Littelfuse(US:LFUS)2025-10-29 14:02Financial Data and Key Metrics Changes - Revenue for the third quarter was $625 million, representing a 10% increase year-over-year and a 7% organic growth, with the Dortmund acquisition contributing 2% and foreign exchange 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 favorable 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][31] - The transportation segment experienced softer end market demand, particularly in commercial vehicles, which decreased by 3% organically [18] Company Strategy and Development Direction - The acquisition of Basler Electric is a strategic priority aimed at enhancing capabilities in power generation and distribution markets, expected to be accretive to adjusted EPS in 2026 [14][15] - The company is focusing on operational excellence and enhancing its semiconductor business, with a new leader appointed to drive growth in this area [11][12] - A realignment of the sales structure has been implemented to better serve customers and leverage the full technology portfolio [9][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for solid revenue and earnings growth in the first quarter of 2026, supported by a 20% increase in bookings compared to the third quarter of 2024 [5] - The company anticipates typical seasonality in the fourth quarter, with guidance for sales between $570 million and $590 million, reflecting a 5% organic growth at the midpoint [20][21] Other Important Information - The company ended the quarter with $815 million in cash and a net debt to EBITDA leverage of 0.9x, indicating a strong balance sheet [16] - The company returned $19 million to shareholders via cash dividends during the quarter [16] Q&A Session Summary Question: Update on Power Semiconductor Outlook - Management acknowledged sequential improvement in the power semiconductor business, despite year-over-year softness, and emphasized the strategic importance of this segment [24][26] Question: Impact of Stock Compensation - The $0.40 impact from stock compensation is primarily due to variable compensation resetting to target levels, with expectations for normalization in 2026 [27][29] Question: Data Center Opportunities - Management highlighted significant momentum in the data center market, with design wins doubling year-to-date and ongoing engagement with hyperscalers and cloud companies [30][32] Question: Industrial Segment Growth - The industrial segment has shown solid year-to-date growth of 12%, driven by strong demand in energy storage and renewables, despite softer HVAC and construction markets [42][44] Question: Transportation Segment Performance - The core passenger vehicle business performed reasonably well, while sensor products continue to face challenges, indicating a realignment strategy in progress [59]