LFUS - Earnings call transcript Q4 2017

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Operator

Good day everyone and welcome to the Littelfuse Inc. Fourth Quarter 2017 Conference Call. Today's call is being recorded. At this time, I will turn the call over to President and CEO, Mr. Dave Heinzmann. sir. ahead go Please

David Heinzmann

good call. to always, With Financial our and quarter Meenal Littelfuse XXXX Chief conference me Officer. morning. you, the Welcome fourth Sethna, Thank is as

very performance quarter earnings end at share a quarter Our last finish by XX% increased the strong of per a $XXX our year. Industrial fourth Littelfuse. in year. over fourth estimate, of for with growth led top Sales up of to of XXXX. fourth against Adjusted strong segments, terrific X% Automotive provided a was growing to an our X% and year Organic over $X.XX also solid were quarter quarter million Electronics exceptionally last

with X% growth. per full up from delivered was our earnings year, XX% cash organic $X.XX, sales earnings share we strategy, the of In record full billion, year net sales, first year, and XXXX, up updated the XXXX. $X.X Adjusted For last of XX% versus flow.

We and progress our product. in double We the Monolith electronics Sensor, also our to acquisition, our announced end plans protection key of previous organic the safety, strategy. technologies. world, strategy of history, accelerate carbide focus efficiency power and of Semiconductor silicon five the and two in mega acquisitions sensor organic built a in of industrial and the global which We in updated Through acquisitions. our closed strategy. growth, saw circuit with And ago. opportunities our sensor strategy in we grow IXYS through our $XXX sensor strategy. top business, profitability our sustain the first a outlined our achieve Back platform. expanding we builds we control several strength our outlined largest energy markets. and growth line position in in of shared strategic combination Analyst initiatives. updated we sensor our of our held double platform substantial to weeks key We We core XXXX, ago December in sales. acquired trends a About This ownership growth At of digit global several intersection Day, on we our key where years million made launched is majority took connected portfolio strategic the the and U.S.

growth growth the a few space. also We brings platform. opportunities with The industrial the power IXYS control more expertise technology semiconductor aligns increasing I'll diversifies and extensive IXYS our control an IXYS accelerate and saw market. presence expands addition detail portfolio across power across our that strategy in within in of our to power discuss minutes. electronics

and strong We continue strategy in high growth by investing traction markets. with our the focusing

want strategy I to that Our accomplished on job our done their world of around hard in executing outstanding have our and the teams thank on for we all XXXX. and associates dedication an work

gives performance tax and on Another we're us topic We're US a our reform additional and company for US believe catalyst focused goals. growing positive Littelfuse. the flexibility Reform for Implications. achieve will we reform be Overall, economy tax financial to Tax future another is

and As company, Acquisitions have in part growth. are and another headquartered organic to acquisitions people innovation our drive of to based. US continue a been invest US our our strategy key of we'll many our

strategy allocation capital our opportunities, remains these unchanged. Given

summary the to in results. of quarter who call about share shareholders I'll buyback. over to fourth use of and XX% remainder flow, our the additional free and We our the M&A expect will with With turn form Meenal reform periodic of dividends returned provide tax our some color will that cash continue on to a

Meenal Sethna

Thanks Dave.

materially ask you involve important for this comments of may future our significant statements forward-looking uncertainties. more today's Also, actual expectations. These about review XX-Q release release non-GAAP to measure in not are certain the A call most During this provided performance risks cause available to financial make We contain results could measures. Relations and differ of detail our press measures statements. from comparable and our to remarks and that to call on reconciliation GAAP these our Investor Form guarantees we risks website. non-GAAP our is today and financial earnings forward-looking XX-K on and refer

fourth results Before I'll estimate and the our the I of outlook, US reform and of a to discuss XXXX impact our beyond. the of impact summary and XXXX our start with quarter tax XXXX new results

legacy share $XX million, million payable our GAAP of the over net acquisition in reform been XXXX well to repatriation expect impact earnings. loss tax flexibility has US. down. million from As With and one and of Littelfuse our tax we adjusted $X.XX This as resulting us We'll have to our tax information release, on details years. foreign earnings. includes pay term the aligns allocation This approximately is deemed EPS charge time a excluded impact only today. it's our credits, have bring on quarter charge purchase financial be tax gives cash included the cash back this as to US per will cumulated on part in we of This earnings. our the debt charge IXYS part best will call. noted focus near which based our quarter the press with we accounting available This the as for estimated $X.XX. capital earnings next to of of increased charge first estimate $XX impact not our of the charge of time $XX the equates one be an charge eight recorded fourth charge the The IXYS estimated

our our As debt times part X.X acquisition to we getting year. excess targeted leverage to strategy, back EBITDA of this

adjusted For XX%. to XXXX, effective the guiding an tax of full rate to year we're XX%

has that that rate. higher When tax the announced had events Within the the much impact an historically we IXYS legacy targeted range. time XX% few early noted rate, a tax planning new acquisitions our tax reduce have of of the Littelfuse estimated it impacts reform legislation. XX% rate rate the We're analysis in some the two US to tax to us overall would rate. still planning we to weeks, stages in and to past our than tax and combined tax take had our acquisition, major effective to our a of IXYS US is adjusted

from However, legacy tax already and near our US term in rate given new rate some the for we legislation. low provisions business, the limitations expect increase

expect rate we to XXXX, effective adjusted to to targeted XX% our back Beyond our XX% range. bring tax

adjusted year. in finished high sales outstanding GAAP quarter near X% increase. above on And our share. than expect tax with and operating same capped full fourth to our the the the from US to finish our Over were now tax for with XX.X% year the fourth at third adjusted guidance and earnings we margins of as acquisition and Sales X% expanded year per XX.X%, offset and the term highlights we rate moving in quarter, margin guidance off up our as over finished point our operating $XXX year XXX few reforms quarter IXYS basis benefit million, next We up to years, the quarter at the XXXX. organically. and an last margin more our end we over last was

strong income of share diluted leverage. loss We quarter operating over a up last per adjusted recorded Our year, XX% was GAAP $X.XX. with of another

last XX% $X.XX, Our adjusted EPS increased was over which year.

over of up with of organic by points year We $X.XX, share per X% full operating with the at XX.X%. up XXX for XX% per diluted basis were earnings $X.XX. to expanded year GAAP XX%, growth finishing $X.XX For while at sales led adjusted leverage earnings margins share the XXXX, driving XXXX, billion strong Electronics. of finished our That was margins P&L. were adjusted the

at record the were slightly double Electronics digit continued operational Automotive XX.X% operating performance the growth finished for XX.X% strong were by year, continued Looking sales drove versus by commodity year. margin during strong increases the a impacted performance. the margins leverage year. year at last Margins business, which down price by and led

a segment as year essentially free record XX% flow. operating cash industrial at returning generated margins. back segment year flow was the million for to the in double we operating million $XXX in operating finished Cash digit and margin, $XXX Our flow cash the

conversion impact charge it of in cash of to income. $XX new tax products. We of capital to and much was income non-cash and the programs XXX%, $XX million very add net in strong Our the excludes growth which million invested expenditures business, a into the net capacity free back customer

to fixed On the structure the color front, transaction. Along momentum business in to capital and our And that year last with quarter an I'll allocation interest back limits execute our our us know we a facility senior capital us turn was rates flexibility expanded $XXX gives gives debt to Dave a conjunction in that, rate the on continue million finish notes rate existing credited strategy. as fourth trends. with additional exposure into This rise. our summary, quarter continued we IXYS more for market solid and to good In with XXXX. it performance financial outstanding issued

David Heinzmann

were segment, million, quarter $XXX organically. sales X% with fourth Thanks, Starting year-over-year the X% of electronics up Meenal. increased and

historical For fourth of $XXX year seen across than electronic XX% cycle indicated into a regions. our XXXX, well fourth organically. average. the more backlog robust increased all for X.X, of orders the we've The saw overall million, full now book-to-bill quarter with We as our above has a year, still through sales increased by XX% going momentum grew strong and quarter

We due were in sales of as distribute North continue expected, believe the were to levels. closely in at inventories to America, Fourth and exceptional and they're reasonable our sales Asia Europe and fourth quarter customers quarter end channel monitor year-over-year XXXX. to down but strong

with For appliances I'll growth in markets, and the Things, across we and had automotive a solid Internet wins few we automation. markets. building in year, home vertical electronics, increases of full these highlight the most saw strong

had for two general applications We the headlights, Our Japan, new another LED in good dashboards other fourth of wins and $X electronic our markets. in systems. wins quarter include include automotive for These quarter. one will business automotive electronics million had in business target customers product

we EV the wins protect and protection thyristors, infrastructure for charger applications. We which also of our wins good saw battery equipment. and design management Internet and data telecom Things In for networking space, had

We our diodes. number XG infrastructure of for network also a secured design power high wins TVS

shift relationships looked more had portfolio leveraging we're From with to electronic new machines and We these in design product wins appliance improve to temperature million expect washing XXXX even energy $X.X functionality. business. revenues. magnetic sensors, contribute engineer than sensors ongoing more our win coffee they position to to We to efficiency manufacturers, as to to makers, wins

Our building grew XX% and home about automation year-over-year. revenues

portfolio and We opportunities but we our for acquired expect automation circuit This in appliance sensing efforts both to continue, will sensors, position and the to provide products efficiency driven year. protection improve and our growth for by last safety. home energy, building only growth categories the not also temperature and

battery I which These As carbide cloud place base wins broad experience, the in efficiently. mentioned term solar promising for potential With customers extensive strong We product seeing customer operate we're Europe. we semiconductor in the just trends. evolving diverse our new launched of engineering centers, management, an position in initial power silicon our and believe safely in industrial need of the silicon interest important strengthen and products for industry wins North earlier, technology. their silicon and We're EV initial and MOSFET, are want well and element Monolith our growth further is investment to to have charging believe Semiconductor and carbide, innovative with micro carbide data market invertors long to America, in the From our a for in appliances, China help pleased the EV these wins and an in and we're positioned power charging our these strategy line indicator we computing supplies automotive electronics, stations October. with and capabilities are industry.

sales delivering both is in Our to look forward margins. We XXXX. and on this areas growth continuing focus targeted momentum growth across

customer for pioneer has wanted will Starting As I diversify expand we to begin results talk acquisition. global segment, be years. base. the the segment. take industrial next power electronics we'll my the market, the to a semiconductor a on in tremendous more reporting commentary able IXYS, With leveraging the wrap a electronics than presence electronics within about in IXYS industry up OEM IXYS been XX IXYS quarter, industrial to I the our moment and

EV We opportunities also the vehicle semiconductor to our with here per expanding by see is One power automotive portfolio IXYS increase content Littelfuse term customers. long example charging.

are portfolio. We seeing to integration to for in been working million. our had XXXX content add with others our and leveraging expect growth Similar our and IXYS we and full on industrial the December portfolio. quarter markets, to $XXX approximately opportunity. continues across will in IXYS best plans we processes what discussions ended discussing be Since we've sales also on August, approximately across sales products closely of in attractive already year demand and the $XX calendar across combined IXIS technologies share very and strong. practices opportunities announcement We've many can electronics

how companies, to best distribution serve suppliers. manufacturing discuss to two opportunities after starting has public operations, share and portfolio meet feedback our where limited certain to positive. started also information as we've However, product share to we synergy can in until and materials We chain and partners Initial quite supply been common and the our them. combined we across processes, closing. customers ability combined with been discuss our We're

million our to annualized remain two first during We'll years. confident we quarter $XX With achieve our savings first cost planning detail the progress within the on our than underway, is provide of earnings call. that on more already target additional

segment Our quarter continues X% products businesses. commercial let growth sales Fourth and car of million fuse automotive well. to across perform vehicle increased organically, passenger by $XXX our

year, $XXX prior the over For the up X% year. automotive organically sales million full were of

in growth fuse automotive strong saw and the in CVP As businesses. our quarter, we organic fourth

business, Our during programs low decline due of dampened growth legacy XXXX. in the exit sensor planned by was the auto our margin to

our grew robust a the decline sensors, segment in X% automotive organically. Excluding very

Europe, quarter, the growth global digit car Asia to incentive we Our America growth passenger saw Geographically America, next due from our generation China demand we to sales fuse impacts. XXXX the the car fuse SUV down tax in market. products, in fourth including for was double outperform compression particularly quarter. North and both challenging continues North the and In build growth the truck had during strong light while

by our based new in at In end German sales addition, Europe especially products. strong of the The In continued a sales higher Asia, and we short driven car India. the term in strong completed year of a build a with the program were automaker. were penetration

more focus to continue increases electrification of We and our across content to move on Asia growth vehicles. the

discussions ban India to our This introduction driven fuses, battery see in vehicles and continue demand powered electric cities We and supports being as well electric regulations cars increased by vehicles. China activities underway is that as increased for voltage larger hybrid globally the in of charging to high diesel development and systems. new for in Europe

of the has As government a recent example, vehicle in electric by India XXXX. goal established a XXX%

two product as for hybrid our technology totaled electric belt as million New passenger $X.X peak. broaden seat our fuses platform power car our in and This fourth well In award sensors, buckle quarter offering. expanded at program vehicle converter annually European includes we a China. application programs manufacturers to sensor for automotive

a passenger this As ODM. in with a result, we at major won category, including business key a significant a win car platform large new European

We about in will also peak. the secured a at new of annual revenues OEM generate business two wins large $X with China. Together million

in to commercial at customers. power to grow the Europe strength as product with as our prior quarter, to growth auto manufacturer the new XXXX, of sensor the quarter of products grew in strategic new North in America, CVP the vehicle won in relative to we on year. strong area beyond our made market We digits business the solid developments double strategy We underway American sales We strategic Sales progress and models. new year. positive released over fourth launches the large vehicle vehicle specialty growth distribution in past North with in with fourth driven we by a overall our return our commercial expect products business look

Europe relationships, million quarter, new plant in into we our greater for this global across Overall, growth. segment as also We portfolio us momentum this we expertise an and customer and CVP we're automotive in well the head XXXX.With transport, well in technical efficiency existing $XX our product positioned market growth above fuel our segment. to support good business won sales additional giving capacity established invested

the $XXX X% grew $XX the of up and Fourth Now, year, million on million of let's XX% to organically for industrial move were organically. sales quarter sales segment.

business channels solar years. and start with sales also quarter, with our picked XXXX, to a our We our fourth business expand up in the level After North distribution outside the to up sluggish digits Asia global highest America, in sales reaching continued quarter. in double broaden our three

such our front, the devices power returning variable first operating the fuse. sensitive fuse digit market we double this our protect in business in high-speed won supplies Korea year, achieved industrial new invertors. is On frequency we the used drives, semiconductors of energy in project designed margin. for storage quarter, a and segment uninterruptable Last goal earlier to customer as to our body Launched the with square power

We and forward. operating in margin fourth the continued expect margins XX% an to trajectory operating that digit of quarter double going maintain with

than is better in year segment was ago. industrial position Our a it much today

Our a the on seeing operating and We're significantly. for sales in performance growth, and solid distributor base development. us gives expansion our strategic product new markets, This geographic cost positions and improvement continuing growth have benefit from focus XXXX. improved

Before we my We're a company on broad customer continued growth after extensive either in impacting every ahead. at trends IXYS bookings ability across segment based opportunities in ongoing I reinforce the momentum. visiting macro CTS vehicles. of potential still We're discuss optimistic safety, our nearly to the on electronic bullish us the More remain we in heading. the the Walking autonomous world, month. our devices our into this quarter continue guidance, trends With booth of connected provides use business. earlier show and we're good visibility the customer. solid factors our connected portfolio and to progress technologies, saw of fourth business. is CTS, seen reflect the of the in driving of about Based and at or direction I energy the with with technology, the our Internet indicators wanted show, on thoughts advancements a seeing It in Things. XXXX and These very the efficiency our the in electrification

While our be outperforming continue to is increased we are end is to profitability. driving content markets segment sophistication XXXX, in The modest for the vehicles. architecture global vehicle expect enhancements the improving to to to in and expected car because in build expect we continued increase the see market industrial of

I'll provide well. For your all first have strategy in those to we're we'll the reasons, outlook for the Meenal, executing and will back quarter, note, I'm then who we right convinced the the that call On place questions. turn take

Meenal Sethna

Dave. Thanks,

we Turning outlook our our note quarter to first closed outlook please the first a that guidance, includes in approximately IXYS rates two the $XXX million organic reported quarter growth million. the current the $XXX months regulatory half expect in range as IXYS mid-January. growth of Based on includes of the and in exchange last The transaction foreign X% of year. be operations for and sales midpoint guidance the over to XXXX reflects to the environment, XX% and sales of

expect the rate tax growth of assumes We to per in an range rate This in year. earnings a XX.X% effective $X.XX, to be X% XX.X% last $X.XX XX% of diluted adjusted last year. compared over first QX for the to representing adjusted quarter share to

XX% tax EPS flat Our will rate. a growth first quarter year-over-year at be

and XX% IXYS our is diluted EPS the $X.XX interest planning the accretive transaction factoring synergy underway, quarters The still net within While EPS to rate expect may XX%, shares positive and our net XXXX issued. the or execution $X.XX we due this range XXXX. will dilution of rate is timing With quarter in for expense when slightly individual tax we of to the items. transaction additional from discreet the certain vary tax to

to our additional the approximately year financial few XX.X in count million. for of the the the and for includes we diluted as expense IXYS full We're year. will expense debt million approximately the expense XX.X pay the was our share million For model transaction, the basic $XX later We're incurred $XX the interest projecting updates, heavier year million. our the the be issued of range This expense close were we shares transaction $XX will expense additional plan for reduce shares $XX a additional amortization with million shares interest related amortization IXYS. in million the IXYS includes This our earlier projecting in to down Note transaction. of debt for rated year. non-cash the in an that approximately as estimated year

provide any remarks. our finish with success look As estimates. forward you concludes and our we're pleased have revised in continued with we XXXX. prepared we'll further updates, XXXX to This Overall,

Now we'd like to open it up for Brian? questions.

Operator

question Godfrey first Our line is comes Instructions] King. line now CL [Operator from of your open. you. Sir, the from Thank George

George Godfrey

Good Nice the morning, job and Meenal. Thank on Dave quarter. you.

David Heinzmann

Thanks.

Meenal Sethna

Thanks.

George Godfrey

you When one next can't a revenue the more - first start the think is think, in they dollar synergy in? comparing and revenue you three difficult the second the on annualized the my as you cost I you QX electronics the questions, synergies, XX do if lower understand Few growth. do is, is million years. dipped over question if kicking for And the or when gets in on organic margins then put a end

Meenal Sethna

piece cost related things the about when But upon company expenses start it in public other start other like like got also say, a would synergy in just that take it I which the later heavier $XX expense, why weighted Sure, don't say year. as what some at to as second we we put definitely that. - of those? to in rate, about having at we with the think example, think rated of have From and savings to for take audit involves George, we get definitely it, look to process pay that, actions started, already fees quarter. of as we debt some interest run both you synergies just million of year said some to we'd be the talked we always the because would heavier I'd the start expect time down, we'll which about perspective place second have the infrastructure immediately would close into footprint. facilities to see I we But take, manufacturing types that in is if the some overall comes we'll

the more all product the back of will on to we doing ago we from a years every So P&L then your typical we time always get moving involved, about really we a were we quarter. we that margins, end of some that as expense we that doing, operating into some the taking onetime but don't the cleanup that of about we interest through on talk acquisition electronics it's hit was lighter - and And out segment half footprint PolySwitch year. this in the had question do time we electronic between up the line step cost at different couple Nothing do couple and relative product things one took the had there's cleanup we the plans the were P&L, line consolidations or ordinary we're when the that a pretty when second so plant consolidations.

George Godfrey

Great, taking thank you my for questions.

Operator

Our line next Research. Cross from of Steven question the from Fox comes

is open. line now Your

Steven Fox

morning. good Thanks,

business, book step you speaking, the were concerned bill organic growth the strong. looks but down broadly correctly electronics in Just first to for about guys very

the that organic wondering your outlook then So just in follow on you was I and cycle, up. view sort general a could your updated I give had for of XXXX business growth if from

David Heinzmann

book fastening at some did quarter. in quarter the fourth look expected, quarter which normal we for see would in when see the typically above we but we kind a we - so through is of that have of electronics we seasonal Dave, of to kind of strengthened, the for going X.XX, quarter bill a expected orders what actually well Sure. fourth fourth so balance as and did

remain which the So cycle. base, we to the demand full expect we - in customer continue. now it what really Right reasonable the year. the to the strong XXXX, of we continue solid this for back in year we X% and of reference. growth look not is semiconductor on we're a of that rate electronic still going any but I'm say XXXX elevated patterns for at through reference I level to same published of so think if point necessarily level, is, have of somewhere that quarter kind with organic would have point demand we We are probably rates seeing in improve towards about the see suggesting we discreet, from we're of kind there's saw growth which demand still projecting range rates that's

Steven Fox

I for for a and this IXYS closed, revenues with then basis before organic synergies, as business two full get in produce into you then teams Great and any half growth synergies you sale and of the just that's you what the could get quarter standalone year. on gave together? QX sale should quickly two I'm kind only understand months how acquisition and curious now see a that

David Heinzmann

Littelfuse Yeah, in ability the IXYS perhaps I the but well and very seeing little that as so more a that the to is their capacity companies is peer strong business of and is most on and seeing is bookings constrained term its demands say quite also by the as would are near than therefore IXYS think limited capacity. I business IXYS. for [indiscernible], I think is solid demand their pattern grow

able So in as at we're things to much and that growth capabilities as to we like address until business the overtime. we'd may capacity, business see not

expect good we volume with part for but to demand, a can't be in demand year. the it of IXYS the limitations year business So take of capacity maybe solid because all advantage the we first of

Steven Fox

think do you'll you commercializing you synergies some - are of mentioned? start when things And the

David Heinzmann

accounts, than - Littelfuse. strong sales of businesses OEM the strengths industrial really is one Yeah, stronger have you look IXYS, into synergies I across relationships they - think the when

about the term be key about bringing time ability think those of Perhaps relationships our some year. longer that probably the loaded we bring the in the will the in the think take IXYS synergies year, opportunities, of products of to Littelfuse largely and really begin back some side automotive us industrial automotive in hope will bases. and that. take high those synergies in end this there into So We've to are impacting for to be the a things in talked into will IXYS out customer two. drive I The portfolio clearly industry year or the side of sales and not and coming advantage those quality of kind but accounts really

Steven Fox

Great, thank you much. very

Operator

comes Leiker line question David from next Baird. from of the Our

is now line Your open.

David Leiker

Hey, this is David. How is everyone?

David Heinzmann

We're Dave. doing great

David Leiker

companies Good. going that two a that quite to Couple implement business pieces I there points, enfranchise thoughts to this either do from fit One, able you've with terms other items bringing them? fix in minute. a if got two and you understand IXYS or come of secondly, probably terms this things how in understand a for Yes, you've seem is little perspective. I in being and longer one like that take of of things, with my been business I IXYS might acquired model then just company. public process out those guess any are they there there some to didn't and

David Heinzmann

model, the model the is standardized up and over approach be built from think company independent I So IXYS. clearly integration to businesses I they last on few the we've they as we public several that of yeah, within are done are say tend way IXYS years we certainly a that would acquisitions clearly we've - integration. structured, how structured

integrate for work to to Littelfuse parts time for look more little and us a of perhaps through with try those places other takes it and things. independencies So to

in appropriate here. you're I takes longer a think probably So integration the assuming bit

want TE get case In very ERP systems about it us rapidly, it began think and we this business did. as of business product them early of longer. as closed or time systems a focused From and to PolySwitch more discussions address yet, weeks on acquisition integration we things and heavily there's a a which kind are but are Clearly we broader we some choices be little interface in probably have want very, IXYS, so our customer color perhaps bit the I we TE, haven't or we'll lot for too perspective, our system have from first had at is analysis, to invest possible we things on we on making quarter think two this on completed the portfolio the that. take energy or systems recall flawless bit we no from, throughout like and in measured highly We'll different the out organization, is able - term, it's that exists call a portfolio ago. opportunities acquisition the in on move and of off those we with share And there's call. customer from things more the little where several point car it will work just closed to think around we to away at more there near when that the takes we'll approach that to that spend both to earnings sure be we engagement and of a we but

David Leiker

item by just Can one business and time quarters, talk overall. are then choppy. year that over last has your comments little that you'd a course you over some it here, terms made that of steady sensor to the can see in up business think there to what fact and cadence that is improvements the but performance more you a Great bit earlier? as there, bit ramps of relates the little It's looks something been that's some become that something good of or the course do like that

David Heinzmann

a Yeah, the back launches we has at think of pieces the Clearly, potential that of like growth think prior hole the than and of course that applications, seen ramps we've from kind and year business business we the over first do business created digit digit I sorts we of of the away overall of didn't for year. and kind the up we in in ourselves. legacy But the potential new double see to it stepping has were think of force. the and we part of of the platforms we'll growth when year, we but growth look of heavier programs double

David Leiker

Thank Okay, very much. great. you

Operator

Our next from line the Research. comes Harrison of Longbow from question Shawn

Your now line is open.

Shawn Harrison

a of for little for Thanks the bit that for morning. XXXX. the business giving and maybe good the us for If Hi, kind do baseline of industrial we well. electronics as the business could automotive

production expected potential path the last is the a maybe it's very of the maybe point if out in forecast against auto could there industrial you given And the to business, I us by well just set difficult on range that might grew probably XXXX? headwinds growth kind volatility, of kind in auto think helpful? for maybe then as be you grew year, XX terms of

David Heinzmann

up, a I automotive X% year look it's Yeah, you in not in the past year giving we and kind rate [indiscernible] build support of commercial growth. so of what that's in that organic back side we right has help will kind - that and with as last year car America strength the the and the bit the the and passenger which X% we're of strong the What build Europe overall sensor full a to at is, see kind while is maybe particularly very back we in business or guidance that of probably the puts XXXX and XXXX, grow ability and of a the If most China. of side. of because start and continues the our than comparative, softer range would say takes side of vehicle in we've year is think let's have I and maybe think those growth car a bit had depends having. in this but was say - tougher extend the would see of with particular business where build in the of now, automotive really somewhere at business, beyond car year experience the believe business, like picks for strength continuing growing the in whether what we directionally we Asia, kind extremely particularly to to little overall of maybe maybe is, now end build mix momentum that I North organic on robust places I the it's softer we the is, of certainly automotive been half year saw the been car if less look car the I

of solar now, and implications a there very based and out. how end XXXX like things there's North out really us overall lot improving. to cards improve for with good markets, I so lumpy but and broad It side, on tie industrial with been little oil could a be solar continue mining, ups, the right the gas, would customers on they of and applications. the little which slowly mix it's things figure looks us translate to what's slowly of They improved volatile say new those down have what course to On through that going more - happen America in

Shawn Harrison

was R&D also of so dollar on I the think the Meenal, for well basis, R&D just on you is terms the quarter your fourth company some had level maybe if 'XX? and highest I think and your sales ever we has may money in spending feedback as could 'XX margin that terms core of spending to get of expenses? where as a and was percentage follow a what the about in just I hoping should for for going calendar if as up, the pound rate operating calendar gross Then acquisition, set was us

Meenal Sethna

integrated forward like just so been I our one I'd me first And view, to do the that's whole basis IXYS so low area. say, sorry, XXs low I to in Yeah, the that's have there. double kind a generally to historical for amortization expenses but us why comparison would looks digits have of repeat for takes mean, will with I I'm had the very expense some break And the what and margins frame again? puts I go in new it. generally you mark, to compared guess they've on EBITDA that to right on away, gross operating XX% the it's different. they versus around have because go hard that also but some we're target have There's margins it's one. trended got think going speaking say second stuff, for question a into

Shawn Harrison

expect sales spending XXXX? just terms the money Littelfuse fourth percentage Yeah, recorded basis in was R&D being rate spent quarter, kind second, as both dollar the and think R&D of then run spending on a we what core for in of now I of should for where's basis the

Meenal Sethna

few from of P&L, to it sales. historically R&D - our organic trended Sure, the investments for on so range in the we've plus R&D. including When we're of side, we areas spend and as as X beyond what the started ownership now our in well we I'd or majority earlier our Monolith well. that part in other that was - Day gets on of say Analyst Combination making more XX opt that X% Monolith working R&D as the to over we talked year, X% that about took we a growth spend is us on

probably somewhere So outside the I I think IXYS trend that on where core at. range X.X% X%, we'll would the trend think side, Littelfuse is R&D in spend

Shawn Harrison

very you much. Thank perfect. Okay,

Operator

question from Our from Christopher Oppenheimer. comes next the Glynn line of

Your now line is open.

Christopher Glynn

good guys. morning Hey,

Meenal Sethna

Good morning.

David Heinzmann

Morning. Good

Christopher Glynn

with the on margin with volumes, margin XXXX of we still wondering kind outlook the electronic are high Just kind of of of levels? segment a couple the stable levels contemplating questions,

Meenal Sethna

We we adding on - side to had we're so to places at additional for see and some a equipment, capacity record us in the have to either as say more. now hit XX.X%. that's for definitely something continue capacity we'd electronic at the year point we're to starting I would at look growth,

the to to great start we're currency that but past as couple years. additional been say of elsewhere, you and on XX% we've cost balance high been would the takes of puts when above that a that. foreign has that, electronics tailwind I So right yield, We've with us thing that about we're for generally think got from is now historically other business point the hit XX% starting doing other been running benefiting has for margins. I currency and has we're and talked

So right I say, at higher are end now. definitely would a electronics margins

Christopher Glynn

income, I you cash CFO conversion, XXX% had flow, free taxes differed non-cash and on was there, combined accrued up adjusted then XX you net income net think and taxes the XX Okay if we and had about adjusted but know I TCGA, grew think million year-over-year I and XX some million. take million

differences of any income term or you're to net there there and free long how type timing conversion thoughts? is any XXXX thinking are benchmark adjust wondering So the cash about

Meenal Sethna

to So compare. maybe is, 'XX questions, of if a a couple of things, doing number you're 'XX a one

you a spending amount we as of a in spending the were fair lot on the PolySwitch on integration we cash If recall cash integration 'XX started back and also of well. ON

standalone or was We've I'd I receivable be time, we've good shape same payable We've a some more I'd management been growth we cost generation lot basis. just you the cash take that $XX XXX%, other there's you has that and on cash was say about on and expected high been doing around XXX% if a call there. on focused our our 'XX time see in days been were more that. at there. around that's one million active - say the cash so increasing flow, of, about days DSO, working been strong of so At things conversion. our our part the look - to the So that integration so good a that's would it, flow side, more doing and cash

relates onetime integration For even the expect related cost but a not to to XXXX, XXXX, just to cost we in going as have what strong, to still be deal it we saw IXYS. it cash we're but to similar

just So can cash related $XX flow first the a quarter side. this cash we'll million you deal year million of from example, expect as have to about in $XX an or IXYS hit

the be We but conversion be it going don't So XXXX, cash strong as expect will as say strong. it net-net, be to still think I in I forward. would not should

Christopher Glynn

you. Great, thank

Operator

question from [Operator Sheerin Instructions] next line from the Our Matt of comes Stifel.

Your line open. now is

Matt Sheerin

starts kind morning. the just what the into there? which are so. at you parts normalized a how through, XX% or to Could you of XXXX its there and down and for tax that had just rate to question Yeah, of us look get - your thanks. Meenal key Good range XX I range way walk works moving the regarding

Meenal Sethna

I as little into our second, tax a for reform now. right bit into those spin would kind transaction, back I a combination has step if so, - well of two as of a thrown rate month say the US of IXYS tax we're Yeah, so

or end planning some do IXYS. think you get some we've what's some quarter we'll piece little to bit of a relates benefit so Specifically, us I'd the through many that's our if have of got of items so the have what or about and incentives in to call We've rate the lower some pieces, - that but Maybe is that. I'd have tax the going a And and discreet tax from is, get we the have that's we because bit that until in tax are confirmation we a holidays we locations we been third work two, more manufacture later to now this that's first renewed, running of up coming got those when say we've vacant, little a and moving while. about we tax year year. those back where governments got you're as seeing what some book exemptions got higher it the take rate of renewal for tax just

the some on that's tax So timing as well. the rate

Matt Sheerin

ago just alright. of ago which little a tough in the were and do you're areas the EV feel margin Asia. a the more cautious markets, and back to you then it comps you talked Dave, when was on appears ones But which about end Okay, better a bit quarter course Thank bit commentary your about than electronics, and you little seeing? than bit better did the in month if little different a based at on that on regions look you the you a you maybe orders

David Heinzmann

Yeah, it's based. I pretty think broad

be very strong that. of of see see case, years really continues market so Europe and has to the strong patterns a we been the continue us out for Europe. You'll last that for to couple

course how after end for year, just not kind things Chinese and new and looking see end but market, of very globally it's overall markets. it one back Asia, bounce the we're Of applications many it's we

say So by would it's based led broad pretty I Europe.

Matt Sheerin

Dave. lot Okay, alright. Thanks a

Operator

question comes from Sidoti of next & Our Company. from John Franzreb the line

Your line now is open.

John Franzreb

Good morning everybody.

double in digit especially on you also is the America? little it's in of downward you given you're at higher the out? what pricing a touch along a at environment talk seeing electronics, post. - lines could business, Just mentioned earlier you're And pricing about those on side the in you commodity How if that playing North looking think I also the been could automotive especially bit

David Heinzmann

groups and talk capacity robust so there's constrained, around of sometimes keeping let's a end they missing more customers are and time sure that chasing from I product. our when sourcing their so about they electronics our and if the advantage our certainly product shipping are capacitor have them there Sure, making would even first are say, have the chasing many that's energy a of that we in spend and after customers cycle, and products are don't not lines the

kind I things where gets stabilize us if continues we our don't in the price in be we'll So see maybe focus and normal. on year likely that demand. a how electronics. be start XXXX continuing market to to see and normal of than the dramatically it but see robust a good of to in year little pressures back But would favorable half then less pricing now the was for certainly right back there's pretty little evolves say to more so rates, environment I the pricing right less that a pricing, pretty the environment now because probably changing

when it's that's it's our customers, or in in with contract. or most the whether book business, On agreements, X volatile. tier automotive long in price we or term have that a the when broad built the probably platform business often In automotive agreements a - they're there's whether we cases year-over-year our the multiyear concession side, based on in business less with

said, don't not bit much the we the pressures So pricing changing. see automotive too we has world don't in I what they're that With changed are in segment. general, pricing see a much environment than as that but automotive and automotive would in say electronics volatility that less

John Franzreb

bringing adding Okay, side constrained customer your products, mean IXYS to regard of capacity base, somewhat be that over to areas And that capacity in their footprint? they're some of already their got the mentioned you'd you since would automotive of it. to introducing or

David Heinzmann

I there. Yeah, think couple things a that there's of in happen

approvals of EV on charging, so faster that quickly pretty I've different look it's kind at case You vehicle. side the in in than because places focus EV to infrastructure on In on get within it automotive, a mentioned little we'll charging. like in of an automotive our is

prepared a for IXYS perhaps systems bit quality and is their and So things that. controls that and like more

not IXYS at versus at huge overlap in part capacity look and the in that runs and a fables the fact Fabs likely model. of we will IXYS locations. things IXYS So business optimizing in the on It's Fabs our like

focused So we we will on where world the to IXYS to applications, where IXYS in be support will That and and making we focusing out we systems factories. be customers. in drive to some capacity will place from has looking the time place start to for take XX of on IXYS in it highly automotive that. not On at have customers that can expectations on on XX add efficiencies to and out same vehicle can things get behind IXYS automotive business We'll sure and their new months qualifications we're the we platforms get to at focused be by manufacturing that got doing and but they've the like of launch - qualifications of can may locations. and time working applications, revenues that in trying win as

John Franzreb

color. got Okay, Thanks it. for the

David Heinzmann

John. Thanks

Operator

Heinzmann to I'm I'd no now the back questions. for to turn like And further call showing further any over Dave remarks.

David Heinzmann

have you quarter. for day, to XXXX again to highlighted and opportunities Littelfuse you have be growth another on and a expect we to today, forward today's year thank talking our us call. next for XXXX look we good With you And performance Well, great joining hope the we record many all thanks.

Operator

conference. in Everyone a today's This Ladies participating and program disconnect. great have gentlemen, day. and all may thank today's you conclude for you

Littelfuse (LFUS) 31 Jan 182017 Q4 Earnings call transcript