Company Overview - Littelfuse is a diversified, industrial technology company with $2.4 billion in revenue for FY 2023[7] - The company has demonstrated a 15-year double-digit compound annual growth rate (CAGR) in sales of 10% and earnings per share (EPS) of 18%[8] - Littelfuse sells over 17 billion components annually to over 100,000 customers[28] Financial Performance & Strategy - The company targets double-digit revenue CAGR through a combination of 5-7% organic growth and 5-7% growth from acquisitions[13,32] - Littelfuse achieved a free cash flow conversion of net income of 143% in FY 2023[42] - The company's adjusted EBITDA margin was 22.3% in FY 2023[40] Segment Performance (FY 2023) - The Electronics segment generated $1.35 billion in revenue with an adjusted EBITDA margin of 28.1%[43] - The Transportation segment generated $678 million in revenue with an adjusted EBITDA margin of 11.2%[46] - The Industrial segment generated $334 million in revenue with an adjusted EBITDA margin of 21.1%[49] Capital Allocation - The company plans to return 40% of free cash flow to shareholders and allocate the remainder to acquisitions[13] - Littelfuse deployed over $1.2 billion in capital on strategic acquisitions[30]

Financial Data and Key Metrics Changes - Revenue for the first quarter was $554 million, up 4% year-over-year and up 3% organically, exceeding guidance [18] - GAAP operating margins were 12.7%, while adjusted operating margins were 14.2%, reflecting a 320 basis point increase from the prior year [19] - GAAP diluted earnings were $1.75, and adjusted diluted earnings were $2.19, up 24% year-over-year [19] - Operating cash flow was $66 million, with free cash flow of $43 million, resulting in a free cash conversion of 98% [20] Business Line Data and Key Metrics Changes - **Electronics Products Segment**: Sales increased by 6% year-over-year and 3% organically, with passive products up 13% organically, while semiconductor products declined by 5% [21][22] - **Transportation Products Segment**: Organic sales declined by 4%, with passenger car sales down 6% due to global cargo declines, but growth was noted in China [23][24] - **Industrial Products Segment**: Sales grew by 16% organically, driven by strong growth in Renewables, Data Center, and HVAC [25] Market Data and Key Metrics Changes - Book-to-bill ratio improved across all businesses, tracking above one, indicating strong demand and customer position [14] - The company entered the second quarter with a strong backlog, reflecting positive market conditions despite uncertainties [14][26] Company Strategy and Development Direction - The company aims to enhance focus on future growth opportunities and develop a structured approach to evaluate secular opportunities across evolving end markets [32][33] - Strategic acquisitions will remain a key pillar of growth strategy, aligning growth goals with long-term technology positioning [33] - The company is committed to providing complete solutions for a broader set of customers, leveraging diverse capabilities [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating through current economic uncertainties, emphasizing a flexible operating model and strong customer relationships [14][15] - There is a focus on monitoring potential demand risks in the second half of the year, particularly in the automotive and personal electronics sectors [74] - Management remains optimistic about long-term growth drivers, particularly in electrification and higher voltage applications [88] Other Important Information - The company returned $45 million to shareholders in the first quarter, with $17 million via dividends and $27 million through share repurchases [21] - A recent CFO transition was announced, with the outgoing CFO recognized for significant contributions to the company's growth [15][30] Q&A Session Summary Question: Can you elaborate on the tariff impacts and guidance assumptions? - Management highlighted a flexible operating model and local manufacturing strategies to mitigate tariff impacts, expecting minimal effect on earnings in the second quarter [39][41] Question: What are the expectations for the power semiconductor business? - Management noted that while there are pockets of strength, the overall market remains static, with opportunities for growth in high energy transfer applications [57][61] Question: How is the acquisition pipeline looking? - The company maintains a strong balance sheet and continues to evaluate acquisition opportunities as part of its growth strategy [63] Question: What is the outlook for transportation margins? - Management expressed confidence in continued margin expansion through operational excellence and leveraging best practices across the company [67] Question: How are customers responding to the current environment? - Customers are focused on short-term management of tariffs, but long-term strategic investments remain unchanged, with ongoing collaboration on R&D priorities [88]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $554 million, up 4% year-over-year and up 3% organically, exceeding guidance [17] - GAAP operating margins were 12.7%, while adjusted operating margins were 14.2%, reflecting a 320 basis point increase from the prior year [18] - Adjusted diluted earnings were $2.19, up 24% year-over-year, exceeding guidance [18] - Operating cash flow was $66 million, with free cash flow of $43 million, resulting in a free cash conversion of 98% [20] Business Line Data and Key Metrics Changes - **Electronics Products Segment**: Sales increased by 6% year-over-year and 3% organically, with passive products up 13% organically, while semiconductor products declined by 5% [21][22] - **Transportation Products Segment**: Organic sales declined by 4%, with passenger car sales down 6% due to global cargo declines, though growth was noted in China [23][24] - **Industrial Products Segment**: Sales grew 16% organically, driven by strong growth in Renewables, Data Center, and HVAC sectors [25] Market Data and Key Metrics Changes - Book-to-bill ratio improved across all businesses, tracking above one, indicating strong demand and customer positioning [14] - The company entered Q2 2025 with a strong backlog, reflecting positive momentum despite market uncertainties [14][26] Company Strategy and Development Direction - The company aims to enhance focus on future growth opportunities and develop a structured approach to evaluate secular opportunities across evolving end markets [33] - Strategic acquisitions will remain a key pillar of growth, with a focus on providing complete solutions for a broader customer base [34] - Operational excellence will be prioritized to enhance long-term profitability, leveraging best practices across the organization [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating through economic uncertainties, emphasizing a flexible operating model and strong cash generation capabilities [12][20] - There is a focus on monitoring potential demand risks in the second half of 2025, particularly in automotive and personal electronics sectors [76] - The company does not expect tariffs to have a material impact on Q2 earnings due to proactive measures taken [42][43] Other Important Information - The company returned $45 million to shareholders in Q1 2025, with $17 million via dividends and $27 million through share repurchases [21] - A recent CFO transition was announced, with the outgoing CFO recognized for significant contributions to the company's growth [15][31] Q&A Session Summary Question: Can you elaborate on the tariff impacts and guidance assumptions for Q2? - Management highlighted a flexible operating model and local manufacturing strategies to mitigate tariff impacts, expecting minimal effects on earnings [40][42] Question: What drove the sequential margin improvement in the Electronics segment? - The improvement was attributed to strong operating leverage from growth in passive electronics and effective cost management [48] Question: What is the company's exposure to data center opportunities, especially related to AI? - The company has a strong position in data centers, participating in trends towards higher voltage architectures, which presents significant content opportunities [52][53] Question: How is the acquisition pipeline looking in the current environment? - The company maintains a strong balance sheet and continues to evaluate acquisition opportunities as part of its growth strategy [64] Question: What are the expectations for transportation margins moving forward? - Management is focused on continued margin expansion through pricing strategies and operational excellence initiatives [68]

Financial Performance - Revenue increased by 4% to $554 million in Q1 2025 compared to $535 million in Q1 2024[20] - Organic revenue growth was 3% year-over-year[21] - Adjusted EPS was $2.19 in Q1 2025, compared to $1.76 in Q1 2024[20] - Adjusted EBITDA margin was 20.1% in Q1 2025, compared to 17.1% in Q1 2024[20] - Free cash flow was $43 million in Q1 2025, a 3% increase compared to Q1 2024, with a free cash flow conversion of 98%[21] Segment Performance - Electronics segment revenue increased by 6% to $307 million in Q1 2025 compared to $291 million in Q1 2024, with organic growth of 3%[27,29] - Passive products in the Electronics segment increased by 12% year-over-year, with 13% organic growth[29] - Transportation segment revenue decreased by 5% to $162 million in Q1 2025 compared to $170 million in Q1 2024, with organic decline of 4%[31,32] - Industrial segment revenue increased by 15% to $85 million in Q1 2025 compared to $74 million in Q1 2024, with organic growth of 16%[34,35] Q2 2025 Guidance - The company expects revenue between $565 million and $595 million[42] - The company expects adjusted EPS between $2.10 and $2.40[41,42]

Core Insights - Littelfuse reported revenue of $554.31 million for the quarter ended March 2025, reflecting a 3.5% increase year-over-year and a surprise of +2.71% over the Zacks Consensus Estimate of $539.67 million [1] - The company's EPS for the quarter was $2.19, up from $1.76 in the same quarter last year, resulting in an EPS surprise of +20.33% compared to the consensus estimate of $1.82 [1] Financial Performance - Net Sales in the Industrial segment reached $85.20 million, exceeding the average estimate of $79.05 million, with a year-over-year change of +15.3% [4] - Net Sales in the Electronics segment were $307.25 million, surpassing the average estimate of $296.51 million, representing a year-over-year increase of +5.6% [4] - Net Sales in the Transportation segment totaled $161.86 million, falling short of the average estimate of $166.98 million, indicating a year-over-year decline of -5% [4] Operating Income - Operating income for the Electronics segment was reported at $46.77 million, exceeding the average estimate of $35.35 million [4] - Operating income for the Industrial segment was $13.07 million, slightly above the average estimate of $12.43 million [4] - Operating income for the Transportation segment was $18.92 million, compared to the average estimate of $17.27 million [4] Stock Performance - Littelfuse shares have returned -9% over the past month, while the Zacks S&P 500 composite has changed by -0.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Company Performance - Littelfuse reported quarterly earnings of $2.19 per share, exceeding the Zacks Consensus Estimate of $1.82 per share, and up from $1.76 per share a year ago, representing an earnings surprise of 20.33% [1] - The company posted revenues of $554.31 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.71%, compared to year-ago revenues of $535.39 million [2] - Over the last four quarters, Littelfuse has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Outlook - Littelfuse shares have declined approximately 24% since the beginning of the year, while the S&P 500 has decreased by 6% [3] - The current consensus EPS estimate for the upcoming quarter is $2.38 on revenues of $580 million, and for the current fiscal year, it is $9.49 on revenues of $2.29 billion [7] - The estimate revisions trend for Littelfuse is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Electronics - Miscellaneous Components industry, to which Littelfuse belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Q1 2025 Earnings Release](index=1&type=section&id=LITTELFUSE%20REPORTS%20FIRST%20QUARTER%20RESULTS%20FOR%202025) [First Quarter 2025 Performance Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) Littelfuse exceeded Q1 2025 expectations with **$554 million** net sales (+3.5% YoY) and **$2.19** adjusted diluted EPS (+24%), driven by strong segment recovery and operational execution Q1 2025 Key Financial Metrics (YoY) | Metric | Q1 2025 Value | YoY Change | | :--- | :--- | :--- | | Net Sales | $554 million | +3.5% | | Organic Growth | N/A | +2.9% | | GAAP Diluted EPS | $1.75 | -9.3% | | Adjusted Diluted EPS | $2.19 | +24% | | Free Cash Flow | $43 million | +3% | - Management highlighted that results exceeded expectations, driven by a solid demand recovery in the Electronics Segment and robust growth in the Industrial Segment, with improved bookings and strong operational performance reflected in an expanded operating margin[2](index=2&type=chunk) - The company returned **$45 million** to shareholders during the quarter through a combination of dividends and share repurchases[3](index=3&type=chunk) [Second Quarter 2025 Outlook](index=2&type=section&id=Second%20Quarter%20of%202025) For Q2 2025, Littelfuse forecasts net sales between **$565 million** and **$595 million**, with adjusted diluted EPS projected from **$2.10** to **$2.40**, and an adjusted effective tax rate of **23%** to **25%** Q2 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Sales | $565 - $595 million | | Adjusted Diluted EPS | $2.10 – $2.40 | | Adjusted Effective Tax Rate | 23% - 25% | [Dividend Announcement](index=2&type=section&id=Dividend) Littelfuse declared a cash dividend of **$0.70** per share, payable on June 5, 2025, to shareholders of record as of May 22, 2025 - A cash dividend of **$0.70** per share will be paid on June 5, 2025[5](index=5&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 29, 2025, total assets were **$3.888 billion**, cash and equivalents decreased to **$618.7 million**, and total equity increased to **$2.457 billion** Balance Sheet Highlights (in thousands) | Account | March 29, 2025 | December 28, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $618,687 | $724,924 | | Total current assets | $1,433,084 | $1,552,009 | | Total assets | $3,888,235 | $3,891,779 | | Total current liabilities | $369,567 | $433,905 | | Total liabilities | $1,431,480 | $1,478,167 | | Total equity | $2,456,755 | $2,413,612 | [Condensed Consolidated Statements of Net Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20NET%20INCOME) Q1 2025 net sales rose **3.5%** to **$554.3 million**, operating income surged **27.7%** to **$70.2 million**, but GAAP net income decreased **10.1%** to **$43.6 million** due to foreign exchange loss and higher taxes Q1 Income Statement Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $554,307 | $535,385 | +3.5% | | Gross profit | $207,256 | $187,808 | +10.4% | | Operating income | $70,150 | $54,952 | +27.7% | | Net income | $43,571 | $48,452 | -10.1% | | Diluted EPS | $1.75 | $1.93 | -9.3% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) In Q1 2025, net cash provided by operating activities increased to **$65.8 million** from **$57.2 million** in Q1 2024, while investing activities used **$80.5 million** (due to acquisition) and financing activities used **$97.0 million**, resulting in a **$106.2 million** cash decrease Q1 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $65,758 | $57,150 | | Net cash used in investing activities | ($80,508) | ($8,483) | | Net cash used in financing activities | ($97,034) | ($33,520) | | (Decrease) increase in cash | ($106,181) | $6,597 | [Segment Performance](index=8&type=section&id=NET%20SALES%20AND%20OPERATING%20INCOME%20BY%20SEGMENT) [Net Sales and Operating Income by Segment](index=8&type=section&id=Net%20sales%20and%20Operating%20income%20by%20segment) In Q1 2025, Industrial segment sales grew **15.3%** with operating income up **172.6%**, Electronics sales rose **5.5%** with operating income up **23.7%**, while Transportation sales declined **5.0%** but operating income increased **16.7%**, with all segments showing improved margins Q1 2025 Net Sales by Segment (YoY) | Segment | Q1 2025 Net Sales (in thousands) | YoY Growth | | :--- | :--- | :--- | | Electronics | $307,249 | 5.5% | | Transportation | $161,862 | (5.0)% | | Industrial | $85,196 | 15.3% | | **Total** | **$554,307** | **3.5%** | Q1 2025 Operating Income & Margin by Segment (YoY) | Segment | Q1 2025 Operating Income (in thousands) | YoY Growth | Q1 2025 Operating Margin | Q1 2024 Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Electronics | $46,766 | 23.7% | 15.2% | 13.0% | | Transportation | $18,917 | 16.7% | 11.7% | 9.5% | | Industrial | $13,074 | 172.6% | 15.3% | 6.5% | [Non-GAAP Financial Measures & Reconciliations](index=9&type=section&id=SUPPLEMENTAL%20FINANCIAL%20INFORMATION) [Reconciliation of GAAP to Non-GAAP EPS](index=9&type=section&id=Non-GAAP%20EPS%20reconciliation) Q1 2025 adjusted diluted EPS increased to **$2.19** from **$1.76** in Q1 2024, primarily due to adjustments for restructuring charges and non-operating foreign exchange loss Non-GAAP EPS Reconciliation | Description | Q1-25 | Q1-24 | | :--- | :--- | :--- | | GAAP diluted EPS | $1.75 | $1.93 | | EPS impact of Non-GAAP adjustments | $0.44 | ($0.17) | | **Adjusted diluted EPS** | **$2.19** | **$1.76** | [Reconciliation of Adjusted Operating Margin & Adjusted EBITDA](index=9&type=section&id=Adjusted%20operating%20margin%20%2F%20Adjusted%20EBITDA%20reconciliation) Q1 2025 adjusted operating income reached **$78.8 million** (14.2% margin) and adjusted EBITDA rose to **$111.5 million** (20.1% margin), with Electronics as the largest EBITDA contributor Adjusted EBITDA Reconciliation (in millions) | Metric | Q1-25 | Q1-24 | | :--- | :--- | :--- | | GAAP operating income | $70.2 | $55.0 | | Non-GAAP adjustments | $8.6 | $3.8 | | **Adjusted operating income** | **$78.8** | **$58.8** | | Amortization & Depreciation | $32.7 | $32.5 | | **Adjusted EBITDA** | **$111.5** | **$91.3** | | **Adjusted operating margin** | **14.2%** | **11.0%** | | **Adjusted EBITDA margin** | **20.1%** | **17.1%** | Adjusted EBITDA by Segment (in millions) | Segment | Q1-25 | Q1-24 | | :--- | :--- | :--- | | Electronics | $68.0 | $57.6 | | Transportation | $27.7 | $24.9 | | Industrial | $15.8 | $8.8 | [Reconciliation of Net Sales and Organic Growth](index=10&type=section&id=Net%20sales%20reconciliation) Total net sales grew **3.5%** in Q1 2025, driven by **2.9%** organic growth and **1.5%** from acquisitions, offset by a **0.9%** negative foreign exchange impact, with Industrial leading organic growth Q1 2025 vs Q1 2024 Net Sales Growth Reconciliation | Component | Electronics | Transportation | Industrial | Total | | :--- | :--- | :--- | :--- | :--- | | Net sales growth | 6% | (5)% | 15% | 4% | | Less: Acquisitions | 4% | —% | —% | 2% | | Less: FX impact | (1)% | (1)% | (1)% | (1)% | | **Organic net sales growth** | **3%** | **(4)%** | **16%** | **3%** | [Reconciliation of Income Tax](index=10&type=section&id=Income%20tax%20reconciliation) The Q1 2025 GAAP effective tax rate was **27.3%**, with the adjusted effective tax rate at **25.5%**, higher than the **19.3%** adjusted rate in Q1 2024 Income Tax Reconciliation | Metric | Q1-25 | Q1-24 | | :--- | :--- | :--- | | GAAP Effective Rate | 27.3% | 13.0% | | Adjusted Effective Rate | 25.5% | 19.3% | [Reconciliation of Free Cash Flow](index=10&type=section&id=Free%20cash%20flow%20reconciliation) Q1 2025 free cash flow slightly increased to **$42.7 million**, derived from **$65.8 million** in operating cash flow less **$23.1 million** in capital expenditures Free Cash Flow Reconciliation (in millions) | Description | Q1-25 | Q1-24 | | :--- | :--- | :--- | | Net cash provided by operating activities | $65.8 | $57.1 | | Less: Purchases of property, plant and equipment | ($23.1) | ($15.5) | | **Free cash flow** | **$42.7** | **$41.6** | [Debt and Leverage](index=11&type=section&id=Consolidated%20Total%20Debt) As of March 29, 2025, Littelfuse's net debt was **$634.4 million**, with a Consolidated Net Leverage Ratio of **1.3x**, well below the **3.50x** covenant limit - Consolidated Total Debt was **$805.7 million**, with Net Debt calculated at **$634.4 million** as of March 29, 2025[28](index=28&type=chunk) - The Consolidated Net Leverage Ratio was **1.3x**, which is well within the **3.50:1.00** covenant limit required by its credit agreements[29](index=29&type=chunk)

Core Insights - The article expresses a beneficial long position in LFUS shares, indicating a positive outlook on the company's stock performance [1] Group 1 - The information provided is intended for informational purposes only and does not constitute a solicitation to buy or sell securities [2] - Past performance of investments is not indicative of future results, emphasizing the need for individual research before making investment decisions [3]

Core Insights - Littelfuse (LFUS) shares increased by 4.9% to $160.04, following a significant trading volume, despite a 30.6% decline over the past four weeks [1] - The company is experiencing growth due to strong design wins in sectors such as data centers, industrial safety, and HVAC [1] Financial Performance - Littelfuse is projected to report quarterly earnings of $1.82 per share, reflecting a year-over-year increase of 3.4% [2] - Expected revenues for the upcoming quarter are $539.67 million, which is a 0.8% increase compared to the same quarter last year [2] Market Trends - The consensus EPS estimate for Littelfuse has remained stable over the last 30 days, indicating that stock price movements may not sustain without changes in earnings estimate revisions [3] - Littelfuse holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook in the current market [3]

Financial Performance - The Company reported total net sales of $2,190.8 million for fiscal year 2024, a decrease of 7.3% from $2,362.7 million in 2023 and a decrease of 13.0% from $2,513.9 million in 2022[24]. - The Electronics segment generated net sales of $1,186.8 million in 2024, down from $1,350.4 million in 2023, reflecting a decline of 12.1%[24]. - The Transportation segment's net sales were $672.4 million in 2024, slightly down from $678.3 million in 2023, a decrease of 0.9%[24]. - The Industrial segment reported net sales of $331.6 million in 2024, a slight decrease from $334.0 million in 2023, down by 0.7%[24]. - The backlog of unfilled orders as of December 28, 2024, was approximately $664.9 million, down from $1,046.9 million at December 30, 2023, primarily due to a reduction in the semiconductor business[57]. - The Company recorded non-cash impairment charges of $36.1 million and $8.6 million for goodwill impairment in the Industrial controls and sensors and Automotive sensors reporting units, respectively[121]. - During Q4 2024, the Company recognized non-cash impairment charges of $47.8 million for intangible assets, primarily related to acquired customer relationships and developed technology[122]. - The Company’s stock price fluctuated between $222.9 and $275.6 from December 30, 2023, to December 28, 2024, indicating significant volatility[131]. Strategic Acquisitions - The Company completed the acquisition of Dortmund Fab for approximately €94 million (about $40.5 million down payment) to enhance power semiconductor capacity[21]. - The acquisition of Western Automation for approximately $162 million is expected to strengthen the Company's position in high-growth markets like electric vehicle charging infrastructure[21]. - The Company engages in strategic acquisitions to expand and diversify its operations, but may face challenges in realizing anticipated benefits and integrating these businesses[87]. International Sales and Market Presence - Approximately 63% of the Company's net sales in 2024 were to customers outside the U.S., with 23% specifically to China[26]. - Sales to customers outside the U.S. accounted for approximately 63%, 65%, and 64% of total net sales in fiscal years 2024, 2023, and 2022, respectively[53]. - The Company directly sells to over 4,000 customers and distributors worldwide, with sales to Arrow Electronics, Inc. representing 9.4%, 11.2%, and 11.5% of consolidated net sales in 2024, 2023, and 2022, respectively[52]. Research and Development - The Company invested $107.8 million, $102.4 million, and $95.6 million in R&D during fiscal years 2024, 2023, and 2022, respectively, indicating a continuous effort to enhance product development[41]. - The Company is focused on expanding its product portfolio through both organic and inorganic investments in high-growth, niche applications[32][39]. Workforce and Leadership Development - The Company employs approximately 16,000 full-time, part-time, and temporary employees, with 47% in the Americas, 40% in Asia-Pacific, and 13% in Europe[59]. - The Company’s leadership development programs include a mix of internal and external training to enhance leadership capabilities across all levels[67]. Sustainability and Compliance - The Company’s sustainability efforts are guided by a Chief Legal Officer and are reported annually, with the 2023 Sustainability Report prepared in alignment with GRI Standards and SASB[78]. - The Company believes it is currently in compliance with all material environmental laws and regulations[81]. - Compliance with environmental regulations has not significantly changed the Company's competitive position or earnings in the past and is not expected to do so in the foreseeable future[84]. - The Company may face increased costs and operational challenges due to climate change regulations and legislative developments[99]. Risks and Challenges - The Company is exposed to risks from operating a multinational business, including political and economic uncertainties in various countries[102]. - The Company may incur significant costs due to defects in its products, including warranty claims and product recalls, which could adversely affect financial results[97]. - Disruptions in the Company's manufacturing, supply, or distribution chain could adversely impact its ability to meet customer demand and result in lost sales[90]. - The Company may face significant liabilities related to environmental contamination and compliance with future environmental laws and regulations[106]. - The Company is exposed to significant fluctuations in foreign currency exchange rates, particularly with net long exposure to the euro and net short exposures to the Chinese renminbi, Mexican peso, and Philippine peso[117][118]. - The Company has experienced cyber-attacks and security breaches, which could disrupt operations and impact financial performance[133]. - The Company has identified material weaknesses in its internal control over financial reporting, which could impact the accuracy and timeliness of financial results[123]. - The Company incurred additional costs and risks due to identified material weaknesses in internal controls, which may impact the accuracy and timely reporting of financial results[127]. - The Company may face challenges in obtaining "conflict-free" metals due to limited suppliers, potentially leading to increased expenses[134]. Financial Position and Taxation - The Company is subject to a minimum tax of 15% on a country-by-country basis as part of OECD-led proposals, which could significantly affect its future effective tax rate and cash flows[111]. - The tax holiday for one subsidiary in China was extended for an additional three years, while another subsidiary's tax holiday will expire at the end of 2025[113]. - The Company's effective tax rate may be adversely affected by changes in the mix of its earnings by jurisdiction, particularly with varying tax rates across different regions[114]. - The Company’s ability to access capital markets is crucial for investments and refinancing, and any inability to do so could materially affect its financial position[129].