Littelfuse Q2 Earnings Call Highlights

• Littelfuse Stock is Hitting on All Cylinders

Littelfuse (NASDAQ:LFUS) reported second-quarter results above its expectations, citing broad demand across data center, industrial, energy infrastructure and selected transportation markets. The company posted net sales of $739 million, up 20% from a year earlier and 14% on an organic basis, while adjusted diluted earnings per share rose 47% to $4.19.

President and CEO Greg Henderson said the results reflected progress against the company’s growth strategy, including efforts to support customers adopting higher-power and more advanced electrical architectures. He said Littelfuse entered the third quarter with record bookings and a book-to-bill ratio “well north of 1.0.”

Adjusted EBITDA margin expanded 220 basis points from the prior year to 23.6%, which CFO Abhi Khandelwal attributed to volume leverage, favorable product mix and operational execution. Operating cash flow totaled $146 million, while free cash flow increased 75% year over year to $127 million.

The company ended the quarter with $628 million in cash and consolidated net leverage of about 0.8 times. Littelfuse returned $90 million to shareholders through dividends and raised its quarterly dividend 7% to $0.80 per share.

Data Center, Industrial Demand Drive Growth

Henderson said computing, communications and diversified industrial, or CCDI, markets delivered strong growth, with data center remaining a leading contributor. The company said it benefited from its “grid-to-chip” capabilities across its businesses as data-center customers pursue more advanced power architectures.

Data-center revenue growth during the first half was tied largely to lower-voltage architectures, Henderson said. While the company has begun low-volume shipments for proof-of-concept high-voltage systems, it expects the larger high-voltage opportunity to emerge in 2027 and beyond. Henderson said Littelfuse’s data-center design wins more than doubled from a year earlier, with many related to higher-voltage architectures.

Khandelwal reiterated the company’s Investor Day outlook for data-center revenue to grow at a 25% to 30% compound annual rate over the next five years. He said the company sees content opportunities in high-voltage data-center systems that are two to four times greater than in lower-voltage systems.

Diversified industrial channels also contributed to CCDI growth, while medical and aerospace and defense markets showed improving demand. Henderson said aerospace and defense includes both traditional programs and new entrants, with design activity particularly strong among newer participants. Consumer electronics sales declined, though the company said that market represents less than 10% of total sales.

Energy and industrial infrastructure demand was broad-based, supported by grid modernization, utility investment and renewable-energy deployment. Industrial automation, construction and a faster-than-expected recovery in HVAC demand also contributed. Khandelwal said HVAC recorded year-over-year organic growth for the first time since the first half of 2025 after four consecutive quarters of declines.

Segment Performance and Basler Contribution

• Electronics Products: Sales increased 21%, including 20% organic growth. Passive products remained strong, while semiconductor products benefited from protection demand and improved power semiconductor demand. Adjusted EBITDA margin rose 470 basis points to 26.3%.
• Transportation Products: Sales increased 2%, including 1% organic growth. Commercial vehicle demand improved in truck, construction and agricultural equipment markets, while passenger vehicle organic sales declined 2% amid lower global production and continued sensor sales declines. Adjusted EBITDA margin was 18.6%.
• Industrial Products: Sales increased 52%, with 16% organic growth. The Basler acquisition contributed about 36% of the segment’s growth, while data center, industrial automation, construction and HVAC demand also supported results. Adjusted EBITDA margin rose 50 basis points to 22.6%.

Littelfuse said Basler is performing ahead of its prior operational and commercial expectations. The company now expects Basler to contribute approximately $135 million to $140 million of revenue in 2026, above its previous outlook, along with $0.25 to $0.30 of full-year earnings contribution.

The company also highlighted design wins in transportation and energy storage. A light truck and commercial vehicle platform using Littelfuse current-sensor and MEGA Fuse technologies represents an annual revenue opportunity of more than $20 million, Henderson said, with potential to extend to other vehicles. In addition, the company secured a battery energy storage and power supply program using fast-acting TLS fuses for data-center battery backup units.

Power Semiconductor Rationalization Continues

Littelfuse is narrowing its power semiconductor focus toward high-power, high-value applications where it believes it has differentiated capabilities. Henderson said the business experienced stronger demand during the quarter and is expected to be a meaningful contributor to third-quarter growth.

The company previously announced plans to close its Allen, Texas, power semiconductor manufacturing facility in 2027. Khandelwal said savings from the closure are expected to begin affecting results in the second half of 2027. He described the move as part of a multiyear effort to simplify the company’s manufacturing footprint, improve lead times and reduce costs through make-versus-buy decisions.

Henderson also cited a power semiconductor design win with a fusion power company. Littelfuse plans to begin third-quarter shipments of high-voltage IGBT and diode products for the customer’s first prototype reactor.

Third-Quarter Outlook

For the third quarter, Littelfuse forecast net sales of $780 million to $800 million. At the midpoint, the outlook represents 26% year-over-year growth, including 21% organic growth, a 6% contribution from Basler and a 1% foreign-exchange headwind.

The company expects adjusted diluted earnings per share of $4.85 to $5.05, with the midpoint representing 68% growth from the prior-year period. Its outlook assumes an adjusted effective tax rate of 23% to 24%.

Henderson said the company’s demand is increasingly broad-based rather than concentrated in data center and grid-related markets. He added that channel inventories appear normal in terms of weeks of supply and that growth is primarily being driven by end-market demand, aside from limited inventory normalization in certain areas.

About Littelfuse (NASDAQ:LFUS)

Littelfuse, Inc is a global manufacturer of circuit protection, power control, and sensing technologies. Founded in 1927 and headquartered in Chicago, Illinois, the company develops and produces a broad range of products designed to safeguard electrical and electronic systems across a variety of end markets. Littelfuse's offerings include fuses, semiconductors, relays, and sensors, all engineered to protect against overcurrent, overvoltage, and thermal events in demanding applications.

The company's product portfolio is organized into key segments such as Automotive, Industrial Electronics, and Power Sensor.

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