Littelfuse(US:LFUS)2025-10-29 14:00Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $625 million, representing a 10% increase year-over-year and a 7% organic growth, with the Dortmund acquisition contributing 2% and FX providing a 1% tailwind [15][16] - Adjusted EBITDA margin was 21.5%, down 20 basis points, while adjusted diluted earnings increased by 9% to $2.95 [16] - Operating cash flow was $147 million, generating $131 million in free cash flow, with a year-to-date free cash flow of $246 million and a conversion rate of 145% [16] Business Line Data and Key Metrics Changes - Electronics Segment: Sales increased by 18% year-over-year and 12% organically, with passive products up 19% and semiconductor products up 5% [17] - Transportation Segment: Sales were flat year-over-year, with organic sales down 2%, but FX contributed 2% to growth. Adjusted EBITDA margin decreased to 16.8%, down 220 basis points [18] - Industrial Segment: Sales grew 4% organically, driven by energy storage, renewables, and data center growth, but faced softer HVAC demand [19] Market Data and Key Metrics Changes - The company reported strong growth in the data center market, with design wins up more than 50% year-to-date, indicating significant traction in this area [10][32] - The transportation segment experienced softer demand in commercial vehicles, with a 3% organic sales decrease [18] Company Strategy and Development Direction - The acquisition of Basler Electric for approximately $350 million is aimed at enhancing capabilities in power generation and distribution markets, aligning with the company's strategic priority of safe and efficient electrical energy transfer [4][13] - The company is focusing on operational excellence and enhancing its semiconductor business, with a new leader appointed to drive this initiative [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in solid revenue and earnings growth for Q1 2026, supported by a 20% increase in bookings compared to Q3 2024 [5] - The company anticipates typical seasonality in Q4, with guidance for sales between $570 million and $590 million, reflecting a 5% organic growth at the midpoint [20] Other Important Information - The company is realigning its sales structure to better serve customers and enhance engagement, transitioning from product-centric to customer-centric sales teams [9][48] - The company expects the Basler Electric acquisition to be accretive to adjusted EPS in 2026, targeting double-digit returns in year five post-close [14] Q&A Session Summary Question: Update on Power Semiconductor Outlook - Management acknowledged sequential growth in power semiconductors but noted year-over-year softness, emphasizing the strategic importance of this segment [23][24] Question: Impact of Stock Compensation - Management clarified that the $0.40 impact from stock compensation is primarily due to variable compensation resetting to target levels, which should normalize in 2026 [27][29] Question: Data Center Opportunities - Management highlighted significant momentum in the data center market, with design wins doubling year-over-year and ongoing engagement with hyperscalers and cloud companies [30][32] Question: Transportation Segment Performance - Management explained the flat performance in passenger vehicle fuses and the decline in sensors, indicating a realignment strategy for the sensor business [55] Question: Tariff Impact - Management discussed the timing of tariffs, indicating a neutral impact for Q4 and a stabilization in market dynamics [51][53]