Littelfuse, Inc.

Good day everyone and welcome to the Little Fuse, Inc. second quarter 2022 conference call. Today's call is being recorded. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. At this time, I will turn the call over to the Head of Investor Relations, Tricia Tuntland. Please go ahead, ma'am.

Good morning, and welcome to the Little Butte Second Quarter 2022 Earnings Conference Call. With me today are Dave Heinsman, President and CEO, and Meenal Sethna, Executive Vice President and CFO. Yesterday, we reported results for our second 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 discussion 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, which provides an overview of recent highlights. We delivered very strong second quarter results, which were above our expectations. Our continued outperformance within a volatile environment was driven by strong customer pull and the persistent operational execution of our associates. We achieved revenue growth of 18% and expanded adjusted earnings by 25% compared to last year. Across our electronics, transportation, and industrial segments, we attained double-digit sales increases driven by demand creation for a broad range of products, and our leverage of capabilities and resources from our recent acquisitions. Our first half double-digit sales and earnings growth is a testament to our global team's execution across the breadth of our end markets within the structural themes of sustainability, connectivity, and safety. Advancing our strategic initiatives, on July 19th, we completed our previously announced acquisition of C&K Switches, I am excited to welcome C&K to our organization. C&K significantly expands our ability to serve our customers with market-leading technologies, capabilities, and talent. Later, I will share more on the strategic rationale for C&K. Consistent with our capital allocation priorities, we have increased our quarterly cash dividend by 13%. This deployment reflects our confidence in the long-term growth of the business and commitment to return ongoing value to shareholders. I would like to thank all of our associates around the world for another great quarter. Our global teams have relentlessly overcome daily obstacles to fulfill customer demand while working safely. They have also shown their ongoing passion and commitment to advancing our sustainability initiatives across the organization, and we look forward to sharing our continued progress when we publish our report later this year. I'm particularly proud of our sustained success, which is an outcome of our highly skilled people and the innovative, reliable solutions we deliver to customers, which continues to differentiate our company. Moving on to performance within our segments. Our electronics product segment delivered revenue growth across all regions, along with strong profitability, driven by our diverse product offering and go-to-market strategies. In particular, demand for our products was driven by our customers' applications, enabling greater connectivity and sustainability, like factory and building automation, data centers, telecom infrastructure, energy efficiency, electrification of vehicles, and charging infrastructure. Exiting the second quarter, our combined electronics book-to-bill was hovering around one, with continued strength and sell-through from our channel partners. Average weeks of inventory at our distribution partners are at the upper end of the normal range. However, there are some pockets where inventory remains lean. Our transportation product segment delivered solid performance in a tough environment. Our passenger vehicle business was impacted by Tier 1's unwinding last year's inventory build and lower OEM vehicle production. due to the ongoing material shortages, COVID lockdowns in China, and declining car build forecasts. Since 2019, our passenger vehicle business has grown high single digits on a compounded annual basis, while global car production has declined high single digits. We see a number of ongoing content growth opportunities with electrification, electronification, and ADAS, and expect to continue our long-term market outperformance. Within our commercial vehicle business, we have a robust order backlog driven by demand for a combined portfolio of legacy and Carling products, and our record revenue reflects our ability to fulfill demand. Notably, we have been able to drive strong output increases at our Carling factories, and as a result, we are realizing growth above our initial expectations Looking ahead, we see a healthy backlog pattern with particular strength and demand for our Carling product groups, and our target markets continue to show strength across material handling, construction, and agriculture equipment. Turning to our industrial product segment, our ability to cross-sell expands solution sets to include multiple technologies, while enhancing operating efficiency and productivity, delivered record revenue performance and strong profitability. We continue to capitalize on robust demand in our strategic markets across electrical safety, renewables, and HVAC. A large part of our success comes from enabling our customers' applications focused on sustainability, such as solar, energy storage systems, support vehicle electrification. We are also seeing robust demand for general industrial electronics applications like data centers and cloud computing. Looking ahead, the underlying fundamentals within our strategic markets remain strong. NINA will provide additional color on our strong financial performance and third quarter outlook. Our ongoing results and successes and the power of our strategy, which is shown on slide five. We are investing for growth both organically and through acquisitions within the structural themes of sustainability, connectivity, and safety. Since early 2021, we have deployed $1 billion in capital for acquisitions, adding approximately $500 million in annualized sales to further diversify and strengthen the end markets we serve and expand our organic growth opportunities. Building on our acquisition of Heartland Controls and HVAC, Carling Technologies and Commercial Vehicles, telecom infrastructure and renewables, and embed in transportation and industrial applications, we are pleased to complete our acquisition of C&K, which serves a variety of end markets. We continue to make organic investments in the business to advance our new product development, capacity expansions, digital presence, and sustainability initiatives. We are confident the investments we are making will continue to deliver long-term profitable growth and returns for our shareholders. C&K brings over 90 years of experience to Little Fuse and is a leading designer and manufacturer of high-performance electromechanical switches and interconnect solutions. aerospace, and datacom in markets, as reflected on slide six. We are very excited about the addition of C&K and its close alignment with our strategic priorities. Our disciplined approach towards M&A positions us to accelerate our success in higher growth markets through diversification, expands our geographic presence, and leverages our core competencies, creating value for all of our stakeholders. Moving on to slide seven, a combination of our companies significantly expands our technologies and capabilities, enabling us to deliver a comprehensive solutions offering to our broad customer base. B&K enhances our technical and application expertise, engineering and designing capabilities, and our technology leadership and high-precision manufacturing, miniaturization, and haptics. Our businesses are highly complementary and enable us to leverage our collective partnerships with distribution channels, OEM relationships, and global footprints, including expanded capabilities in India and Vietnam. The integration is underway, and we look forward to leveraging our respective strengths. Now let's move on to highlights and design wins in the end markets we serve. Within our industrial end markets on slide eight, We are generating new business with our applications knowledge and breadth of products. We are expanding solutions that focus on sustainability. During the second quarter, we secured business by delivering multiple technologies for large-scale and home-based energy storage systems. With a large-scale battery manufacturer, our product was designed into battery formation equipment. In HVAC, we captured opportunities based on our customer relationships and cross-selling capabilities. Within industrial safety applications, new standards continue to drive elevated design activity to achieve compliance. With our reputation for engineering and reliability, we expanded our market position in commercial kitchens for electrical systems in buildings, with our major restaurant chain, and with a beverage equipment supplier. We also want business for welding equipment used in electric vehicle collision repair shops, motor drives and elevators, and industrial power grids. With our diverse, high-quality offerings, we are increasing product content with leading customers and expect this to continue given their intensifying focus on sustainability and safety. Turning to our transportation end market on slide nine, We are expanding our wins with the electrification of vehicle platforms. During the second quarter, our investments in engineering and new products allowed us to increase our positions across multiple applications within an electric vehicle, whether a hybrid or full battery electric vehicle. Our early engagement, reputation for quality, and strong high-voltage technology portfolio secured several opportunities in battery management and protection distribution, and onboard chargers. For off-board electric vehicle charging, our technical support and product performance secured significant new business. With the global ongoing transition to electric vehicles, our company is playing a tremendous role in enabling our customers' applications. We look forward to expanding our presence with them in this high-growth end market. For traditional passenger vehicles, We expanded our leadership with our wide range of products, given the increasing functionality and complexity in architectures. In automotive electronics, we won global business with our long-term relationships and reliability for telematics, infotainment, and comfort and convenience applications. In commercial vehicles, we captured business in our strategic end markets. With an existing European customer in heavy-duty trucks, Our unique technical solution met stringent customer requirements, which won us new business. In electric buses, we secured a project with our high quality Carling products. We are pleased with our early integration success. We see a broad range of sales synergies ahead of us. In electric two and three wheelers, we won business for battery management systems and powertrain control modules. For commercial vehicle charging infrastructure, we expanded our wins for forklift applications. With our investments for growth, including expanded capabilities and portfolios with the addition of Carling and Embed, we are seeing new business opportunities, which continues to position us well for continued growth within transportation applications. Moving on to slide 10, electronics end markets, greater connectivity requirements continue to drive favorable macro trends. During the second quarter, we won business for data centers and telecom infrastructure based on product features and delivery support. These wins also included products from our Carling acquisition based on a strong global presence in telecom applications. For building solutions, our far-reaching go-to-market model and deep portfolio enabled us to secure a multi-technology business systems, and smart doorbells. Our long-term engagement, support, and the ongoing push towards expanded efficiencies and safety drove wins in appliances and general-purpose electronics. The pipeline of new business opportunities is robust and further expanded with our completed acquisition of C&K. We look forward to building on our collective market positions with our various industry-leading brands. Our combined successes of winning business will serve as a platform for continued growth. We are extremely well positioned to expand the proliferation of our electronics content across a wide range of applications centered within sustainability, connectivity, and safety. Our new business wins have been significant and represent a diverse range of end markets and applications. We've also worked hard to build a robust pipeline of new business opportunities that I am confident we will secure with capabilities and differentiated solutions. We fully expect that the organic growth from all of our new business activities, coupled with our acquisitions, will enhance and sustain our long-term growth. I will now turn the call over to Meenal to provide additional color on our financial performance and outlook.