Littelfuse, Inc.

Please stand by. We're about to begin. Good morning, ladies and gentlemen. Welcome to the Little Fuse third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad, and if you would like to withdraw your question, simply press star 1 again. And now at this time, I would like to turn the call over to the head of investor relations, Mr. David Kelly. Please go ahead, sir.

Good morning, everyone, and welcome to the Little Fuse third quarter 2023 earnings conference call. With me today are Dave Hinesman, president and CEO, and Meenal Sethna, executive vice president and CFO. Yesterday, we reported results for our third 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, David. Good morning, and thanks for joining us today. Before I begin, I'd like to welcome our new head of investor relations, David Kelly. I expect many of you already know David from his prior role in equity research at Jefferies, where we were part of his sell-side coverage. David brings a strong understanding of our business and industry and will continue fostering strong relationships with our investors and delivering valuable insights as we continue to drive the growth and shareholder value. Please join us in extending a warm welcome to David. With that, let's start with a summary slide four. Our global teams delivered solid Q3 results as both sales and earnings exceeded our prior guidance. Our performance reflects strong execution, ongoing diversification, and favorable content momentum within a continued challenging macro environment. We're pleased with our overall performance, yielding strong year-to-date profitability. Despite the ongoing channel destocking and pockets of in-market softness, we've significantly improved our financial performance versus past market cycles. This reflects our resilient business model and continued strong underlying fundamentals on slide five. Secular growth themes, including sustainability, connectivity, and safety, continue to drive our organic growth trajectory. Our recent acquisitions have further balanced our in-market exposure while complementing our diverse technology capabilities and expanding our market leadership. We remain well-positioned to deliver on our long-term strategy. I want to thank our global teams for their unwavering commitment and persistent hard work. Let me start with a view on what we are seeing across our markets. Through the third quarter, we continued to see inventory destocking across our electronics and commercial vehicle distribution channels. Our electronics book-to-bill remains below 1, and while we have limited visibility, we also believe some of our OEM customers are working through inventory reductions. While we expect inventory destocking to continue into next year, as inventory levels stabilize, we expect to return to normalized order rates. Regarding our in-markets, we're seeing varying demand patterns across a broad customer base. Starting with electronics markets, we continue to see softness in consumer and personal devices, as well as pockets of data. In industrials, we benefited from growth in renewables, infrastructure, power supplies, and industrial safety, offsetting pockets of softer demand. And finally, while the UAW strike had a modest impact in the quarter, automotive demand remained solid, driven by both low and high voltage applications our automotive content expansion is benefiting from program launches led by china and we saw 15 growth above car build in the quarter strongly within our targeted double digit range despite the current challenging macro environment we continue to diversify our portfolio build upon our design wins and fortify our market position We expect a return to growth during 2024. Broadly, across our in-market exposures, design activity remains robust, and we continue to benefit from content outgrowth. Customers remain invested in expanding secular growth capabilities, and we are delivering a robust design win cadence, which supports consistent long-term outgrowth. We believe our execution through this variable macro environment is reflected in our year-to-date margin performance, as well as our robust cash generation. For the full year 2023, we expect to exceed operating margins we delivered when we last experienced market down cycles and disruptions in 2019 and 2020. We remain competent in our margin resiliency despite the current challenging macro environment. reflecting our robust outgrowth opportunity and well-positioned cost structure. Our ability to drive strong cash flow through cycles enables us to continue investing for future growth across our portfolio and deliver outsized long-term shareholder value. Now let's move on to business design wins during the third quarter. For industrial markets on slide six, We continued to build a robust and global funnel of new business opportunities and secured a wide range of design wins. We secured a multi-technology win for energy storage in India and leveraged our solutions-focused product portfolio to deliver a solar design win in the EMEA region. We also secured key industrial safety design wins across the energy sector, including wins in Indonesia and North America. Taking a step back, industrial safety remains a long-term growth theme for us, given the need for safeguards against electrocution from higher power applications in an increasingly electrified world. Turning to the transportation and markets on slide seven, we continue to see a strong funnel of meaningful content opportunities driven by the ongoing push towards greater sustainability, connectivity, and safety. For passenger vehicles, the launch of several new OEM platforms, particularly new programs coming online in China, were a key driver in the quarter. Momentum with EVs and EV charging infrastructure helped secure wins for both low and high voltage applications. We won new business for a vehicle telematics module by leveraging product offerings from our CNK switches portfolio. An area where we are seeing design win success is our innovative current sensor offerings, which are helping drive new business opportunities for EV battery management systems and inverter applications. Within the commercial vehicle space, we secured a multi-technology win for a medium-duty EV truck that will utilize software from our embed acquisition in conjunction with hardware from our legacy portfolio, a great example of leveraging complementary technologies to drive revenue synergy. We also won new business for commercial truck and bus applications in South America and China. In Japan, we were able to leverage some of the rugged and reliable switch products from our Carling portfolio to win new business for construction and specialty vehicle applications. Moving on to slide eight, in electronics end markets, design activity continues to be robust. We're seeing multi-technology design wins globally across a broad set of end markets. We secured a diverse range of design wins, including power tools, garage door openers, appliances, and other general electronics. We continue to see growth in medical equipment and security in markets with wins globally. Our momentum in securing meaningful design wins remains strong. We've achieved success across a diverse range of end markets, applications, and geographies. which underscores our global capabilities and extensive reach. Our close collaboration with our customers' engineering teams has played a pivotal role in accelerating the development of next-generation products and design initiatives. As we continue to grow organically through the new business activities bolstered by strategic acquisitions, we are well positioned to continue executing on our long-term growth strategies. We'll now turn the call over to Miedl to provide additional color on our financial performance and outlook.