going was bit

the you unwind, highlighted business, and one, that about also that have means mentioned, of two inventory So Tier impact couple a stronger they having combination in QX, the - part have of of past, the about the one would quarter-on-quarter QX the talk I say dollar maybe we've the two, things but to that. happened it's that definitely so this things, in definitely talked have basis lowered our a things segment with largely so Xs this inventory one. down. were part part footprint the digesting just into that that segment the of especially sales we discussion because impact, automotive point but across our we XXX be production most, impacted When the we Tier Euro that transportation the this of now that's come global levels they're was we that about and that as because I'd part and Xs

one bit that going margins. on back that piece content a of the And near-term having by cost the last just lower increases little impacting pace with even sales combination lot is So then not of the outgrowth the and talked past the just true, several combination lower that's that, coming of a a we're and though down, say really plus I've I'd volume fact about one. in sales price contracts the that some to working still XXX cost on production working to points going that on with basis our the our we timing and we're renegotiate them are the also see of because holds the quarters, it in call keeping story being working

addition I go forward. in So period the the and work doing we're we synergy Carling, only with with into to a we've around fourth improving absolutely we're margins then taken quarter thing with the the of actions would through of as going the unwind to ongoing start expect going efforts for time, some that cost-reduction

Your Silver the of David line question next King. comes from CL from

open. is line Your

first Yes. thank My you. Hi, morning good would the about your EBIT segment. question, I be guess, margins Electronics on

last a in about go mid-XXs. closer margins few threshold recall five I there to quarters, third comment maybe the over where quarters, to this is over times of up same five of believe a the comment meaningfully being maybe And, of mid-XXs been out think right, back of made don't I level quarter sustainable last and the fourth the if kind I that year the I this the time. So today, you past couple that you've was above of so quarters

ceiling you. relatively off, So And first in strength in segment? characterize durable Thank then forward? level margins you attribute you that going I'm just would or how that wondering, the the what would segment margin the sustainable

Sure.

able pricing, lot we've market that to through through we're lot doing there. going a going distribution. then We've So I'll what segment as distribution that's Electronics volume seen the conditions price the fact of - given because work about, that commenting and pricing quarters. you five - and especially we're say you What that adjust is - coming very in faster were on I volume a giving quarters or noted seen of the past that strong align few four of past way our segment, recap some talked you're margins given the and and given I'd the to growth the as just I'll was

the comes Electronics through margins the that talked was, be expected percentage to And We dynamics average have around volume, cost, to in positive now. strong those focus I segment what the cost absolutely mid-XX would as and given price and I even say well. it I about when positive price the

would being about target organic segment Electronics when try margin talking I've was we're talk overall that through cycle. about we is comment he growth. about margins Dave's similar talked to I - think the to about think what long-term Company We also closer to overtime XX%

us, especially on Electronics we'll of times in distribution, as know rebalancing business through for see margins we there still - I in a so segment. XX% are around where Electronics that little that is But we say bit. we would going And see holds because mentioned, move so going inventory target long-term

you switch question Thank My Okay. would next that. be about acquisition. the for C&K

didn't the out unit third for either that EBIT or impact maybe calling contribution So, I remarks, apologies - But accretion the its you during this. missed its I if quarter. recall it's prepared on

couple wins case where integrated within the going the as I think wondering segments, you acquired fourth if that is share? times, the you. that keep then optimal goal forward? quantitative maybe or the is of of so ideally this a functions acquisition would as said your particular business three So switch I into And even am was I to breadth be for what unit structure as appropriate might Thank at capturing or is important C&K separate maybe contained incremental longer-term segment - details the other a secondly, you wondering product business that

it, a can But and impact more about, feel the by and offering partners our C&K the and me our we bring strengthens take customer Meenal in the to we the acquisition, ability broader to really very way and enhances learn business financial we more base. it the kind to a Sure. and within It structural also and crisp strategic side fit perspective. electronics. it's switch from very it David, let good core like speak our the with of of distribution our business our position a

Electronics rolling integrated within the So up business and business. is being C&K our absolutely

that automotive electronics talked products as applications well industrial as of Now our as has traditional types about passenger C&K applications. into are we applications, in of sorts also car comments, being sold

pretty components that are many broad but electronic our is and end reach it way markets. So

will are doing So of business we level good capabilities the these their steps in into We think it I had have a right about and core absolutely be feel fully us integrating are and about our into already micro and and switching integrated, types stamping it Board well, very meaningful we not business it for enabler standalone. strength much we that of that, it. as will be so capabilities will our good technology and feel fit very

you give on maybe to a business? the impact So Meenal little can the color

Sure.

when so Switches bought would So in we of maybe And the comments, running learn well-run really C&K we C&K the company been XX% it's I talked year Dave's prior one about add, echoing Switches we margins like so that fact it about more about it. EBITDA much so. we or very of a was the

also be, our that we mentioned growth dilutive we to A, on for cost growth the can think the Dave to just as go even a do. Electronics a we business as it we at as a So bit think of it's improvements lot always us, that consolidate margins, grow structure within margins, to margins it's reasons through for we are Company margins and opportunities topline about there, there's will where dilutive segment the level, bit

margins to upper-teens that target align to that the years interim. do acquisition, improve so us little Our the acquisition margins few the I the the to about level, definitely years. combination dilutive few and but goal in C&K we two in really XXX for Carling the to basis is next next points, see mentioned in those profile operating between path company of work our of the C&K the

from David question next comes Benchmark. the of line Williams from Your

line is Your open.

touched notable or on? can here. want softness any you Thanks terms for that ask any China you're geographically letting been about there a even if particular additional did but in of color is just there provide - here, most just wondering color follow-up seeing and the areas to I anything me there ask if I have on there's

Yes.

driven of we talk kind markets think primarily talk served are the China. about and Chine, I by the through are there end customer Greater softness our is that when we about base

consumer-facing at towards split types base areas those we higher China, impacted our meaningfully. a earlier have products know and customer probably we of Greater been more and have So in

going profile - strong in drag there, on the been in by maybe that So general the on driven with has in in bit soft pass car some the car we car economy reasonably build incentives has has a and caution of growth China, in sure. know, pass been a is you think of China there's where for certainly growth China exception spending but that also demand just bit there softened a Greater China

from Your Joshua Buchalter next from comes the line of question Cowen.

Your line is open.

wanted through last be queue. to thanks in back And given of the on that actions. It the and conversations the support down we term? and follow-up what they industrial in you margin, any to cost allows these able pricing optimistic have was to come of letting for soft, wondering short-to-medium guys, quarters? Hi and some continuing changed I Thank cost --. me can digestion price you're Have that consumer get you follow taking and materially keep the hearing like I up be weakening my going but sounds should confidence the any several of to you. over of least distributors. your with the at in line you're

that I've industrial the for our of of others we side say, would seen softening speak First of I've us, I in not to kind all, have that. seen business. heard

of have focus we we for key HVAC, seen As energy, drivers us, softness of and yet. these power very on sorts as market not conversion, heavily renewable

that's - want conversations some much to really kind but very still is position the But at from POS the of of level. for solid and really not the demand their that's we've a partners, distribution Clearly, industrial side, correct talked haven't rebalancing pricing of standpoint, about some holding us. their too with view. inventory on end shifted that I So up about about inventory

to being side in of a from so, and pricing partners, seen So no, the good a end we really lot Electronics haven't discussion in see standpoint. demand continue on pretty our momentum shift we through distribution the

Yes. in there on come in while own putting down we just down, mentioned - more some earlier, places energy come side, cost costs other costs going we've had of seen the costs inflation just And lot there, Dave right? our piece is that some continues. or add a up, last this not the production I'll When think costs have cases about wage maybe

those a say hearing because on. going - that's not reason that we around another we're still lot people would see I not inflationary we're from So increases

you. We during question, Baird forward follow-up Josh. soon. concludes interest That seeing your joining appreciate Have you on conferences the in Littelfuse. for to look with Stifel again and Thank and us Thank session. and you I day. great talking you today's call your our a Q&A