• Revenue: $567 million, down 7% year-over-year.
• GAAP Operating Margin: 15.5%.
• Adjusted Operating Margin: 15.9%.
• Adjusted EBITDA Margin: 21.7%, up 310 basis points sequentially.
• GAAP Diluted EPS: $2.32.
• Adjusted Diluted EPS: $2.71.
• Free Cash Flow: $65 million in the quarter; $157 million year-to-date.
• Cash on Hand: $630 million.
• Net Debt to EBITDA Leverage: 1.6 times.
• Capital Returned to Shareholders: $17 million via cash dividend in the quarter; $91 million year-to-date.
• Electronics Segment Sales: Down 12% year-over-year.
• Transportation Segment Sales: Down 3% year-over-year.
• Industrial Segment Sales: Increased 7% year-over-year.
• Fourth Quarter Sales Guidance: $510 million to $540 million.
• Fourth Quarter EPS Guidance: $1.90 to $2.10.

• Warning! GuruFocus has detected 6 Warning Sign with LFUS.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Littelfuse Inc (NASDAQ:LFUS) exceeded its sales and earnings guidance for the third quarter, demonstrating strong execution and resilience in a challenging environment.
• The company reported strong free cash flow and maintains a well-positioned balance sheet to support its long-term growth strategy.
• Littelfuse Inc (NASDAQ:LFUS) secured meaningful new business wins across various segments, including data centers, gaming, medical, and telecom applications.
• The company observed growth in its industrial segment, driven by strong demand in industrial safety, HVAC, and data center applications.
• Littelfuse Inc (NASDAQ:LFUS) continues to focus on operational excellence and cost reduction initiatives, contributing to margin improvements across its segments.

Negative Points

• The company observed cautious customer ordering patterns and challenging end market conditions, particularly in Europe and China.
• Littelfuse Inc (NASDAQ:LFUS) expects fourth-quarter sales to be sequentially lower due to typical seasonality and ongoing muted demand trends.
• The electronics segment experienced a decline in sales, particularly in semiconductor products, which were down 21% year-over-year.
• The transportation segment faced a 3% decline in sales, impacted by pruning actions and ongoing end market weakness.
• The industrial segment is experiencing continued soft demand trends, particularly in industrial equipment and factory automation applications.

Q & A Highlights

Q: Can you elaborate on the 4Q guidance assumptions for the electronics segment, particularly regarding seasonal factors and power semiconductor trends? A: We are experiencing two different dynamics in the electronics segment. For passives and protection semiconductors, channel partner inventories are healthy, and demand is stable, leading to normal seasonality in Q4. However, the power semiconductor segment, heavily tied to industrial applications, is facing challenges due to slowing industrial demand, particularly in Europe. We expect this softness to persist into 2025, with limited visibility on improvement due to geopolitical dynamics.

Q: How did the book-to-bill ratio change in the electronics segment during the quarter? A: The overall electronics book-to-bill ratio softened slightly as we entered Q4. For passive products and protection semiconductors, it is running just under one, indicating near parity. However, the power semiconductor portion is softer, primarily due to industrial application challenges.

Q: Can you explain the upside in transportation and industrial margins this quarter and the implications for future margins? A: Both segments benefited from favorable foreign exchange impacts, contributing approximately 200 basis points to margins. Additionally, we saw positive mix effects. While some of these factors were one-offs, we remain confident in our margin sustainability and expect continued margin expansion in 2025 through cost reduction and operational improvements.

Q: What is the current pricing environment, and are you seeing any pricing pressure as demand recovers? A: The pricing environment has stabilized. The cost increases from the past few years have remained, and the pricing actions taken have been resilient. While there is a return to more normalized pricing dynamics, particularly in electronics, we are actively managing pricing in transportation to address cost and profitability concerns.

Q: How is the design win activity progressing, and does it contribute to net growth in a flat market? A: Design activity remains strong across all segments, with robust design wins in automotive and commercial vehicles. While conversion from design to production has been slower, we expect it to contribute to growth over time. The design wins position us well for future growth once market demand recovers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.