[Management View]
Littelfuse reported strong Q3 2025 results, with revenue growth of 10% YoY, driven by robust performance in the Electronics segment and solid Industrial segment growth despite mixed market demand. The company announced the acquisition of Bassler Electric for $350 million, aiming to expand into grid and data center markets and enhance OEM exposure in industrial infrastructure. Strategic priorities include focusing on the safe and efficient transfer of electrical energy, providing complete solutions for customers, and driving operational excellence.

[Outlook]
Management provided Q4 2025 guidance, projecting sales between $570 million and $590 million, with organic growth of 5% at the midpoint and a 2% contribution from the Dortmund acquisition. EPS guidance is set at $2.40 to $2.60, incorporating a $0.40 headwind from compensation and a $0.15 impact from a higher adjusted effective tax rate. The company expects Bassler Electric to be accretive to adjusted EPS in 2026 and targets double-digit returns by year five post-close.

[Financial Performance]
- Revenue: $625 million (+10% YoY, +7% organic growth).
- Adjusted EBITDA margin: 21.5% (-20 basis points YoY).
- Adjusted EPS: $2.95 (+9% YoY).
- Operating cash flow: $147 million; Free cash flow: $131 million.
- Cash on hand: $850 million; Net debt to EBITDA: 0.9x.

[Q&A Highlights]
Question 1: Can you elaborate on the sequential growth in the Power Semiconductor business and its outlook for Q4? How will improvement impact margins?
Answer: Sequential growth was observed from Q2 to Q3, though YoY performance remains soft. Management emphasized the strategic importance of the Power Semiconductor business in the safe and efficient transfer of energy. Efforts are underway to sharpen focus, improve go-to-market strategies, and enhance operational performance. The hiring of Dr. Karim Hamed as the new leader of the semiconductor business is expected to accelerate improvements. Margins are anticipated to improve as operational execution strengthens.

Question 2: Can you clarify the $0.40 stock compensation impact in Q4?
Answer: The $0.40 headwind is primarily due to a reset in variable compensation to target levels, following a year where teams did not receive payouts due to performance. A smaller portion is attributed to year-over-year stock compensation impact. This reset is expected to normalize in 2026.

Question 3: What is the current scope of the data center business, and what is the lead time from design wins to revenue?
Answer: Data center design wins are up more than two times YoY, with meaningful revenue contribution already observed in Q3. Design wins are tracked as commitments to include Littelfuse products in customer programs, with relatively faster lead times to revenue compared to other markets like automotive or industrial. Data center growth is a significant driver for the Electronics segment, which grew 18% YoY (12% organic).

Question 4: How is the industrial segment performing, and what is the outlook for scalability?
Answer: The industrial segment grew 4% organically in Q3, driven by energy storage, renewables, and data center demand, despite weaker residential HVAC and construction markets. Year-to-date growth is 12%, indicating strong performance. The Bassler Electric acquisition is expected to further enhance industrial exposure and growth opportunities.

Question 5: Can you provide more details on the sales force realignment and its expected impact?
Answer: Littelfuse transitioned from a product-centric to a customer-centric sales structure, consolidating sales teams into three market-facing organizations. This change aims to improve customer engagement, enable full-portfolio solutions, and align R&D efforts with customer technology roadmaps. Early implementation in the data center and e-mobility segments has already shown positive results.

Question 6: Are tariffs impacting growth or causing delays?
Answer: Tariff-related timing impacts were observed in Q2 and Q3, with a $6 million tailwind in Q2 and a $3 million headwind in Q3 for the Transportation segment. Management noted that tariff dynamics have largely stabilized, and Q4 guidance assumes a neutral price-tariff impact.

Question 7: What is the outlook for the Transportation segment, particularly passenger vehicle fuses and sensors?
Answer: Passenger vehicle fuse sales grew 4% organically, reflecting stable demand, while sensor sales declined 18% due to ongoing product pruning and realignment efforts. The core passenger business performed well despite stable car builds and slower EV market growth.

Question 8: What are the focus markets and strategic priorities for the Power Semiconductor business?
Answer: Littelfuse aims to focus on high-growth markets such as data centers, grid, and medical applications, leveraging its differentiated value proposition in the safe and efficient transfer of electrical energy. The sales realignment is expected to improve the positioning of power semiconductors with customers, while operational optimization will drive growth and profitability.

[Sentiment Analysis]
Analysts expressed optimism about Littelfuse's strategic initiatives, particularly the Bassler Electric acquisition and data center growth. Management maintained a confident tone, emphasizing strong execution, strategic focus, and long-term growth opportunities.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|-------------------------|-----------------|-----------------|------------|
| Revenue | $625M | $568M | +10% |
| Adjusted EBITDA Margin | 21.5% | 21.7% | -20 bps |
| Adjusted EPS | $2.95 | $2.70 | +9% |
| Free Cash Flow | $131M | $120M | +9.2% |

[Risks and Concerns]
1. Declining margins in Electronics (-140 bps), Transportation (-220 bps), and Industrial (-310 bps) segments due to lower volumes, unfavorable mix, and increased stock and variable compensation costs.
2. Continued softness in residential HVAC and construction markets, impacting Industrial segment growth.
3. Tariff-related timing impacts, though largely stabilized, remain a potential risk.
4. Execution challenges in the Power Semiconductor business, requiring strategic and operational improvements.

[Final Takeaway]
Littelfuse delivered strong Q3 2025 results, exceeding guidance and demonstrating resilience in mixed market conditions. The acquisition of Bassler Electric positions the company for growth in high-demand sectors like data centers and grid infrastructure. Strategic realignment of the sales force and focus on high-growth markets are expected to drive long-term value. While challenges remain in certain segments, management's proactive approach to addressing operational and strategic priorities instills confidence in sustained growth and profitability.