Core Insights - The company is well positioned to lead in the safe and efficient transfer of electrical energy [1] - The new CFO is focused on sharpening the company's strategy to identify areas of competitive advantage [1] Company Observations - Initial observations indicate strong financial health, but there are challenges that need to be addressed [1] - The company is in the process of refining its strategic approach to determine where it can win in the market [1]

Littelfuse (LFUS) 2025 Conference Summary Company Overview - **Company**: Littelfuse (LFUS) - **Industry**: Multi-industrials, specifically focusing on electrical energy transfer solutions Key Points and Arguments Financial Strength and Strategy - The new CFO, Abby Kennewell, emphasizes the company's strong position in safe and efficient electrical energy transfer and is focused on sharpening the company's strategy to identify areas of competitive advantage [4][6] - The company is working on improving operational execution, particularly in its Mexican facilities, by implementing best practices from its well-run Asian operations [5][6] Market Opportunities - Littelfuse is capitalizing on trends in higher voltage and energy-dense applications, particularly in sectors like automotive electrification and data centers, which are expected to drive growth [7][8] - The company has seen a double-digit increase in its new business opportunity funnel, indicating both short-term and long-term growth potential [9][10] Sales and Marketing Strategy - A shift towards a more integrated sales approach is being implemented, moving away from siloed selling to a portfolio-based solution selling, which is expected to enhance customer relationships and increase market share [11][12] - The data center market is highlighted as a significant growth driver, with a focus on higher voltage architectures that align with Littelfuse's product offerings [13][14] Operational Excellence - A new global operations team has been established to focus on improving margins and operational efficiency, particularly in the transportation and electronics segments [19][20] - The industrial segment has shown robust growth, with a 19% increase in top-line revenue and strong margins, attributed to both market demand and internal operational improvements [49][50] Margin and Financial Projections - The electronics segment is currently experiencing lower margins due to a downturn in the power semiconductor business, but improvements are expected as market conditions stabilize [24][25] - The company aims for a long-term margin flow-through of 30-35% on incremental sales, with a focus on maintaining operational efficiency [25][26] Capital Deployment and M&A Strategy - Littelfuse plans to continue funding organic investments while also pursuing M&A opportunities to enhance growth, with a target of achieving double-digit return on invested capital (ROIC) within three to five years [28][31] - The company maintains a low leverage ratio, allowing for flexibility in capital deployment while ensuring robust cash flow generation [32] Pricing Strategy - The company aims to maintain a price-cost neutral position, focusing on value creation and addressing customer needs [35][36] Future Outlook - The management is focused on organic growth, efficient capital allocation, and operational execution to ensure durable earnings growth [52] - The upcoming investor day is expected to provide more clarity on financial goals and market strategies [54][55] Additional Important Insights - The company recognizes the need to better articulate its diverse end markets and the value it brings, particularly in the data center sector [54] - There is an ongoing effort to leverage AI for operational efficiency improvements, particularly in manufacturing processes [53] This summary encapsulates the key insights from the Littelfuse conference, highlighting the company's strategic focus, market opportunities, operational improvements, and future growth plans.

Company Overview - Littelfuse, Inc. is a global manufacturer of electronic components, modules, and relays serving various industries [1] - The company operates through three reportable segments: Electronics, Transportation, and Industrial [1] - Littelfuse has a market capitalization of approximately $6.2 billion and employs around 16,000 people [1] Analyst Background - The author has a master's degree in Analytics from Northwestern University and a bachelor's degree in Accounting [1] - The author has over 10 years of experience in the investment field, starting as an analyst and advancing to a management role [1] - Dividend investing is a personal interest of the author, who aims to share insights with the Seeking Alpha community [1]

Core Viewpoint - Investors are encouraged to consider Littelfuse (LFUS) due to solid improvements in earnings estimates and positive short-term price momentum [1][9]. Estimate Revisions - The rising trend in earnings estimate revisions reflects growing analyst optimism regarding Littelfuse's earnings prospects, which is expected to positively impact its stock price [2]. - The Zacks Rank system indicates strong agreement among analysts in revising earnings estimates upward, leading to significant improvements in consensus estimates for both the next quarter and the full year [3]. Current-Quarter Estimates - For the current quarter, Littelfuse is expected to earn $2.64 per share, representing a decrease of 2.6% from the previous year, but the Zacks Consensus Estimate has increased by 9.56% over the last 30 days with no negative revisions [6]. Current-Year Estimates - The expected earnings for the full year are $9.72 per share, reflecting a 14.6% increase from the prior year, with a positive trend in estimate revisions as one estimate has increased without any negative revisions [7]. Zacks Rank - Littelfuse currently holds a Zacks Rank 2 (Buy), indicating promising estimate revisions, and stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500 [8]. Stock Performance - The stock has gained 9.2% over the past four weeks, driven by solid estimate revisions, suggesting potential for further earnings growth and price appreciation [9].

Core Insights - Littelfuse reported strong Q2 2025 earnings, with GAAP revenue of $613.4 million and Non-GAAP EPS of $2.85, both exceeding Wall Street expectations [1][2] - Year-over-year, GAAP revenue grew by 9.8% and Non-GAAP EPS increased by 45%, indicating robust financial performance [1][2] - The company is focusing on strategic priorities such as acquisitions and innovation to drive growth [1][4] Financial Performance - Q2 2025 Non-GAAP EPS was $2.85, surpassing estimates of $2.33 and up from $1.97 in Q2 2024, reflecting a 45% increase [2] - GAAP revenue reached $613.4 million, exceeding estimates of $576.7 million and up from $558.5 million in the previous year, marking a 9.8% increase [2] - GAAP operating margin improved to 15.1%, up from 11.7% year-over-year, indicating enhanced profitability [2] Business Overview - Littelfuse specializes in circuit protection and power management solutions, with a product portfolio that includes fuses, semiconductors, sensors, and relays [3] - The company serves various markets, including industrial, transportation, and consumer electronics, ensuring safety in electrical systems [3] Strategic Focus - The company is pursuing targeted acquisitions and expanding its technology capabilities while focusing on innovation in circuit protection and power semiconductors [4] - Key growth areas include electrification and data center markets, supported by significant R&D investment of $107.8 million in FY2024 [4] Segment Performance - The Electronics segment saw a 9.8% sales increase, with organic growth of 4% and a steady operating margin of 14.9% [5] - The Transportation segment's revenue rose by 6.2%, with operating income climbing 84.3% and margin expanding to 15.6% [6] - The Industrial segment delivered the strongest growth at 17.2%, with operating margin nearly doubling to 19.2% due to demand in renewable energy and data centers [7] Recent Developments - Littelfuse integrated facilities like Dortmund Fab to enhance power semiconductor production and reported a $10.4 million foreign exchange loss [8] - Acquisitions contributed significantly to growth in the Electronics segment, with ongoing integration efforts being crucial for future productivity [8] Future Outlook - Management projects Q3 FY2025 net sales between $610 million and $630 million, with adjusted EPS guidance of $2.65 to $2.85 [11] - The company increased its quarterly dividend to $0.75 per share, reflecting confidence in its financial health [12]

Core Insights - Littelfuse reported revenue of $613.41 million for the quarter ended June 2025, marking a year-over-year increase of 9.8% and exceeding the Zacks Consensus Estimate by 5.4% [1] - The company's EPS for the same period was $2.85, a significant increase from $1.97 a year ago, representing a surprise of 21.28% over the consensus estimate of $2.35 [1] Financial Performance - Net Sales in the Electronics segment reached $335.67 million, surpassing the average estimate of $320.5 million, with a year-over-year change of 9.8% [4] - Net Sales in the Industrial segment were $98.35 million, exceeding the average estimate of $90.5 million, reflecting a year-over-year increase of 17.2% [4] - Net Sales in the Transportation segment amounted to $179.4 million, compared to the average estimate of $163.5 million, showing a year-over-year change of 6.2% [4] Operating Income - Operating income for the Electronics segment was $49.86 million, slightly above the estimated $48 million [4] - Operating income for the Industrial segment was $18.86 million, exceeding the average estimate of $14.5 million [4] - Operating income for the Transportation segment reached $28.07 million, significantly higher than the average estimate of $18.5 million [4] Stock Performance - Shares of Littelfuse have returned +2% over the past month, while the Zacks S&P 500 composite has changed by +3.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported revenue of $613 million for the second quarter, reflecting a 10% increase compared to the prior year and a 6% organic growth [18] - Adjusted EBITDA margin improved to 21.4%, up 280 basis points year-over-year [18] - Adjusted diluted earnings per share (EPS) was $2.85, up 45% and exceeded the high end of prior guidance [19] Business Line Data and Key Metrics Changes - **Electronics Products Segment**: Sales increased by 10% year-over-year, with a 4% organic growth. Passive products saw a 14% organic growth, while semiconductor products declined by 5% [21] - **Transportation Products Segment**: Sales grew by 6%, with 4% organic growth. Passenger car sales increased by 3% organically across North America, Europe, and China [22] - **Industrial Products Segment**: Sales grew by 17% organically, driven by strong performance in grid storage, renewable energy, data centers, and HVAC [23] Market Data and Key Metrics Changes - The company experienced a strong backlog and bookings, with a book-to-bill ratio tracking above one [9] - The company expects continued growth momentum into the third quarter, with projected sales between $610 million and $630 million [26] Company Strategy and Development Direction - The company is focusing on enhancing its capabilities in higher voltage and higher energy density applications to meet customer demands [10] - There is a strategic priority to provide more complete solutions for a broader set of customers, leveraging the company's unique product portfolio [12] - The company is also working on operational excellence to enhance long-term profitability [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on growth opportunities and maintain strong execution [16] - The management noted improved visibility in end markets compared to three to six months ago, indicating a more stable demand environment [93] Other Important Information - The company generated $82 million in operating cash flow and $73 million in free cash flow during the quarter, with a strong cash position of $685 million [20] - The company plans to prioritize cash flow for organic investments and strategic acquisitions while returning capital to shareholders through dividends and share buybacks [21] Q&A Session Summary Question: Margin upside in Transportation and Industrial segments - Management discussed the focus on operational excellence and diversifying the portfolio to improve margins in the Transportation segment [33][34] Question: Clarification on tariff timing impacts - Management clarified that the timing of price realization versus incurred costs resulted in a $0.15 benefit in Q2 that would reverse in Q3 [40] Question: Performance in the Industrial segment - Management expressed excitement about the Industrial segment's growth, particularly in energy storage and data centers [42][43] Question: Data center exposure and growth - Management indicated that data center solutions are becoming increasingly important and are expected to grow significantly [50][51] Question: Visibility and demand trends - Management noted improved visibility and stability in end markets compared to previous months, expecting growth across all segments [93][94]

Financial Data and Key Metrics Changes - Revenue for the second quarter was $613 million, reflecting a 10% increase year-over-year and a 6% organic growth, with the Dortmund acquisition contributing 2% to sales growth and foreign exchange providing a 1% tailwind [19][20] - Adjusted EBITDA margin improved to 21.4%, up 280 basis points, driven by strong sales growth and operational performance [19][20] - Adjusted diluted earnings per share (EPS) was $2.85, up 45% compared to the previous year, exceeding the high end of prior guidance [20] Business Line Data and Key Metrics Changes - **Electronics Products Segment**: Sales increased by 10% year-over-year and 4% organically, with passive products up 14% organically, while semiconductor products declined by 5% [22][23] - **Transportation Products Segment**: Sales grew by 6%, with organic sales up 4%. Passenger car sales increased by 3% organically across North America, Europe, and China [24] - **Industrial Products Segment**: Sales grew by 17% organically, benefiting from strong growth in grid storage, renewable energy, data centers, industrial safety, and HVAC [25][26] Market Data and Key Metrics Changes - The company reported a book-to-bill ratio above one, with bookings at the highest run rate since 2022, indicating strong demand across all segments [7][8] - The company is experiencing increased demand for higher power and higher energy density applications across its end markets, which is driving growth [9][10] Company Strategy and Development Direction - The company is focusing on enhancing its capabilities to capitalize on future growth opportunities, particularly in higher voltage and higher energy density applications [9][10] - There is a strategic priority to provide more complete solutions for a broader set of customers, leveraging the company's unique product portfolio [11][12] - The company is also working on driving operational excellence to enhance long-term profitability and optimize its operating structure [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue strong growth into the third quarter, supported by a solid backlog and improved operational execution [17][20] - The management team highlighted the importance of aligning technology capabilities and sales structures to better serve customers and drive ongoing product innovations [11][12] Other Important Information - The company generated $73 million in free cash flow during the quarter, with a strong cash position of $685 million and a net debt to EBITDA leverage of 1.1 times [21] - The company plans to prioritize cash flow for organic investments and strategic acquisitions while continuing to return capital to shareholders through dividends and share buybacks [21][22] Q&A Session Summary Question: Margin upside in Transportation and Industrial segments - Management discussed the focus on operational excellence and diversifying the portfolio to improve margins in the Transportation segment, with expectations for continued margin upside [31][34][36] Question: Clarification on tariff timing impacts - Management clarified that the timing of price realization versus incurred costs resulted in a $0.15 benefit in Q2 that would reverse in Q3 [40][42] Question: Insights on the Industrial segment's performance - Management expressed excitement about the Industrial segment's growth, emphasizing the focus on energy storage and data center markets [44][46] Question: Data center exposure and growth - Management confirmed that data center solutions are becoming increasingly important, with strong traction in design wins and a growing pipeline [48][50][54] Question: Visibility on demand and market conditions - Management noted improved visibility in end markets compared to previous months, with expectations for continued growth across all segments [99][100][102]

Q2 2025 Financial Performance - Revenue increased to $613 million, a 10% increase compared to Q2 2024, with organic growth of 6%[21, 23] - Adjusted EPS reached $2.85, a 45% increase compared to Q2 2024[21, 23] - Adjusted EBITDA margin was 21.4%, a 280 bps increase year-over-year[21, 23] - Free cash flow was $73 million, a 44% increase compared to Q2 2024, with a year-to-date free cash flow conversion of 114%[23] Segment Performance - Electronics segment revenue increased to $336 million, a 10% increase, with organic growth of 4%[30, 31] - Transportation segment revenue increased to $179 million, a 6% increase, with organic growth of 4%[33, 36] - Industrial segment revenue increased to $98 million, a 17% increase, with organic growth of 17%[38, 39] Q3 2025 Guidance - Sales guidance is $610 million to $630 million[41, 42] - Adjusted EPS guidance is $2.65 to $2.85[41, 42] Full Year 2025 Expectations - The Dortmund acquisition is expected to contribute 2% growth to company sales with a neutral EPS impact[50] - Foreign exchange and commodities are expected to provide a 1% tailwind to sales and a $0.14 benefit to EPS[50]

[Performance Overview and Outlook](index=1&type=section&id=Performance%20Overview%20and%20Outlook) Littelfuse exceeded Q2 2025 expectations with strong sales and EPS growth, provided positive Q3 guidance, and increased its quarterly dividend Q2 2025 Key Financial Highlights | Metric | Q2 2025 | YoY Change | | :--- | :--- | :--- | | Net Sales | $613 million | +9.8% | | Organic Growth | N/A | +6.2% | | GAAP Diluted EPS | $2.30 | +26% | | Adjusted Diluted EPS | $2.85 | +45% | | GAAP Operating Margin | 15.1% | +340 bps | | Adjusted EBITDA Margin | 21.4% | +280 bps | | YTD Operating Cash Flow | $148 million | N/A | | YTD Free Cash Flow | $115 million | N/A | - Management emphasized **solid growth** and **operational execution**, focusing on capitalizing on opportunities and driving excellence[2](index=2&type=chunk) Q3 2025 Financial Guidance | Guidance Metric | Q3 2025 Range | | :--- | :--- | | Net Sales | $610 - $630 million | | Adjusted Diluted EPS | $2.65 - $2.85 | | Adjusted Effective Tax Rate | 25% | - The Board approved a **7% increase** in the quarterly cash dividend to **$0.75 per share**[3](index=3&type=chunk)[5](index=5&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements reflect a healthy position with asset growth, increased net income, and strong operating cash flow [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$4.07 billion** by June 28, 2025, driven by goodwill and property, while cash and debt remained stable Condensed Consolidated Balance Sheets | Balance Sheet Item | June 28, 2025 (in thousands) | December 28, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | **$1,542,050** | **$1,552,009** | | Cash and cash equivalents | $685,184 | $724,924 | | **Total Assets** | **$4,065,881** | **$3,891,779** | | **Total Current Liabilities** | **$379,742** | **$433,905** | | Long-term debt, less current portion | $792,524 | $788,502 | | **Total Equity** | **$2,598,965** | **$2,413,612** | [Condensed Consolidated Statements of Net Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Net%20Income) Q2 2025 net sales grew **9.8%** to **$613.4 million**, driving a **41.6%** increase in operating income and higher net income Condensed Consolidated Statements of Net Income | Income Statement | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $613,413 | $558,489 | $1,167,720 | $1,093,874 | | Gross profit | $232,054 | $207,004 | $439,310 | $394,812 | | Operating income | $92,778 | $65,506 | $162,928 | $120,458 | | Net income | $57,342 | $45,466 | $100,913 | $93,918 | | Diluted EPS | $2.30 | $1.82 | $4.05 | $3.75 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$148.2 million** year-to-date, while investing and financing activities used significant cash Condensed Consolidated Statements of Cash Flows | Cash Flow | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $148,225 | $126,574 | | Net cash used in investing activities | ($89,704) | ($26,677) | | Net cash used in financing activities | ($120,543) | ($79,290) | | (Decrease) increase in cash | ($39,554) | $6,173 | [Segment Performance](index=8&type=section&id=Segment%20Performance) All segments demonstrated strong Q2 2025 growth, with Industrial leading sales and significant operating income gains across segments Q2 2025 Net Sales by Segment | Q2 2025 Net Sales | Amount (in thousands) | YoY Growth | | :--- | :--- | :--- | | Electronics | $335,666 | 9.8% | | Transportation | $179,400 | 6.2% | | Industrial | $98,347 | 17.2% | | **Total net sales** | **$613,413** | **9.8%** | Q2 2025 Operating Income by Segment | Q2 2025 Operating Income | Amount (in thousands) | YoY Growth | | :--- | :--- | :--- | | Electronics | $49,861 | 8.0% | | Transportation | $28,074 | 84.3% | | Industrial | $18,863 | 97.6% | | **Total operating income** | **$92,778** | **41.6%** | Segment Operating Margins | Operating Margin | Q2 2025 (%) | Q2 2024 (%) | | :--- | :--- | :--- | | Electronics | 14.9% | 15.1% | | Transportation | 15.6% | 9.0% | | Industrial | 19.2% | 11.4% | [Supplemental Financial Information (Non-GAAP)](index=9&type=section&id=Supplemental%20Financial%20Information%20%28Non-GAAP%29) This section reconciles GAAP to non-GAAP measures, detailing adjusted EPS, EBITDA margins, organic sales growth, and debt leverage [Non-GAAP EPS and EBITDA Reconciliations](index=9&type=section&id=Non-GAAP%20EPS%20and%20EBITDA%20Reconciliations) Q2 2025 GAAP diluted EPS of **$2.30** was adjusted to **$2.85**, with GAAP operating income adjusted to a **21.4%** EBITDA margin Non-GAAP Diluted EPS Reconciliation | EPS Reconciliation | Q2 2025 ($) | Q2 2024 ($) | | :--- | :--- | :--- | | GAAP diluted EPS | $2.30 | $1.82 | | EPS impact of Non-GAAP adjustments | $0.55 | $0.15 | | **Adjusted diluted EPS** | **$2.85** | **$1.97** | Non-GAAP Margin Reconciliations | Margin Reconciliation | Q2 2025 (%) | Q2 2024 (%) | | :--- | :--- | :--- | | GAAP Operating Margin | 15.1% | 11.7% | | Adjusted Operating Margin | 15.8% | 12.7% | | Adjusted EBITDA Margin | 21.4% | 18.6% | [Segment-Level and Other Reconciliations](index=10&type=section&id=Segment-Level%20and%20Other%20Reconciliations) Q2 2025 adjusted EBITDA margins were strong across segments, with total organic sales growth of **6%** and increased free cash flow Q2 2025 Organic Net Sales Growth by Segment | Q2 2025 Organic Net Sales Growth | Electronics (%) | Transportation (%) | Industrial (%) | Total (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales growth | 10% | 6% | 17% | 10% | | Less: Acquisitions & FX | 5% | 2% | 0% | 4% | | **Organic net sales growth** | **4%** | **4%** | **17%** | **6%** | Free Cash Flow Reconciliation | Free Cash Flow Reconciliation | YTD 2025 (in millions) | YTD 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $148.2 | $126.6 | | Less: Purchases of property, plant and equipment | ($33.0) | ($34.7) | | **Free cash flow** | **$115.2** | **$91.9** | [Debt and Leverage Analysis](index=11&type=section&id=Debt%20and%20Leverage%20Analysis) As of June 28, 2025, net debt was **$547.6 million**, resulting in a **1.1x** Consolidated Net Leverage Ratio, well below covenant Net Debt Calculation | Net Debt Calculation | As of June 28, 2025 (in millions) | | :--- | :--- | | Consolidated Total Debt | $810.2 | | Plus: Unamortized debt issuance costs & Finance lease liability | $2.5 | | Less: Cash held in U.S. | ($265.1) | | **Net debt** | **$547.6** | - The Consolidated Net Leverage Ratio for the twelve months ended June 28, 2025 was **1.1x**[30](index=30&type=chunk) [Disclosures](index=3&type=section&id=Disclosures) This section provides standard disclosures on forward-looking statements and the rationale for using non-GAAP financial measures - The "Safe Harbor" statement cautions that forward-looking statements are subject to **risks and uncertainties** that could cause actual results to differ materially[9](index=9&type=chunk) - Non-GAAP financial measures are used to enhance understanding of **core financial performance** and facilitate historical comparisons, with reconciliations provided[12](index=12&type=chunk)