Littelfuse (LFUS) Q1 FY26 earnings call: guidance and Q&A

Seeking more detail on the drivers of diversified industrial demand within the Electronics segment, specifically new design wins or end markets.

Management confirmed broad-based demand beyond data centers, noting strong performance in diversified industrials which includes aerospace, defense, and medical. They highlighted that all industrial segments except HVAC are performing well.

“We're seeing broadening across the industrial segments. And actually, all of our industrial segments with the exception of HVAC are doing well. We did see very strong performance in the diversified industrials.”

asked by Christopher Glynn · answered by Gregory Henderson

Asked if book-to-bill or absolute orders expanded sequentially from Q4 to Q1, and for characterization of overall orders growth.

Management stated sequential improvement in book-to-bill from Q4 to Q1, and also within Q1. Bookings were up more than 20% year-over-year.

“we saw sequential improvement. And even within Q1, as I kind of look at the progression of the quarter, we saw sequential improvement as we went through the quarter. So again, book-to-bill north of 1, we saw bookings higher than 20% on a year-over-year basis.”

asked by Christopher Glynn · answered by Abhishek Khandelwal

Inquired about the benefits seen in the protection portfolio within the Electronics segment and data center-related opportunities in the Industrial segment.

Management explained that all segments participate in the data center market, from on-rack solutions (Electronics) to infrastructure (Industrial, e.g., Basler's control/protection, power semiconductors for UPS). They noted strong double-digit growth in data centers and similar expected performance in Q2.

“we are actually really seeing broad-based strength in the data center from all of our segments and really across that ecosystem, we talk about solutions that go from grid to chip.”

asked by Luke Junk · answered by Gregory Henderson

Asked about the drivers of strong margin expansion across segments despite higher commodity costs, and the incremental margin.

Management stated a Q1 flow-through of 38%, above the long-term target of 30-35%. They acknowledged commodity pressure but noted teams are offsetting it through supply chain savings, productivity, pricing, and surcharges, aiming for price-cost neutrality.

“Our teams are working diligently to offset those commodity or inflationary pressures that we're seeing, whether it's through supply chain savings, whether it's through driving incremental productivity, whether it's through pricing or surcharges, right?”

asked by Luke Junk · answered by Abhishek Khandelwal

Asked if the Electronics segment margin could return to 2022 levels (lower 30s) and what factors would drive this.

Management indicated that while they wouldn't commit to a specific past number, they expect margin improvement in the Electronics segment over the mid- to long term. This will be driven by product rationalization and footprint optimization in the power semiconductor business unit, as the passives and protection franchises already have strong margin profiles.

“what you will -- what you should expect is margin improvement in the Electronics segment over the mid- to long term as we make that work come through.”

asked by David Williams · answered by Abhishek Khandelwal

Inquired about the acquisition pipeline given ongoing strategic initiatives and bandwidth, and the company's approach to M&A.

Management confirmed an active and disciplined acquisition pipeline, aligned with their strategy. They emphasized that M&A is a key part of their growth strategy, supported by a strong balance sheet (net leverage 1x), and more details will be provided at the Investor Day.

“we continue to have an active pipeline. We continue to be disciplined about it, and we want to focus on doing acquisitions that align to our strategy... you should expect to continue to see us doing acquisitions.”

asked by Christopher Glynn · answered by Gregory Henderson