Littelfuse(US:LFUS)2021-04-28 18:15Financial Data and Key Metrics Changes - The company reported record revenues of $464 million for Q1 2021, representing a 34% increase year-over-year and a 16% increase sequentially [9][33] - Adjusted operating margin was 17.1%, expanding 270 basis points compared to the previous year [34] - Adjusted EPS was $2.67, reflecting a 107% growth year-over-year [10][35] Business Segment Performance - The Electronics Product segment saw sales growth of 34% and 32% organically, with operating margins at 19.4%, up over 400 basis points [42] - The Automotive Product segment experienced a 23% sales increase, with organic growth of 17% and operating margins at 15.8%, up over 200 basis points [43] - The Industrial Product segment's sales increased by 80% due to the Hartland acquisition, with organic growth of 10% and operating margins at 7.2% [44] Market Data and Key Metrics Changes - Demand recovery was noted across various end markets, particularly in automotive and commercial vehicles, with organic sales growth of 22% in passenger vehicles [15][43] - The company reported strong demand in China and Asia, with ongoing healthy order rates across all segments [127] Company Strategy and Development Direction - The company is focused on a five-year growth strategy centered around sustainable, connected, and safer solutions, aiming for long-term double-digit revenue growth and best-in-class profitability [7][8] - The integration of Hartland Controls is progressing well, enhancing customer relationships and expanding the product portfolio [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges and inflationary pressures but expressed confidence in the company's ability to manage these issues [10][52] - The outlook for Q2 2021 anticipates sales between $463 million and $477 million, reflecting a year-over-year increase of 53% at the midpoint [47] Other Important Information - The company generated $50 million in operating cash flow and $35 million in free cash flow during the quarter, ending with $573 million in cash [38] - A three-year $300 million stock buyback authorization was approved by the Board, with a focus on acquisitions to enhance organic growth [39] Q&A Session Summary Question: Inventory build and content growth in automotive - Management noted that while there was some inventory build in Q4, it did not continue into Q1, with content growth in automotive at 8% to 10% [60][61] Question: Measures to minimize double booking and excess inventory - The company is increasing lead times and implementing non-cancelable orders to manage inventory effectively [64] Question: Gross margin and operating margin outlook - Management indicated that gross margins are facing headwinds from increased input costs, with expectations for improved flow-through in Q2 [70][75] Question: Supply chain simplification and wafer capacity - The company is exploring in-house wafer production where feasible, but most shortages are not in areas of heavy focus [79] Question: Visibility into second half of the year - Management expressed cautious optimism for the second half, contingent on supply chain stability and pandemic developments [102]