Financial Data and Key Metrics Changes - The company reported record quarterly sales of $6.2 billion, marking an 18% organic growth in Communications and Security Solutions (CSS), 12% in Electrical and Electronic Solutions (EES), and a return to growth in Utility and Broadband Solutions (UBS) with a 3% increase [6][34] - Adjusted EPS grew 9.5% year over year and 16% sequentially, with both gross margin and EBITDA margin improving sequentially [7][35] - Organic sales growth accelerated to 12% in Q3, up from 6% in Q1 and 7% in Q2, indicating four consecutive quarters of accelerating momentum [5][10] Business Line Data and Key Metrics Changes - EES delivered organic sales growth of 12%, driven by construction, industrial, and OEM segments, with data center sales up 60% year over year [12][14] - CSS achieved 18% organic sales growth, supported by strong demand in data center solutions and enterprise network infrastructure [14][15] - UBS saw a 3% increase in organic sales, led by high single-digit growth in investor-owned utilities, while public power remained soft [22][23] Market Data and Key Metrics Changes - Total data center sales reached approximately $1.2 billion in Q3, representing 19% of total company sales on a trailing 12-month basis, with a year-over-year growth of 60% [6][17] - Broadband performance accelerated with sales up over 20% year over year, marking a significant improvement from previous quarters [22] Company Strategy and Development Direction - The company is focused on accelerating cross-selling initiatives and driving enterprise-wide margin improvement through technology-driven business transformation [7][8] - The strategic outlook for 2026 includes mid-single-digit organic sales growth, continued strength in electrical markets, and a return to growth in public power [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform market trends driven by secular growth in digitalization, electrification, and supply chain resiliency [8][35] - The company raised its full-year outlook for organic sales growth, adjusted EBITDA, and adjusted EPS based on strong business momentum [7][30] Other Important Information - The company redeemed $540 million of Series A preferred stock, optimizing its capital structure and reducing financing costs [26] - Free cash flow was a use of $89 million in Q3, attributed to increased working capital needs due to significant sales growth [10][24] Q&A Session Summary Question: How much did price contribute to growth by segment? - The overall pricing benefit in Q3 was just under 3%, with EES at about 4%, CSS at 2%, and UBS at 1% [38] Question: Can you provide insights on EES growth excluding data centers? - EES experienced strong growth across construction, industrial, and OEM segments, with notable increases in infrastructure-related projects [41][43] Question: What is the outlook for public power in the utility segment? - Public power is expected to return to growth in 2026, with current softness attributed to inventory build issues during the pandemic [107] Question: How will supplier volume rebates impact margins? - Supplier volume rebates contributed to gross margin expansion in Q3, and the company expects this trend to continue into 2026 [61] Question: What is the status of the digital transformation and cross-selling? - The digital transformation is progressing well, and cross-selling initiatives have significantly exceeded initial expectations, contributing to overall sales growth [63]

Financial Data and Key Metrics Changes - The company reported record quarterly sales of $6.2 billion, marking an 18% organic growth in Communications and Security Solutions (CSS), 12% in Electrical and Electronic Solutions (EES), and a return to growth in Utility and Broadband Solutions (UBS) [6][35] - Adjusted EPS grew 9.5% year-over-year and 16% sequentially, with both gross margin and EBITDA margin improving sequentially [7][36] - Organic sales growth accelerated to 12% in Q3, following 6% in Q1 and 7% in Q2, indicating four consecutive quarters of accelerating momentum [5][11] Business Line Data and Key Metrics Changes - EES delivered organic sales growth of 12%, driven by construction, industrial, and OEM segments, with data center sales up 60% year-over-year [13][14] - CSS achieved 18% organic growth, primarily from data center solutions, which were up over 50% due to large project activity [15][16] - UBS saw a 3% increase in organic sales, led by high single-digit growth in investor-owned utilities, while public power remained soft [23][24] Market Data and Key Metrics Changes - Total data center sales reached approximately $1.2 billion, representing 19% of total company sales on a trailing 12-month basis, with a year-over-year growth of 60% [6][18] - Backlog in UBS increased by 11% year-over-year, reflecting stronger customer order rates [23] Company Strategy and Development Direction - The company is focused on accelerating cross-selling initiatives and driving enterprise-wide margin improvement through technology-driven business transformation [8][9] - The strategic outlook for 2026 includes mid-single-digit organic sales growth, with continued strength in electrical markets and a return to growth in public power [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform markets due to secular growth trends in digitalization, electrification, and supply chain resiliency [9][36] - The company raised its full-year outlook for organic sales growth, adjusted EBITDA, and adjusted EPS based on increasing business momentum [8][31] Other Important Information - The company redeemed $540 million of Series A Preferred Stock, optimizing its capital structure and reducing financing costs [27] - Free cash flow was a use of $89 million in Q3, attributed to increased working capital needs due to significant sales growth [10][25] Q&A Session Summary Question: How much did price contribute to growth by segment? - The overall pricing benefit in Q3 was just under 3%, with EES at about 4%, CSS at 2%, and UBS at 1% [39] Question: Can you discuss the strength in EES outside of data centers? - EES saw growth across all operating groups, particularly in construction and OEM, driven by robust demand in infrastructure projects [40][42] Question: Are you seeing a crowd-out effect from AI and tech spending? - There is no observed crowd-out effect; EES growth is attributed to overall market outperformance [51][52] Question: What gives confidence in the return to growth for public power? - Public power is expected to return to growth in 2026, supported by improving customer order rates and inventory builds [109][110]

Financial Data and Key Metrics Changes - The company reported record quarterly sales of $6.2 billion, marking an 18% organic growth in Communications and Security Solutions, 12% in Electrical and Electronic Solutions, and a return to growth in Utility and Broadband Solutions [7][36] - Adjusted EPS grew 9.5% year over year and 16% sequentially, with both gross margin and EBITDA margin improving sequentially [8][36] - Organic sales growth accelerated to 12% in Q3, following 6% in Q1 and 7% in Q2, indicating four consecutive quarters of accelerating momentum [6][36] Business Line Data and Key Metrics Changes - Electrical and Electronic Solutions (EES) saw organic sales up 12% year over year, driven by growth across all operating groups, particularly in construction and OEM [15][16] - Communications and Security Solutions (CSS) delivered organic sales growth of 18%, supported by strong demand in data center solutions [16][17] - Utility and Broadband Solutions (UBS) reported a 3% increase in organic sales, marking a return to growth after seven quarters of declines, driven by investor-owned utilities [23][36] Market Data and Key Metrics Changes - Total data center sales reached approximately $1.2 billion, up 60% year over year, representing 19% of total Q3 company sales on a trailing 12-month basis [7][19] - The broadband segment experienced over 20% year-over-year growth, indicating a significant improvement from previous quarters [23] - Backlog increased 11% year over year, reflecting stronger customer order rates across various segments [23] Company Strategy and Development Direction - The company is focused on accelerating cross-selling initiatives and driving enterprise-wide margin improvement through technology-driven business transformation [8][10] - The strategic outlook includes capitalizing on secular growth trends such as digitalization, electrification, and supply chain resiliency, with expectations for continued market-leading growth into 2026 [10][36] - The company raised its full-year outlook for organic sales growth and adjusted EBITDA based on increasing business momentum [8][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform markets due to strong portfolio strength and ongoing secular growth trends [10][36] - The outlook for 2026 includes expectations for mid-single-digit organic sales growth and continued strength in electrical markets, with a return to full-year growth in utility services [37] - Management acknowledged challenges related to working capital investments but emphasized the high quality of cash flow issues due to significant sales growth [71] Other Important Information - The company redeemed $540 million in Series A preferred stock, marking a significant milestone in capital structure optimization [27] - Free cash flow was a use of $89 million in Q3, attributed to increased working capital needs due to significant growth [24][25] - The company is experiencing a dynamic tariff environment, with supplier price increase notifications up over 100% in count, but the impact on results was limited [28] Q&A Session Summary Question: How much did price contribute to growth by segment? - Overall pricing benefit in Q3 was just under 3%, with EES at about 4%, CSS at about 2%, and UBS at about 1% [39] Question: Can you discuss the strength in EES outside of data centers? - EES saw growth across construction, industrial, and OEM sectors, with construction up mid-teens driven by infrastructure projects [42][44] Question: Is there a crowd-out effect from AI and tech spending? - There is no observed crowd-out effect; EES growth is attributed to overall market outperformance [51] Question: What is the outlook for public power in the utility segment? - Public power is expected to return to growth in 2026, with current softness attributed to inventory build issues [108]

Financial Data and Key Metrics Changes - Revenues increased by 6% year-over-year to $5.2 billion, driven by strong vehicle production in North America and China [7][17] - Operating income rose by 10% to $654 million, reflecting volume growth and strong operating performance [7][17] - Earnings per share reached a record $2.17, up 19% year-over-year, supported by lower share count and increased operating income [7][18] - Operating cash flow was strong at $584 million, with capital expenditures totaling $143 million [18][23] Business Line Data and Key Metrics Changes - Advanced Safety and User Experience segment revenue was flat year-over-year at approximately $1.4 billion, with strong growth in Wind River exceeding 20% [9][20] - Engineered Components Group revenue increased by 6% to $1.7 billion, driven by nearly 30% growth with local OEMs in China [21] - Electrical Distribution Systems revenue grew by 11% to $2.3 billion, benefiting from strong EV production and an easier year-over-year comparison [22] Market Data and Key Metrics Changes - North America revenue grew by 14%, driven by double-digit growth in Electrical Distribution Systems and User Experience [19] - Europe experienced a 3% decline in revenue, primarily due to challenges in the Advanced Safety and User Experience segment [19] - Revenue in China was flat, impacted by unfavorable customer mix in the Advanced Safety and User Experience segment [19] Company Strategy and Development Direction - The company is progressing with the separation of its Electrical Distribution Systems business, expected to be completed by the end of Q1 2026, to enhance shareholder value [6][16] - Focus on maximizing shareholder value through a robust operating model and proactive portfolio management [6][31] - Continued investment in advanced technologies and expansion into non-automotive markets, with expectations of strong growth in adjacent sectors [6][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth accelerating in 2026, driven by new automotive program launches and strong demand in non-automotive markets [15][31] - The macro environment remains dynamic, with geopolitical trends and trade policies posing challenges [16][31] - Management highlighted the importance of navigating supply chain disruptions and maintaining strong customer relationships [16][31] Other Important Information - The company recorded a non-cash goodwill impairment charge of $648 million for Wind River, reflecting slower growth expectations [18][19] - New business bookings for the quarter totaled $8.4 billion, bringing year-to-date bookings to approximately $19 billion [8][7] Q&A Session Summary Question: Can you break down the $80 million known impact for Q4? - The $80 million includes volume impacts from the facility fire in Oswego and other customer-specific situations affecting European production [34][36] Question: What is the status of Nexperia and its political implications? - The situation is political, primarily between the Dutch government and China, but the company has alternative sources and does not expect production in China to be impacted [39][40] Question: What are the drivers behind the margin guidance for Q4? - Key drivers include flow-through on weaker volumes, timing of customer recovery, and elevated copper prices impacting margins [44][49] Question: How is the company approaching M&A opportunities? - The company is open to M&A as a means to diversify revenue, focusing on meaningful synergies and growth potential [62][64] Question: What is the outlook for Active Safety and User Experience growth? - Active Safety is expected to see low single-digit growth in the back half of the year, while User Experience is projected to return to growth in 2026 [68][71] Question: How does the company view the opportunity in energy storage? - The energy storage market presents significant growth potential, with ongoing investments in adjacent markets [52][83]

Financial Data and Key Metrics Changes - Revenues increased by 6% year-over-year to $5.2 billion, driven by strong vehicle production in North America and China [5][17] - Operating income rose by 10% to $654 million, reflecting volume growth and strong operating performance [5][17] - Earnings per share reached a record $2.17, up 19% year-over-year, supported by lower share count and increased operating earnings [5][18] - Operating cash flow was strong at $584 million, with capital expenditures totaling $143 million [18][24] Business Line Data and Key Metrics Changes - Advanced Safety and User Experience segment revenue was flat year-over-year at approximately $1.4 billion, with strong growth in Wind River exceeding 20% [7][20] - Engineered Components Group revenue increased by 6% to $1.7 billion, driven by nearly 30% growth with local OEMs in China [22] - Electrical Distribution Systems revenue grew by 11% to $2.3 billion, benefiting from strong EV production and an easier year-over-year comparison [23] Market Data and Key Metrics Changes - North America revenue grew by 14%, driven by double-digit growth in Electrical Distribution Systems and User Experience [19] - Europe experienced a revenue decline of 3%, primarily due to challenges in the Advanced Safety and User Experience segment [19] - Revenue in China was flat, impacted by unfavorable customer mix in the Advanced Safety and User Experience segment [19][20] Company Strategy and Development Direction - The company is progressing with the separation of its Electrical Distribution Systems business, expected to be completed by the end of Q1 2026, to enhance shareholder value [4][16] - The focus remains on maximizing shareholder value through proactive portfolio management and cost structure optimization [31] - The company anticipates revenue growth acceleration in 2026, driven by new automotive program launches and continued growth in non-automotive markets [15][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic macro environment, including geopolitical trends and trade policies, which pose challenges to forecasting [15][16] - Despite uncertainties, the company remains focused on navigating challenges and delivering strong financial results [16][31] - The company raised its full-year 2025 guidance, reflecting strong Q3 results, while incorporating conservatism due to recent production disruptions [15][27] Other Important Information - The company recorded a non-cash goodwill impairment charge of $648 million for Wind River, which is excluded from adjusted results [18][19] - New business bookings for the third quarter totaled $8.4 billion, bringing year-to-date bookings to approximately $19 billion [6][5] Q&A Session Summary Question: Can you break down the $80 million known impact on Q4 guidance? - The $80 million includes volume impacts from the facility issue in Oswego and other customer-specific situations affecting European production [34][35] Question: What is the current status of Nexperia and its political implications? - The situation is political, primarily between the Dutch government and China, but the company does not expect production in China to be impacted [39][40] Question: What are the growth dynamics in the quarter, particularly in China? - The company has seen specific OEM volume issues impacting growth in Europe and China, with program cancellations affecting the latter [56][58] Question: How is the company approaching M&A opportunities? - The company is committed to growth in non-automotive markets and is evaluating M&A opportunities based on potential synergies and market positioning [61][63] Question: What is the outlook for Active Safety and User Experience segments? - Active Safety growth is expected to be low single digits in the second half of the year, while User Experience is anticipated to return to growth in 2026 [66][69]

Financial Performance & Guidance - Allegro's 2QFY26 net sales reached $214 million, exceeding the midpoint of guidance[10] - The gross margin for 2QFY26 was 49.6%, surpassing the midpoint of guidance and showing a 140 bps quarter-over-quarter improvement[10, 14] - EPS for 2QFY26 was $0.13, also above the midpoint of guidance[10, 14] - Free cash flow for 2QFY26 was $14 million, representing 6% of sales[14] - The company made a $25 million voluntary debt repayment[14] - 3QFY26 sales guidance is between $215 million and $225 million, implying 24% year-over-year growth[20] Business Highlights & Market Position - Overall net sales increased by 14% year-over-year[15] - Auto sales increased by 12% year-over-year, with e-Mobility leading the growth at 21% year-over-year[15] - Industrial and Other sales increased by 23% year-over-year, driven by strength in Data Center[15] - Over 70% of design wins were in strategic focus areas[15] - Allegro is the 1 market leader in magnetic sensing[32, 37] Strategic Focus & Long-Term Goals - The company aims for long-term gross margin >58%, operating expenses ~26% of sales, operating margin >32%, and free cash flow >25% of sales[109] - Allegro repurchased approximately 39 million shares from Sanken Electric, reducing their ownership from 51.5% to 32.5%[119]

Financial Performance - Record Q3 revenue of $5.2 billion, with adjusted growth of 6% year-over-year[4] - Record adjusted operating income of $654 million, up 10% year-over-year, driven by strong flow through on volume and manufacturing performance[4] - Record adjusted EPS of $2.17, up 19% year-over-year, driven by increased operating income and lower share count from repurchases[4] - Operating cash flow of $584 million, enabling ~$250 million of capital deployment in share repurchases and debt repayment[4] Business Highlights - Bookings of $8.4 billion, reflecting sequential acceleration in program award timing[4] - Strong performance outside of Automotive, with double-digit revenue growth attributable to markets outside of Automotive, including 20%+ growth in Wind River[3] - 30% growth in Software bookings year-to-date[10] - Approximately 85% of year-to-date bookings in China are with Local OEMs[10] Segment Performance - Advanced Safety & User Experience (AS&UX) revenue was $1.442 billion[34] - Engineered Components Group (ECG) revenue was $1.714 billion[35] - Electrical Distribution Systems (EDS) revenue was $2.286 billion[36] Outlook - Raising full-year revenue guidance to $20.15 billion - $20.45 billion, representing adjusted revenue growth of 2%[47] - Expecting revenue growth to accelerate into 2026[49]

Q3 2025 Performance - Shipments reached 13 million units, a 13% year-over-year increase[10] - Net revenues totaled €372 billion, also up 13% year-over-year, driven by growth in North America[10] - North America saw a 35% rebound in shipments compared to the prior year[10] Market Share - North America market share improved sequentially by +40bps compared to Q2 2025[10] - U S market share increased by +50bps compared to Q2 2025, reaching 78%[30] - EU30 market share decreased by -70bps year-over-year[32] U S Investment and Production - A $13 billion investment in U S operations was announced[12] - This investment aims to increase U S production by 50%[12] - The investment is expected to add over 5,000 jobs in the U S[12] H2 2025 Outlook - The company affirmed its H2 2025 outlook, expecting improved net revenues and industrial free cash flow compared to H1 2025[11] - The company anticipates incurring approximately €10 billion in net tariff expenses for 2025[79]

Big Tech Earnings & AI - Microsoft's earnings were not massively disappointing, and the OpenAI news is positive for the company in the long term [2] - The market is waiting for Amazon's earnings report [3] - Alphabet's search business is strong, with growth in Gemini [3] - AI is a significant theme for all companies, influencing capex decisions [4] Market Inflection & Strategy - The market is in a phase of digestion, pausing to assess recent Fed announcements and earnings reports, while awaiting further earnings and ECB updates [4] Commodity Focus: Uranium & Gold - Uranium miners are a recommended theme due to exploding global power demand driven by AI, EV, and electrification [5][6] - The uranium market is undersupplied, with rising demand from data centers and new reactors, making it a durable commodity story [6] - Gold is currently in a consolidation phase, with clients happy to hold it, and potential for institutional investment [7][8]

Core Insights - Ferrari is recognized as an elite business with a timeless brand, strong pricing power, and exceptional margins, appealing to investors for its blend of performance and predictability [1] Group 1: Electrification Challenge - The primary strategic challenge for Ferrari is the transition to electric vehicles, with the first fully electric model expected in 2026 and a target of 60% of its lineup being hybrid or electric by that year [3] - The brand's identity is closely tied to the sound and driving experience of its combustion engines, which may not translate well to electric powertrains, posing a risk to its core value proposition [4] - Ferrari has invested in new facilities to engineer electric performance that retains the emotional connection of its combustion cars, but failure to achieve this could deter even loyal customers [5] Group 2: Valuation and Market Expectations - Ferrari's stock trades at approximately 41 times earnings, reflecting a premium valuation due to its luxury brand power and high returns, but this also means that market expectations are extremely high [6] - Any operational missteps, such as margin misses or slower growth, could lead to a significant decline in stock value, as the current valuation assumes flawless execution [6] - Unlike traditional automakers, Ferrari lacks the ability to increase production in response to market sentiment changes, which could impact its performance during economic downturns [7] Group 3: Risks of Success - The most significant risk for Ferrari may stem from its own success, as both internal and external factors could impact its performance [8]