Littelfuse, Inc.

Good day, everyone, and welcome to the Little Fuse First Quarter 2022 Earnings Conference Call. Today's call is being recorded. At this time, I will turn the call over to the Head of Investor Relations, Tricia Tutland. Please proceed.

Good morning, and welcome to the Little Fuse First Quarter 2022 Earnings Conference Call. With me today are Dave Heinsman, President and CEO, and Minal Sethna, Executive Vice President and CFO. Yesterday, we reported results for our first quarter, and a copy of our earnings release and slide presentation is available in the Investor Relations section of our website. A webcast of today's conference call will also be available on our website. Please advance to slide two for our disclaimers. Our discussions today will include forward-looking statements. These forward-looking statements may involve significant risks and uncertainties. Please review yesterday's press release and our Forms 10-K and 10-Q for more detail about important risks that could cause actual results to differ materially from our expectations. We assume no obligation to update any of this forward-looking information. Also, our remarks today refer to non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is provided in our earnings release available in the Investor Relations section of our website. I will now turn the call over to Dave.

Thank you, Tricia. Good morning, and thanks for joining us today. Let's start with slide four. Building on our noteworthy success in 2021, our global teams delivered tremendous performance, substantially above our expectation to start this year. We achieved record revenues and earnings per share growth as we successfully executed on our strategy and continued to outperform the markets we serve. Across our electronics, commercial vehicle, and industrial businesses, we attained double-digit organic growth compared to last year, while our passenger car business outperformed global car build. Broad in-market demand continues to remain strong. and our team has resiliently managed supply chain disruptions. Our organic growth trajectory, combined with our strategy-led acquisitions, continue to strengthen and diversify our business. As a result of our persistent execution, we remain extremely well positioned to further capitalize on current and future growth opportunities within the global structural themes of sustainability, connectivity, and safety. That said, we are operating within a more volatile macro environment compared to 90 days ago, given events related to COVID and the war in the Ukraine. In particular, the shutdowns in China due to COVID-19 have impacted our operations, which will impact our second quarter sales and earnings. Our teams achieved outstanding results driven by increasing demand creation across the industrial, transportation, and electronic markets we serve, and worldwide execution. I would like to recognize and thank all of our associates around the world for their ongoing determination to drive record growth by winning new business, making significant strides with additional strategic acquisitions, and meeting customer demand within a challenging macro environment. Our strong performance through these unprecedented times is truly a reflection of our great people and the strength of our business. Moving on to performance within our segments. Our electronics product segment achieved remarkable results. We drove significant revenue growth across all regions, driven by our diverse product offering, far-reaching go-to-market strategy, and our team's ability to overcome ongoing macroeconomic challenges. Demand for our products was driven by a broad range of applications, including data centers, telecom infrastructure, industrial automation, appliances, and automotive electronics. We expect to capitalize on the ongoing themes around connectivity, automation, and electrification. Exiting the first quarter, our electronics book to bill remained above one, and weeks of inventory at our distribution partners are within our normal range, underscoring sustained strong, ongoing demand. This demand setup is positive, but we are working through the resurgence of COVID-19 in China, which directly impacts our electronics business. Our teams continue to maintain focus on this dynamic environment. Our transportation product segment delivered solid performance within a challenging supply chain environment. Our passenger vehicle business was impacted by OEM shutdowns and their lower production levels driven by their ongoing material shortages and the war in the Ukraine. Withstanding this, we continued to outperform global car build, given our increasing product content in passenger vehicles. We see a number of ongoing content growth opportunities and expect to continue our market outperformance despite lower global car build projections. Our commercial vehicle business drove strong demand for our combined portfolio of legacy and car link technologies, products driven by our deeper and broader presence across material handling, heavy duty truck, bus, construction and agriculture equipment, marine, and power sports markets. We have a strong order backlog which sets up for continued performance. Turning to our industrial product segment, Our strong performance was an outcome of our global team's ability to serve new customer applications, increase new product sales, and leverage a broader product portfolio. We saw robust demand in our strategic markets, including industrial safety, HVAC, and renewables. In North America, we were seeing improving trends in oil and gas and non-residential construction. with sustained strength in mining and industrial MRO markets, while electrical distributors inventories remain lean. MENA will provide additional color on our strong financial performance. Our ongoing results and successes reflect both the strength of our team's execution and the power of our strategy, which is shown on slide five. Since launching our five-year growth strategy in early 2021, we have aggressively advanced our strategic business initiatives. We are investing for growth, both organically and through acquisitions, within the structural growth themes of sustainability, connectivity, and safety. These investments include resources to partner with our customers as they deploy their applications related to these themes. We have expanded our product content and captured share gains globally in high-growth markets. During 2021, we also completed two acquisitions aligned closely with our strategic goals, Heartland Controls and HVAC, and Carling Technologies and Commercial Vehicles, Telecom Infrastructure, and Renewables, all higher growth in markets, adding approximately $300 million in annualized sales. In April, we announced two additional acquisitions, CNK Switches and Embed, Turning to slide six, we are looking forward to welcoming C&K employees to the LittleFuse team upon closing of our announced acquisition. C&K is a leading designer and manufacturer of high-performance electromechanical switches and interconnect solutions with annualized sales of over $200 million and has historically had EBITDA margins of approximately 20%. In addition to of C&K expands our product portfolio, addressable market, and growth globally across industrial, automotive, and datacom markets, serving as a platform for continued growth. Our complementary go-to-market models will continue to strengthen our partnerships with distribution channels. C&K's technology leadership in high-precision manufacturing, miniaturization, haptics, and operational footprint will broaden our capabilities. We expect to close the transaction late in the second quarter and look forward to getting the integration underway. Moving on to slide seven, let me begin also by welcoming Embed team to LittleFuse. Embed is a proven provider of embedded software and firmware developed for a broad range of applications. This acquisition will help us to better serve our customers by expanding our software design, engineering, and technical expertise. This capability is critical given the complexity of vehicle electronification and electrification, as well as the proliferation of communications and applications driven by IoT trends in industrial markets. We now have additional capabilities to deliver broader hardware and software solutions to our customers, applications, or automation and controls for industrial applications. The addition of embed will unlock new growth opportunities across the transportation and industrial markets we serve. Since early 2021, we are on track to deploy $1 billion in capital for acquisitions lined with our long-term growth strategy, adding approximately $500 million in annualized sales to further diversify and strengthen the end markets we serve and expand our organic growth opportunities. Our disciplined approach towards M&A positions us so that newly acquired businesses accelerate our success in higher growth markets through diversification, expand our geographic presence, and leverage our core competencies, creating value for all of our stakeholders We are very excited about these businesses and their close alignment with our strategic and financial objectives. Now let's move on to highlights and design wins in the end markets we serve. Within our industrial end markets on slide 8, we continue to generate increased business wins across a broad range of applications to grow our business. expanded our portfolio with acquisitions. During the first quarter, we captured business in the commercial kitchen and food and beverage industries that enable our customers to meet tighter safety requirements. Our ability to provide strong technical support across a broad set of higher voltage products have allowed us to secure global design wins. As a result, we secured business in renewables across a variety of applications including solar, wind, and energy storage systems. In HVAC, we continue to secure more business with our expanded product portfolio. With the breadth of our high-quality offerings, we are increasing product content with leading customers, and we expect this to continue given our global brand and their sustained focus on safety and sustainability. Turning to our transportation end markets, on slide nine, We continue to increase our product content to outperform the market. Within electrification, our high voltage products secured global business for battery management systems and onboard charging applications in passenger vehicles. In commercial vehicles, we captured business for power distribution in two-wheelers, onboard charging in buses, and rail traction for trains. We also expanded our business and electric vehicle charging infrastructure applications. With the increasing complexity of vehicles, we secured business based on our engineering capabilities for heavy-duty trucks, material handling, and construction and agriculture equipment. We are also leveraging products from our successful integration of Carling to grow our business in these end markets. Within safety, comfort, and ADAS applications, we captured wins based on our product performance. With our investments for growth and expanded capabilities and portfolio with the additions of Carling and Embed, we are very well positioned for continued growth within transportation applications. Moving on to slide 10, electronics end markets, we are seeing significant growth from innovative products targeting key end markets. During the quarter, we capitalized on the proliferation of electronics content across a wide range of applications centered around connectivity. We secured business for data centers and telecom infrastructure with our responsiveness to customize solutions. In appliances, we expanded our presence with existing customers based on our long-term engagement. In addition, our product features won us business for building security systems and general-purpose electronics. Our ongoing success of winning business and our announced acquisition of C&K will serve as a platform for continued growth. Across the high-growth industrial, transportation, and electronic end markets we serve, our pipeline of new business opportunities is very active and we are confident in the The organic growth from these new business wins, coupled with our acquisitions, will enhance and sustain our growth and position us to continue expanding our market presence. I will now turn the call over to Minal to provide additional color on our financial performance and output.