LFUS - Earnings call transcript Q1 2018

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Operator

Good day, everyone, and welcome to the Littelfuse Inc.

First Quarter 2018 Conference Call. Today's call is being recorded. At this time, I would turn the call over to the President and CEO, Mr. Dave Heinzman. sir. ahead, go Please

David Heinzmann

good Call. to and Quarter Littlefuse XXXX Conference morning. you, the Welcome First Thank

me, always start with expectations. We're first Here as performance off Financial our quarter to Officer. Chief a above great significantly in with is XXXX, our Meenal Sethna,

are sales all our for business. we demand our businesses, across all across sales double-digit IXYS organic growth broad-based segments, seeing and We of delivered including record

is, circuit further and focus with integrating delivered team pleased which We're We safer, IXYS the discuss I strong connected to flow protection, by we achieve continued as and will a bottom introduction, to later more call on take quarter. details. progress leverage I our our and execution for first consistent portfolios, earnings to balance in the results. for realization market well-positioned and am to provide our opportunities numerous world. turn I'll that our are sales track making over business line combined continue future. solid steps drive growth quarter of financial the sheet with greener we With the our who Corporation our initial color the on remain We and brief cash an synergy will with double-digit strong additional our the the growth of strategy, power Meena, control sensor on and goal across

Meenal Sethna

Great. Thanks, Dave. everyone. Good morning,

Let me start with statements. forward-looking some

the to A from Relations results today most website. to earnings comparable Also is financial details in available measure risks and and to non-GAAP be our call, differ to our XX-K uncertainties, release -- reconciliation you forward-looking measures. contain will cause non-GAAP expectations. provided on we financial remarks will our XX-Q Form and release for important certain may our today's measures and statements, this risks that statements Investor these actual comments press GAAP review could First significant during if we about materially our forward-looking involve more make of ask refer

exceptional of earnings first some we an per XXXX highlights our adjusted Now sales with from expected, our in XX% XX% an were much than had sales quarter of XXXX. year, double-digit growth driving our up and over and our organically. share well We start last excess to $XXX quarter had guidance. of for million, stronger Sales Notably, up first the for organic the all January segments quarter. growth

sales sales quarter. the X%. months addition, in achieved also stronger our GAAP $XX fourth In in portfolio than a business for margins for the expectation operating finished X.X in million IXYS $XXX with our and at the million record

Our adjusted the operating margins margin was adjusted with XX.X%. average. business at IXYS than over margins XX year even points company results We expanded basis last lower

up over diluted gains. We the adjusted partially foreign which per of nonoperating last exchange to GAAP Our related and $X.XX, to leverage charges. will comps operating share XX% was recorded we year, mainly These drive million P&L. offset through the accounting acquisition, IXYS to adjustments, integration approximately included certain by purchase $XX continue income after-tax as doing earnings in

the last over EPS Our year. XX% adjusted $X.XX, was diluted grew which

related finish IXYS the was performance our strong growth sales guidance business Our business. legacy by our well sales from a and leverage above higher-than-expected record the as led as in

benefited from exchange also mainly Europe. We foreign from

some included adjusted on-off the Our EPS also in quarter. benefits

investments. $X.XX we few in nonoperating a EPS With recorded accounting on for a mark-to-market equivalent equity the in gain investments, change certain rules to

to or rules, change continue the in gains may from With see we future accounting losses. volatility

about benefits. of was $X.XX a option midpoint rate in about XX%. basis to exercises. Additionally, XXX benefit to projected due That stable our EPS discreet tax our stock largely This from tax was points higher-than-forecasted contributed

results. the the finished Automotive first lower margins as was XX.X% than included XX.X%, last margin. basis points XXX performance business, at was year, XX IXYS year. basis operating by points last a versus electronics were at this Looking quarter quarter up This that

prices leveled margin a year compared prices we when drag, ago. from currently to While see have a still off, commodity

Our year. Robust benefit generated million reduction margin the growth segment cost the for from record flow industrial flow achieved a and cash operating sales a last expected breakeven to million margin XX.X% efforts drove and quarter. compared free the cash in expansion. first margin quarter We in $XX $XX a in

million integration-related and IXYS also We in acquisition used $XX approximately for costs. cash

Our generation quarter. cash for first led the our stronger-than-expected record earnings

capital, driver working continue flow. benefit of our cash We focus the to key our ongoing see from also on a

Over synergy benefits. some opportunities IXYS are and to see improve inventory well, accounts the capital across the next payable. see we we other opportunities quarters, of mainly These several working metrics P&L as beyond

of allocation, goal at to capital in X.Xx. IXYS We down a around noted debt-to-EBITDA growth focus debt with $XX on X.X to we the get million ending a our x. transaction paid previously net debt of after quarter a leverage the Turning a X.Xx approximately average leverage and in of first to paydown, growth

And our Our our shares, flexibility on summary, Also we're as it back leveraging effective for press growth with Dave May that, execute a release, more business Directors prior continuous was performance XXth. In positive right the Board April on program, secular to repurchase trends. driving opportunities program market which this focused continue natural today's X strategy. current on of in expired to a Xst, I'll million is and to profitable trends stock that our authorized and color growth. leverage turn of noted new replaces

David Heinzmann

the electronics Starting with segment. Meenal. Thanks,

strong all of the later we strong XX% which sales months were performance up saw through New Chinese in Organic fourth the quarter. quarter were were the $XXX million X.X momentum of we The First in patterns typically cycle Year year-over-year, demand quarter about continued The at in of with on decline. seasonal regions. us up included when extended growth robust current first see IXYS results. sales the XX% electronics a

first than finished of ratio we book-to-bill IXYS, normally slightly time. the quarter we this at Excluding with X.XX, see the higher

for components growth semiconductor late X% discrete projected to about XXXX last from up have upgraded Third-party industry X%, forecast year. of

all has electronics across quarter, backlog second product the strong lines. a into Going

improved up are times some seeing of capacity Littlefuse legacy in semiconductor year. of result the business, last lead we the additional We ramped

products. capacity our with few electronics core constraints very have We

continue to that broader times excess distribution the ensure We extended and our aren't of in bookings some monitor inventory capacity the against lead driving the and channels. landscape industry constraints double to seen carefully

the sales. channel we XX up year-over-year, are within expected are While consistent inventories that XX normal close of are channel our it the believe to are weeks. in-customer levels keeping running inventories levels current and increase watch with Current

had the business quarter. IXYS levels sales record and first Our demand in

our some in to and activity focusing are With backlog the the products, second address and customers. strong we increased strong integration demand for support lead times quarter the

growth business strategic market, and focused we of remains opportunities in in on number traction areas. targeted making are electronics these good Our a

in automotive assistance management had $X We wins the quarter, Our for customers customer's systems electronics in of advance in Asia. used system a design design in ignition first our assistance. million with new started wins primarily with wide product and for business variety engine for won business, XXXX, driver IGBTs our customer's

custom new across With products electronic We of systems sensor ED are sensors. of global in appliances and our for electric. also our plug-in appliance features, used mild product to sophisticated other management battery across ever battery secured applications hybrid, hybrid increasingly for especially largest the one our We our are with the added business portfolio for manufacturers. the spectrum largest quarter design market win during important

sales, with in washing be able engineering and awarding This and in and used will service, proximity well -- global as the will differentiator. highlights our machines become a the particular We're door systems support strength seamlessly of as leverage customers Our the safety world to refrigerators. our provide true win has resources their [indiscernible] locks open-door logistics to sensors that the footprint.

Beyond where chronic our the business won and building design sensors in security North manufacture applications, windows our automation sensors ground market. and are gain integrated appliances, We for of American continues to doors. of new home into

with for the won new in meter addition, utility Asia. business In sensor manufacturer we applications anti-tampering

around strategic to continue area LED growth momentum of lighting. We our extend

As at streetlight we Malaysia, a wins design recently where we a growth also LED countries had India, pace. seeing as secured the where new installation in we continues additional rigorous in win, design to proceed are smaller such

The new products lighting regulate power technologies in used brings industrial we doorbells wireless for used video to opportunities many which LED custom be with continues market. plus the areas driver, the targeted from automotive streetlights, for Things thermostats, detectors LED IXYS We for applications of opportunities industry. an growth the portfolio and connected to a of business smoke to Internet a in agricultural Beyond wide Europe. devices added range won adding in an e-call

of growth connected world, and data driving increasingly vertical an the of challenge cloud of and amount strategic in becomes challenges our are IoT data. storing of center one markets, including These areas. several opportunities massive transmitting across another growth infrastructure, the With

the of to protect helping Late remain our power year, on that solution infrastructure for high-voltage new leading growing networking G. GPS, helps last speed uses fast future business in cartridge devices, fiber. of the talked up the an we quarter a copper opportunities. business supplier with optimistic example, new implementation data won We Taiwan, get in DSL lines about of center equipment. suppliers As won

in HVA legacy in more IXYS from across $XX Littelfuse across wide are lighting, industrial of products design portfolio. the charging, applications the business, LED first In addition devices, had IXYS -- rail, million to wins and welding. high-speed quarter in a in electronics we battery than seeing medical range the wins legacy wins the market similar systems

record track the for reliability, operator couple of of Europe. secured improve a to system new highlight a in strong we our on propulsion you. me Let for business high-speed rail them Based

defibrillator addition, medical X key external with presence IXYS leveraged manufacturers. the design with market established wins In device we the in

to Before the progress I want update provide on IXYS business. the segment, brief integration wrap I a electronics up our for

plans, the certain review IXYS reputation customers. we're have have automotive customers executing distribution great have in IXYS and all, be integration with opportunities about OEMs progress for future. transaction positive. All offerings from global been further pieces very diligently means is The the industry to advantage working our IXYS the of Since and continues teams see we what of strategic portfolio. strong business down feedback road on mid-January, we expand to IXYS conducted it the of Our the with close a in and of and excited

the participate. the leadership markets The a investment IXYS position expanding to in business. a we Littelfuse has developing the with on focus diversify of competencies Over of which goal the years, core in that made strategies number

or non-core IXYS decisions the We certain underperforming portfolio with costs reduced assets accept to have some strategy, improved business efficiencies. align better made our and to long-term initial

our will based ZGBE that produces wireless business We solution. Korea be exiting in

not have the addition, does business with determined IXYS strategy. long-term In our we microcontroller fit

approximately strategic historically business. exploring been is million, The they $XX profitable. are in sales We and business this alternatives compliance for have this not

of savings during costs impact realize start timing these this the to year, but plans, expect XXXX. of With limited on we we will revenue

target synergy by other With end We'll these track to we're progress actions the future plus of cost-savings and XXXX. our the on progress, updated rate on on million $XX you activities realize keep calls. run

the and is had grew global an Next well we Automotive overall million car with the growth $XXX quarter. sales XX% organically automotive record the growth segment, in of to X% excess build. the where for XX%

America saw a North focus with we're North Our mix passenger a particular shift organic growth and vehicle. SUV, also businesses fuel from China, in car greater Asia. seeing strength the for a and In fuse positive content are factor. on to which efficiency, continued growth regulatory double-digit have In benefiting we America,

business electrification to around requirements on the our new secured focus of car more for business generation than We in high providing annual first strategic small with of and more the platform. quarter where fuse business and current of wins revenues our ongoing product our opportunities connected the fuse next a In automakers continue $XX power world, current vehicles OEM a higher with safer, won driving increase quarter. million. than dozen more passenger vehicles, As car German greener peak

One PolySwitch Asia-based safety new helped business for technologies win their of monitoring device. us global OEM, within electronic our

a areas, to one on We our and growth of to content new products growth. our for focus new product automotive all -- used business per launches winning sensor the make increasing saw performance protect to Results as Japan, safety window in solid it in continue to progress We strategic returned from of double-digit motors. business driver is leading were growth increased and key regions. a The by vehicle. quarter, occupant number ongoing in driven our

project components. secured sensors buckle we of one world's safety quarter, seatbelt largest supplier automotive the with for the of During win

a conventional transmissions systems We enablers dual more the is sensors large towards in strategic in automatic widespread improvements. efficiency Our a use opportunity applications for OEM. speed the Chinese for manufacturer to of new quarter good with also to providing are clutch the our used growth transmission business achieve win manufacturers The key multiple trend greater had from with a be win with vertical transmissions. speed Chinese sensors

CVP, geographies customer quarter. in widespread double-digit revenue for Our growth market multiple Commercial growth the delivered across or are this Drivers Vehicle business Products segments. and

XX and We also which positions than wins more beyond. well quarter, design had in us the new for XXXX

One North American power distribution growth for strategic CVP is a spoke win vocational of last modules. with the trucks. about a quarter opportunities manufacturer our We positive specialized

superior the in to record products are unmatched for solid business execution new the approach our won automotive performance in follow-on successful applications. Overall, segment additional support the strong given and has With development we and the drove customer responsive business quarter start us the year. and

cover segment. industrial our Next we will

First up businesses. by our were XX% fuse of million relay quarter $XX led sales organically, and

and the had the heading second strong quarter. another Our backlog into business quarter solar strength current continued indicates

our of our channels leveraging segments, products expertise in and end talked about have automotive distribution segments the industrial, see the markets. and intersection We opportunities across the and business electronics, we between past

these is industrial well Our points. segment positioned convergence for

progress channels our We are our EVs great applications. charging leverage in segment. relationship EV an ship product our area with opportunities particularly, increasing with growing products plus growth we distribution strong and Similarly, in for focus. are industrial is infrastructure automotive, our for charging off-cord EV portfolio our opportunities leveraging excited initial with electronic making in to

other on the face We customer business fuses new opportunity in high-voltage are experienced insights circuit generating already challenges and gaining technical for opportunities. protection they success

the existing power in We opportunities expect semi-portfolio. space we more offer this integrate as our with IXYS

have provides aligned on tariffs. second production electronic proposals, to we of our customer the Finally, the and our significant Asia of current before we our like operations to the especially products footprint contemplated base, across Meenal goal needs, for our quarter, China. segment. comment number our I'd the customer and on sales could With be focus of Under largely have several within impacted guidance

When discussions you provide of federal is hopeful as to benefit specifics more that a around there recognize potential implemented, the may the We monitor the economy. the and continue evolving to are what clarity impact. district global be

today, As customers. our executing for of providing an we solutions job doing I continue strategic opportunities our growth excellent outlined on innovative

record to will to to electronics in limited expanding XXXX segment solid well. America provide call Our manner content as and seeing build, quarter, through growth With vehicle. growth key the segment automotive extra I'll in our quarter, And channels who global the is and a growing second now achieved and your IXYS revenue distribution North strong start. our industrial benefit continues great is questions. business its for Despite over a progress to turn beyond. and car well-positioned second cycle the continue the in robust Meenal from segment then a performance the take is off making we will outlook for is

Meenal Sethna

end remains key Thanks, strong of Dave. markets. Demand our across most

we The see second sales of and our our typically to sequential quarter quarter is growth the strongest year, across businesses. expect

second the of million sales a for the be in The Based of the over quarter $XXX full foreign reflects range the XX% $XXX the on sales year. regulatory Our environment, second to last current to and business. we of million. includes rates the quarter guidance organic also midpoint quarter guidance exchange growth reported growth and X% the IXYS expect of XXXX

We be diluted of earnings expect of $X.XX This shares. with the last growth to XX.X representing assumes midpoint diluted year. adjusted $X.XX count a XX% in per share million range the share over to

provision higher a stock compensation equates we This the As in to share. had noted our second $X.XX expense historically, class. press to our incremental per in release, about earnings in quarter, due in retirement equity expense

would XX%. for the the our XX.X% a in year. to quarter Our be an compared EPS rate adjusted growth guidance At year-over-year of tax XX.X% second last tax same a to rate, constant assumes effective quarter XX.X% rate

Beyond unfavourably dilution profitability the rate, growth our profit impacted IXYS EPS tax by interest is levels and lower related near-term share higher in expense.

we However, execute will leverage our synergy overall continue profitability, return our on as to our to plans to we expectations. see improve IXYS

the the wanted second beyond year. Looking additional provide some rest I of the for quarter, color to

quarter year. second strongest I in is As quarter the typically mentioned, our the

are largely our shutdowns, automotive third and period, fourth The by our slower quarter dampened the to first quarter maintenance across the due regional holiday our typically industry. fourth and customer and seasonally and

Looking at amortization projections specific year financial some the $XX remains our of for expense adjusted million. items,

projecting million interest our $XX range view. the expense of prior slightly are to We in lower $XX year than for million, the

the half Our heavier given quarter interest the highest debt second and timing is and additional the expense when in weighted of first paydown of for year, debt our the we plans. issued

XX%. year Our tax full XX% to range XXXX rate remains adjusted

discrete to timing within exemptions. item rate due vary, individual of and the of However, approvals the quarters government may incentives tax tax and

factoring transaction for $X.XX interest share impact expense EPS previously have to of in XXXX the net $X.XX dilution. to be to when the the IXYS added and accretive We projected

stronger synergy of the be the expect execution well XXXX. will performance accretive EPS least our to sales the for and IXYS $X.XX we transaction With business at underway,

our we foundation the provide of remarks. success. ahead, performance leverage look concludes our and we the strength As prepared operational portfolio, believe of This for our our market continued trends

Now for Dilham. we'd it questions, open like to up

Operator

Instructions]. [Operator

of question . Our Christopher comes first Glynn from Oppenheimer

Christopher Glynn

electrical long-term So paradigms out vehicle electric question -- on there.

versus mean whole than how marketplace more wax? to served see market wondering current bring going going indications dollars be you're hearing that share for positions? as share run are investment there a to be You that Just space, ball huge rate wide-open would been to that from market may a just expansion in targeting positions that viewing structures players traditional could leadership your long-term And has changes of some and the in chase lot and industry some margins is of market we're investment tradition? what

David Heinzmann

look and and things We then sort the at picture that good what EV by charging, EV of driven an see We different side infrastructure our are side thing. for like high-speed charging the look systems to station the marketplace. it's evolving onboard on-vehicle and question tend Chris. we ways. Thanks, in It's X of in or

little this our current one and on a with electrical lot position a have them OEMs on have Certainly products And relationships of strong and migrate with with those are about side, on-vehicle, they We up globe. engaged same and we come we before, have before, a infrastructure talked to of around strong very this fusing the view EV. additional enjoy those. each as the OEMs has question we key customers

lot we side the ongoing certainly there we're helps vehicle take content to well So that solve we're we we our that experience of we have We high-voltage also per a business well-positioned think out opportunity as that. of relationships, industrial think our go advantage think us of there, transition dramatically. so positioned have of for problems

However, we bodes have may staying as our said, well as we have the current we think share perhaps is maybe but still that it in not us. business today on-vehicle, market significant opportunity we for the evolves globally

Now well infrastructure additive. today, that both to don't and companies EV on The of it's as side, as charging the all a are into those. sell developing applications systems trying lot exist there

see And additive so an have core is to opportunity. as opportunity business there we every our this and we

Christopher Glynn

Great. markets granular very does Or feels end very diverse, know it now? running widespread. remain particular And but chain or and is right any particularly electronics hot I supply

David Heinzmann

I strong pulled key where that would been drive have say a historical historical or tend the growth little areas and X seen different then X than by to have we cycles back. cycles maybe -- driven

robust cycle field, areas of, classify as these different but I electronics growth certainly would, our are days it's as more based, broad in I automotive electronics, also it's in well. than industrial area pretty certainly this electronics kind a a think strong little

leading say kind So more I growth the in are would couple seen those areas of based but the broad really what a of than past, be may areas. it's we've

Operator

Baird with Our Co. from Leiker David next comes question Robert &

David Leiker

of Couple IXYS things first. on

initiatives of and synergies getting profitability finding you than accretion, than that on expected? what of arms more you have quickly are improving quickly, terms will more function you executing is Or your thought? around opportunities In a

Meenal Sethna

this portfolio the the It's timing comments the more really in of our steps And synergies always and helpful. a of accretion so were it's with of now earlier combination, concrete we and terms plans, that's view business I'd looking been stronger some say, first that my so the some we is at quarter the taken of one business, have synergies mentioned exiting than of that, is were been underlying and right, the was performance the of that's set synergy the up of see of much year. in driven activities, target and of expecting

David Leiker

mentioned the strong patterns in very that right presentation. then But IXYS the the And other of business. body hitting thing now, the demand you

taking maximize our of, our the to of kind folks potential IXYS trying of advantage and activities lot gone folks on to very their potential. the have business try efforts supporting or teams advantage from a those maximize, involved So been take our our folks have excellence in, operational help logistics there of to opportunities planning

David Leiker

read Great. finding opportunities sell cross too Are I you is early? that

David Heinzmann

about Corporation company they of strong say historically, we with Yes, areas it's we multinational industrial been weak are point a some the would we as OEM large certainly finding so are relatively of that opportunities OEM. our has present talked IXYS a relationships of industrial strong very

So term certainly, the their capabilities very us advantageous selling long those in portfolio. broad of our cross for for are into

term automotive of So lot opportunities down certainly really we to away much know potential, yet, Haven't sit over are with And take time starting we're delays is engaged a IXYS business to getting to and confident getting from has we was synergies how so prepared the also in they to having we're there them to the so customers. shied but a support will. certainly we're that revenue on weren't And customers. cross-selling just we it's speed they opportunity. past operate huge think automotive core to longer wanting up challenge, and automotive very our

David Leiker

and broken? the point seem mending, at we we say Great. we product. more business cycles that the business, that been cycles kind lot across opportunities here we all look some can And has conversation this item be electronics a been that, very to as other in that at has they secular historically, through the had productivity Are fashion this then one of

David Heinzmann

cycles cycle. I not yourself saying a it's too and many be great question, That's when. through to question the a of lived ask comfortable have we

a demand pattern I the in different and spaces different difficult we So that behavior secular IoT, whether it's the so automotive, in and will when be have things industrial that same has marketplace, that exist sort grow the dynamics but description that not and the build pulled maybe demand that, cycle soften, it's inventory the be electrification, in in a if to seen and the the like there'll of demand is think chain there it's our past, is already I begin of still been partners demand likely to back. think specification cycle, a supply support this

So there the it feel call cyclical X I going business to the be stage, wouldn't this to to that impact a is be does different. not at but bit

Operator

Our next Steven Research question from comes with Cross Fox .

Steven Fox

couple I a question. of had

was the First operations on further menial income improvements nicely that from cash but capital working you calling side. cash for flows the above are on on flows

you cash just this what type see obviously if of come I this was days you find And out improvement a can year. year So year you seasonality got flow, will will but then either do efficiencies of or other I of and working what rough during to you curious seems capital this Capex or get And dollars? what the think a out follow? idea for

Meenal Sethna

we and just and importantly, management, around have starting the that been in receivables, around upwards. that where and couple flowing fruits and our we the improvement legacy DPO on have the been one for we A of a flow payable watching years. see from few even labor days can And see from, things the the more Sure. now actively working DSO cash of and really business of you

take a So inventories a from broader those takes continues efforts one our usually your look longer entire quarter manufacturing to business, efforts improvements was that short-term we are are a what lot you we're still and do of because chain, logistics that supply in legacy there. and at payables been we're seeing making so have the around festive I'd for inventory. of on say early working

less probably this us and and that longer. X especially to demand strong may you tend papable we time, and when inventory be mentioned, lower given focused really be a in take demand company, surprise around days, we are can that will No you the near-term little smaller on power to a have and so for we're see where again, opportunities for that and opportunities tends in to I your really also relates that meeting inventory. looking perspective demand payables do IXYS, we it As for want to the what are around customer negotiating payable tend to take be to patterns as for engagement see customer some the year. us Inventory we careful so have areas and

have So improvement we dollar point. would I amount this you for at expect don't

Your million second $XX year for million include to in capital. expense We're $XX around around the projecting question IXYS capital we well. as the business

Steven Fox

Dave, to XX this that to that areas later? need. there and [indiscernible] new what about list hired sooner X that exclude months? I I was Any ramps, of side. sort of kind are like most electronic Clarification ramping be as whole likely something from Great. long If think of, If would is in so helpful. ramp months think can a on for about, auto the than on we the timing these some of color

David Heinzmann

if wins automotive, take those design out, you The to come revenue much the side electronic faster. in electronics Yes.

to on away wins. less and very say, right in months are design depends some electronics the So win quite side, different. little longer. In revenue launching a I design it they programs the fast, so would X cycles generally from But is case a the some are are or

So from this seeing see design that wins revenues those are their year. we

Steven Fox

markets what to are likely most maybe about excited year for end you like contribute most this Which are the rest. ones

David Heinzmann

The quickly, a begin sensor of we'll as relatively of shipping came we'll year, to the it's tend that and will we see production case this appliance I year, that won from impact revenue this those from businesses, those In well. and win, project-based, for in moves it sure. contribute to we see think you back lot we what them win LED lighting is continues. it,

So areas couple our that wins. fastest to those of the are be may in responding

Steven Fox

Great.

microcontroller-s quick that included does is included updated the for the outlook still talk Or about include Korean IXYS into not or is that $X.XX at you in exit? number? a synergies, -- that you When the the Just in clarification. least, the operations put

Meenal Sethna

the to quoted cetera but take of so we a with that basically still said out we a Realistically, need working net that why work numbers customers. our business. have revenue can of So I costs about are we we with don't lot still that our of buys expect there closing et time customers impact, faster while that I we're that that's last much

Operator

Sheerin question comes next from Our Matthew Stifel. of

Alvin Park

question for mentioned was for some was of was Park for was mistaking, you of XXX Mat it potential if in and so supply, XX quarter a the is color This year, it a it ordering strength Are [indiscernible] cross-selling last Sheerin. ASPs? IXYS? year-over-year so there call or I double not results I'm to there full I the for compared was -- the that had Alvin quarter IXYS Is because Could concerns tight any there higher growth. XX% on for provide any growth? from that the on

David Heinzmann

Yes, times to lot the very semiconductor growing that, it's think, of serve because industry of typical January, of revenue electronics this What weeks. been It's a -- in XX lead we markets industrial the markets broad-based strength cross-selling the the that quarter the seeing. we're those and that's space a with driving they I strength XX out or demand anywhere there have heavily, clearly, in in closed steadily. the first revenue is gains from not is

strength opportunities and had there. fundamentally nice that that that they've are design overall doing think it's I some market wins So

of, updated went drove and our out times core about the there. book-to-bills base, distributors and meant we, which the fast because get in lead general IXYS quarters of talk the book-to-bill are quarter be customer time stand or systems, point, that to the we their line, longer guess those times the to today, kind business, in I we particularly lead drive meant we you to kind there products business in which will and working IXYS from So artificially will. the patterns in Lead if drove dropped down, didn't than in place customers they they higher

Alvin Park

see. I

was it but QX, you $XX much And around I that talk the board SG&A, million. IXYS that from how And from Okay. it this business? could of wondering on about same incremental the came was previous it year is given if question. just much another fact IXYS million quarter, as for think, quarter, how Littlefuse's and SG&A $XX was

Meenal Sethna

that cost are IXYS on helpful get on was our we to you from quarter, so G&A, get of IXYS as numbers have of leverage. that but of this is reduction some just the what's to specific we doing, Yes. within quarter the And come I post containment perspective even got versus back some it's first some -- we the activities as well. in some the

as and some ended The of shift last belonged was some being of stock bit of little really moved that moved P&L where other we the and of our expense so that areas other it well. G&A pieces a compensation in into up

Operator

Gary Our Prestopino next question comes from Associates. with Research Barrington

Gary Prestopino

help there comment to little. Dave that come? in that, the could is content as comments out or you Ford's passenger has you SUV of thoughts would term on jettison I of maybe any assume that So in on but to move maybe maybe kind sedans, or future a crossover longer most their more you could

David Heinzmann

general content those to is in passenger North and about a general, bit. the car in for talked content in America we crossover a this a in vehicle Overall, SUV Yes, from higher application. a quite us past the from

steadily increasing content us. is but car we platform passenger America, the shift for the we if in we the the within well. should Ford it's North positive so car a net all even passenger the the probably us positive for for anything say have overall, But So globally, as as or that net in way see a North position in would side be America a good strength

Gary Prestopino

non-GAAP mean of would Okay, these idea there some some be line that in possible? us of acquisition-related could Is you give of adjustments items run-rate on terms full this that? basis and like the cost but stuff then on year

Meenal Sethna

color you back to for Yes, I everybody a little first quarter. a with just more that come that will we detail come little bit back the give to to could you on

so going to So second step just so through, the continue will there lot had actually it adjustments we that up go significant up into quarter. in ended one-time of came also a almost because as is of really purchase inventory the consider activity was that we related we away then, accounting quarter, bulk everybody the the has we'll of accounting relates costs into that was purchase the adjustment we the deal was would That number inventory equity were stock-based most $XX had compensation still which, of about were quite part and amortization that. talked of we to there, the closed equity and bit Littelfuse that there converted issuing I come as backlog now say forward. also, adjustment IXYS part that deal. we the A a some then shares a first the into adjustments as that and million deal other piece And

Operator

from Longbow comes question Research. next with Harrison Shawn Our

Shawn Harrison

so there last with of be acquisitions. [indiscernible] as in there constraints correct a let upside good upside demand are quarter IXYS the the going question that the that both the and to with that as XX% capacity robust was a was maybe First concern the well some and me obviously, given organic LittleFuse case

So utilization? you where maybe with going capacity if second any to in both companies talk [indiscernible] is be there you about And quarter? the are growth could

David Heinzmann

Sure.

our the start core in the and stated as first Littelfuse constraints we the capacity we a body electronics with presentation, product limited general, of In within have core areas. products. Let's

actually normal quarter our in and in we kind of the business down first approaching lead fact back times, core In time more our have lead would there. levels the during been longest the of areas some semiconductor reduced

productivity addressing able investment. have So without in and adding capacity our business increase capacity to I think as capital be gains to as been well concerns, we core driving steadily capacity

and in the as concerned the a customer bit of to the were so business and business IXYS ramp improvement different a that from team we said maybe continue sure see are have along, to that we a of IXYS team strong hope we'll a to and have looking focus we demand. ability we core in strength, surprised ability limited going outputs you as and bit at where start ability have the study focus have as of continued philosophically really seen been little areas we we are lot our on these saw demand on So that have story, and sometimes place where the quarter, IXYS sometimes the ways supply in but you demand much to little in well the Littelfuse I the up product as in first to factory, ability be some chain advantage the with with very constrained, higher future. will much levels capacity of on serve take in their patterns to the to make certainly lines in the IXYS think

Shawn Harrison

that that you then you something X.X is or there book-to-bill were the the it potentially year? correction better problematic risk this any follow-up, said But are high year. your think a to year? Or feel to little relative saw like a things this And read not half I from does was distribution inventory customers another that, channel as bit you last year in of other last second year

David Heinzmann

it we carefully. be think Yes, some to is most very correction practical if a get want we this really not, the that call be continue I monitor of to into May or become but to you cycle going further cycle. it we

fact we were being X.XX first in of driven from little faster. means during can our year, the their some know them they were quarter distribution that times lead less orders described can pull business, they what because they that book-to-bill actually core quarter, I our by ways semiconductor in reduced which last our on the partners a core think I back get earlier

book-to-bill general monitor the make and in good, and X it's over distribution it. sure whether has service place an see very, the our of a they there And their X byproducts to distribution robust. distributor from kind place. increase on the things with of inventory we inventory in we been we that returns inventory the there the a normal competitive sales hanging weeks partner, you in down line and high today, by an distributor, and distributor quarters, core during would From to reported channels quarter a pretty range lines in our have closely right position it's because the has yes, of absolute perspective, or or see in broad within very what but So drives our last dollars, and been byproduct

So right don't see I in watch that we signs, earlier, around tend be mentioned closely. as we particularly, to sceptic and very that, I and any now, but warning

with share see absolutely you those you of sort signs guys. If of those things we'll

Shawn Harrison

how are considered think it assuming progress there and stop off get One of I we you is that half the am with last you -- Meenal, that as so to if XX, the maybe million that $XX 'XX, non-core, one, I may, the in the 'XX? that where sales first December rolls as immediately in about is doesn't business

Meenal Sethna

be of business, I we're little timing what expect roll a view off. But to up a would think alternatives be at give on $XX you say we'll that, I strategic that that on looking quarter, we with better able mentioned, impact give we'll of indication MCU as depending we able to majority for better next still so which very end because I is the million again, to the the and doing XXXX.

Operator

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

John Franzreb

it It magnitude was as business same also Dave, that great -- industrial be business. a would the electronics the just going little the you color was reference up back quarter IXYS just A at business? to had the but helpful. there legacy

David Heinzmann

taking our the nonresidential industrial industrial of oil things. mid had but at the industrial what electronics growth year grew teens that or businesses robust. electronics talked strong those A growth Yes. and When I gas, we is space core space MRO about different than the business, call about, which the our fuses have we area. talking was say of about not That And kind OEMs earlier. construction, in good to an talking industrial little that that our a electronic different mining, would little sort our we IXYS It's as power in on are industry, and segment. relay at we pacreviein call sure have and there serve tends space there market of probably I we'll pretty approach how I'm our that. about very we're same talked IXYS looking modify to we area bit advantage and on make approach are go-to-market that

think space lot more us to for gives drive it's we really that like momentum very a of to attractive And try that So a area. we IXYS aggressively. us and

John Franzreb

automotive in the you're to Perfect. back Great. content the And going sector. of just that seeing

or rates stayed in little a SUVs of the the the versus catch growth been effect kind the up penetration cars, accelerating rates always maybe or mix passenger bit has has Regarding cars same? passenger

David Heinzmann

less I but And has that. think phenomenon, that. so, Europe a fair it's mix more more overall has and in see and a even like amount you of bit general, been a little SUVs towards moving of things the crossovers, Europe global in

ongoing big it's is a certainly So it well. and as driver Asia, an in

Ford trend. to And a -- But trend So that's move been I SUVs, maybe think trend. their also always going us reacting in focus energies. the so little an in and positive it's on bit ongoing North a America for it's tended content to is been just higher is it's and to that's a time a bit

John Franzreb

I earlier, properly? last was that included And Okay. that understand EPS? Did gain referenced Meenal, in you $X.XX that adjusted that

Meenal Sethna

It of correct. Yes. EPS. adjusted our part That's was

Operator

Instructions]. [Operator

next Our . Steven Research Fox question comes of from Cross

Steven Fox

you just your just tax sort you the mean one understanding the of guidance I [indiscernible] of still could met is exact what how having makeup reported? difference rate through given substantial originally original question. how I versus walk it had I'm you trouble what versus other thought?

Meenal Sethna

we midpoint about is would far volumes so because drop-through guidance piece as our the the $XX part the our sales. I'd big the a million expect by of that sales big of was the overage Sure. sales are with [indiscernible] got additional good say we sales, guidance really of

section, share had had of the IXYS, we was up our also we assumption, investments we off to share expense lower. about that we mentioned mark-to-market with in that were I we pickup, about new share $X.XX well, we a was was were and there, a $X.XX that with count on a then equity other where then around added being have mentioned assumptions I income the The that as on rate the that period and of shares the ended other issued some little EPS partial making nonoperatings couple gains had pieces, another some tax gain or

Steven Fox

typical drop-through the margin was a And conversion right? guys for you

Meenal Sethna

business by I'd would today. drop the a lower the a higher expect it it little average say, in Typical, base but bit business, at you was the from Yes. offset where IXYS overall then

Operator

our you At to time, Heinzman, proceed, may this Q&A. I'd concludes sir. turn to back over Dave This like

David Heinzmann

joining you us for today's quarter, next look to forward talking We you again a for call. Thank and have great to day. Thanks.

Operator

conference. and This attending you, the concludes program. today's gentleman ladies for Thank

You may disconnect. Good day. all

Littelfuse (LFUS) 2 May 182018 Q1 Earnings call transcript