Littelfuse at Jefferies Conference: Strategic Growth Insights

On Wednesday, 03 September 2025, Littelfuse Inc (NASDAQ:LFUS) presented at the Jefferies Mining and Industrials Conference 2025, outlining its strategic priorities amid both challenges and opportunities. The company emphasized its focus on growth in high voltage applications and operational excellence, while also addressing ongoing market corrections.

Key Takeaways

• Littelfuse is targeting growth in automotive electrification and data centers.
• The company plans to enhance operational efficiency in its Mexican facilities by leveraging best practices from its Asian operations.
• A three-year financial outlook will be unveiled at the upcoming Investor Day in February.
• The electronics market is experiencing a prolonged correction, but improvements are expected.
• Littelfuse aims to achieve price-cost neutrality with a slight positive impact.

Financial Results

• Free cash flow conversion is strong, exceeding 100%, with a quarter-to-date conversion of 114%.
• The industrial segment ended Q2 with a 19% margin and a 17% growth, highlighting robust performance.
• Electronics segment margins are around 15%, with expectations of improvement in the Power Semi business in Q3.
• The company maintains a conservative leverage ratio, currently below the optimal 2.5x net debt to EBITDA.

Operational Updates

• Littelfuse is focusing on lean manufacturing and supply chain integration to improve profitability.
• There is a strategic shift towards aligning sales efforts to present a comprehensive product portfolio to customers.
• The company is implementing a data center pilot program, which has shown success in increasing wallet share.

Future Outlook

• Littelfuse plans to share detailed financial projections and margin opportunities at its Investor Day in February.
• The company is optimistic about its growth prospects, driven by strategic initiatives and operational improvements.
• Capital deployment will focus on organic investments, strategic M&A, and returning capital to shareholders through dividends and share buybacks.

Q&A Highlights

• Littelfuse sees opportunities to increase prices based on value creation.
• The automotive market accounts for 20% of the company’s global revenues, with strength in China but softer trends in North America and Europe.
• The company is simplifying its business by exiting unprofitable areas to improve margins.

For a more detailed understanding, readers are encouraged to refer to the full transcript.

Full transcript - Jefferies Mining and Industrials Conference 2025:

Seri Bordetsky, Analyst, Jefferies: Okay. I had a spiel I was I was gonna say, but I’m gonna skip it and, just dive in just given the time. I think it was real. Hi. My name is Seri Bordetsky.

I cover multi industrials here at Jefferies, including Littelfuse. We’re really excited to have them here with us today. Abby Kennewall recently joined as CFO following some time at IDEX. Lot to talk about. So as I mentioned, we’ll just jump in.

This is a fireside chat. So if you have questions, you can feel free to interrupt me at any time. So thank you for joining us today. You settled into the CFO role in mid June. What are you most excited about when taking this new role?

What are some of your initial observations about Littelfuse’s financial strength and some challenges that you see?

Abby Kennewall, CFO, Littelfuse: Well, thank you. And first of all, pleasure meeting all of you. I think I know some of you, but I’ll get to know you over time. Well, look, first of I’m really excited to be here. And as I kind of think about where we are, we’re really well positioned to be a leader in safe and efficient transfer of electrical energy.

So what got me here is a couple of things. Probably heard Greg talk about it, first of all, what we’re really working through is sharpening our strategy. And what that implies is where do we win, what gives us the right to win. So we’re in the process of doing that work. So as Greg and I spent some time talking about it, that’s one exciting piece of it.

Secondly, as you kind of think about the brand, think about what we do, we have a broad set of capabilities. And so what we’re trying to do is position our commercial organization to go to market differently. What that implies is rather than selling in silos, how do we go sell our company as a portfolio to our customers and help them solve their problems? And then lastly, it’s around operational execution. So if you think about where we are, there’s pockets of company that’s very well run-in terms of operational execution and then there are pockets that have an opportunity for improvement.

So I’ll tell you, if you think about our Asian facilities, they’re very well run operationally. However, there are pockets of opportunity across our Mexican footprint. So we took a gentleman who ran our Asian facility and made them the VP of Operations. So what they’re in the process of doing is deploying best practices from Asia into Mexico so that we can start to improve profitability. So going back to your other question on opportunity and challenges, I think the opportunity I just told you, challenges I talked about from Mexico’s standpoint, how we’re driving improvement.

So what really excites me is, you know, you’ve sharpened your focus, you you kind of work with your commercial team to go to market in a way where you’re solving customer problems, and then we have the balance sheet to go deploy and really help us take the company from where it is to the next phase in this journey.

Seri Bordetsky, Analyst, Jefferies: So as you mentioned, you kind of announced three new strategic priorities, the first of which is to better capitalize on some growth. Can you just talk through that opportunity, especially within the higher voltage and energy dense applications? And what can this add to growth going forward?

David, Unidentified speaker, Littelfuse: You want to start? Yes, maybe I’ll start, Terry. And good morning, everyone, and good to see everybody and a lot of familiar faces in the crowd. But yeah, I think Greg, as he laid out on the last couple of earnings calls, we have a pretty broad and diverse exposure. But if you think across our vertical end markets, there is this pervasive trend of whether it’s higher power or higher energy density.

And certain end markets are certainly moving at a pretty accelerated pace of this kind of trend adoption and evolution. So a couple of examples, you’ve heard us talk about electrification and automotive or the data center trends and everything around the data center ecosystem. So really kind of sharpening our focus on where these pervasive trends are, where is the higher voltage, where do we have the right to play, where are we winning with customers, and then with our scale and technology leadership kind of going more aggressively after those opportunities.

Seri Bordetsky, Analyst, Jefferies: Yeah. And I think you guys talked about that new business opportunity funnel up double digits in the quarter. You know, What does that now represent? Is it near term? Is it long term?

How do you guys define that opportunity?

Abby Kennewall, CFO, Littelfuse: I mean, look, I’d tell you, it’s both. Right? Some things are pretty near term, quick wins in terms of how our teams are approaching our customers. In fact, I’ll give you a specific example. As Greg spent some time with our customers, it was pretty clear that, for example, two salespeople are calling on the same customer.

Right? So they were a little confused. And now one of the opportunities we have is instead of being inward focused, how do we change our focus and be more outward focused to think about what is the problem that the customer is trying to solve. We have a broad set of capabilities, broad set of you know, a pretty broad portfolio that that actually fits into a lot of what they’re trying to do. So part of this is changing the way we go to market, honestly.

And it’s a combination, Siri, to your point. It’s some of these are short term, some of these are longer cycle as you get specked in, it’s a longer cycle play. But again, I come back to our bookings. If you think about bookings exiting Q2, it’s been the highest since 2022, and you’re starting to see the wins of some of that play itself out.

Seri Bordetsky, Analyst, Jefferies: You jumped ahead to my next question, but you did talk about aligning the sales focus Is a little bit this something your customers asked for? And does selling complete solutions come at higher margins or higher growth? How does that work?

Abby Kennewall, CFO, Littelfuse: Well, I just gave you the example of Greg talking to a customer a couple of customers who said, hey, it would be better if one person called and kind of sold into whole portfolio. So part of this is customer driven. And part of this is frankly driven by the fact that if you look at our portfolio and we kind of go spend time with the different leaders, it’s pretty clear. As their sales team are selling selling their products, there’s an opportunity to go get bigger market share. So it’s a combination.

It’s some some of this is customer driven, some of this is our own own desire to go sell the portfolio versus each of the silos selling the selling the individual product. Does it come with higher margin? I’d say this. I think first of all, I keep anchoring back to what we do, which is safe and efficient transfer of electricity. What that implies is there’s got to be value creation.

There’s got to be a value proposition. I mean, if you think about us, we’re a small part of the overall solution, so the cost of failure is pretty high. So that’s a big part of it. And then it ties back to a third strategic imperative, which is operational execution. As you start to improve your footprint or operational execution, when the top line starts to grow, the business levers really nicely at 30%, 35% long term, and you start to see margin expansion.

Seri Bordetsky, Analyst, Jefferies: One opportunity you’ve talked to about this go to market strategy has been data centers, around those data centers. So maybe just kind of describe that opportunity, how are you scaling that go to market opportunity and bringing more of your portfolio to that market?

David, Unidentified speaker, Littelfuse: Yes. Maybe I’ll start, Terry, and then hand it over to Abhi. If you think about our data center exposure today, we’ve talked about being pretty meaningful growth driver. It’s not double digits a percentage of sales, but still driving some nice volume expansion across our segments. So interestingly, we touch up whether it’s a Electronics segment, you think more on the rack or industrial segment, think more data center infrastructure.

But it really goes back to the themes that Abhi spoke to, which is safe and efficient transfer of electrical energy, and you’re seeing a lot of these data center architectures that have historically been lower voltage, twelve, forty eight volts kind of moving to those higher voltage architectures that presents a pretty meaningful opportunity for us across those business segments and then tie it back to that that second opportunity that Abid pointed to, which is if we think about selling that that product suite, whether it’s an electronics segment or an industrial segment or a transportation segment product to those customers at a kind of, you know, funneled approach with a direct sales force, that’s the opportunity to get into those next gen architectures with the customers, which by the way, we’re already working with today, right? We’re working with the leaders on the hyperscaler side or on the infrastructure side, most of the names that come to mind. We have the relationship. So as we get more cohesive in our sales approach, it’s an operation opportunity to further leverage that growth.

Abby Kennewall, CFO, Littelfuse: Mean I think just to building on what you said, David, I think this is a this example in particular is a great example because all three segments touch that end market. And so if you go in with the united front in terms of, hey, here’s the entire gamut of products that we offer, think I you have a real opportunity to increase your wallet share. And that’s kind of what we’re excited about. This is the one place where we actually piloted this. And if you think about the wins that we talked about on our second quarter call, it was all tied to this part of the business.

Seri Bordetsky, Analyst, Jefferies: And just to hang out because you obviously go through distribution. Just how does this sales process look and then through the distribution channel as well?

David, Unidentified speaker, Littelfuse: Yes. And maybe taking a step back, if you think about the Littelfuse business today, about, let’s call it, 60% using round numbers of our revenues flow through the distribution channel. But what’s interesting about that number is a lot of it is, let’s call it, directed to distributors, meaning that you’re already working with the OEM customer, that’s a big automotive or industrial or broader transportation or data center customer. So I think bridging back to the data center example, oftentimes, we’re working direct with the hyperscaler, with the infrastructure provider. It could end up flowing through distribution because back to Abi’s point, we tend to be a pretty small percentage of the bill of materials when all is said and done.

But the direct engineering relationship is there and frankly has already been there, and that’s kind of the ethos and the strength of the Littelfuse model is that engineering relationship.

Seri Bordetsky, Analyst, Jefferies: So you referenced the opportunity for the Mexico factory footprint. Your third priority, obviously, is focused on operational excellence. You established a new global operations team in the second quarter. Just some early learnings of this team, what KPIs are they focused on? And then what’s the margin opportunity there?

Abby Kennewall, CFO, Littelfuse: Yes. So look, I’ll start with the last question because we get that a lot, I’ve gotten that a lot, especially given my background on eightytwenty and operational execution. Here’s what I’ll tell you. We’re not ready to kind of talk about what the end answer looks like in terms of margin profile. What I am committed to, though, is we’re going do an Investor Day in February.

And as part of it, what we plan to do is lay out the financial projection for the next three years along with our margin opportunity. But if you kind of take a step back and think about where we are, so what we did, as I mentioned, is we appointed a gentleman who was our lead for the manufacturing facilities in Asia to be the Head of Global Operations for Littelfuse. What they’re focused on, as I said, is specific pockets of the company where there’s real margin opportunity. They’re focused on lean. They’re focused on flow.

They’re focused on supply chain integration where, hey, five factories are buying the same component. Is there a real opportunity to go drive cost out in terms of being able to leverage the buy, right? So it’s basic blocking and tackling, but we do believe there’s real opportunity. If you look at our Q2 performance, right, and then kind of go through by segment, I think without without answering the margin question, I do think there’s a little color I can give you. If you think about industrial performance, right, they exited the quarter at about 19%.

Really good margin profile. They had a nice growth for the quarter. So one of the things I’ll tell you about industrial segment, for example, is continue to plan to invest in that business. At a 19%, 20% kind of margin profile, we’re really happy with the performance. Transportation has some work to do.

Part of the Mexico facilities are tied to our Transportation segment. So as we start to see that get better, you’ll start to see improvement in our Transportation segment. And then look, electronics is an interesting one because if I kind of think about the passive and the protection piece of the business, they’re doing really well in electronics. What’s dragging the performance down for that segment is really the pressure that we see in the power semi business. Now that said, exiting Q2, as we talked about, we’re starting to see an inflection in our orders.

And so as that volume starts to come back, you’re going to start to see the electronics business margin improve as well. So net net, what I’ll tell you, there’s margin opportunity for the two segments that I laid out, transportation electronics and overall Littelfuse. And as we do Investor Day, we’ll start to quantify that more and what that means in terms of goals over the next three years.

Seri Bordetsky, Analyst, Jefferies: You mentioned electronics margins, so I’ll skip a little bit ahead. What’s the right way to think about through cycle margins for electronics? And how do we think about the margin contribution from operating leverage for some of the strategic initiatives you spoke about earlier? And just how do you think about managing costs for Yes. A business that’s such

Abby Kennewall, CFO, Littelfuse: So I’ll kick it off, and David, you can jump in. But I think first things for us, if you kind of think about Electronics segment, think about ’twenty one, ’twenty two, I’d say they were pretty normal years. I mean the growth rates were 20 plus percent for two years. And so what you then saw is an elongated correction, if you will, inventory destocking and correction of those two years of growth. So at the average, we were about 21% EBIT margins is what we saw.

Now where we are today is nowhere close to 21. We’re in the 15% kind of range. But again, as I point back to the Power Semi piece, Power Semi is a big part of the drag in electronics segment. As we mentioned, Q3 to Q2, we should see improvement in our Power semi business, and that business starts to come back. Our margins are going to start to uptick in the Electronics segment.

From a I’d say from an operational flow through standpoint, long term, I’d say the portfolio is about a 30% to 35% flow through on incremental sales. It can be high in the early days simply because as you start to see revenue come back, you’re not going to go invest dollars and cents. But long term, we’re going to invest back in the business to continue that top line momentum. So that’s how I would think about it.

David, Unidentified speaker, Littelfuse: David, anything from you? Yes. And I would just add to that point back to that leverage of 30%, 35%. Historically, our Electronics segment, we really see strong kind of incremental conversion on volume growth and feel confident in the ability to execute on some nice volume momentum. And Abhi spoke to us of the book to bill strength we’re seeing, so confidence in our teams and electronics to deliver on that expansion.

Seri Bordetsky, Analyst, Jefferies: I’ll just pause. If you have any questions, raise your hand. Okay. So given your background deploying capital at IDEX, just how do you plan to approach capital deployment here at Littelfuse? Do you think about internal investments needed versus acquisitions returning cash to shareholders?

Abby Kennewall, CFO, Littelfuse: Yeah. Yeah. So so look. First things first. As I said, we’re in a very interesting time, very exciting times in terms of really honing in on our strategy, honing in on where we wanna play, what gives us the right to win.

So that is a big part of the work we’re doing right now. And as we start to think about that, I mean, look, from a capital deployment strategy, our balance sheet is pretty well positioned. We deploy or we generate free cash flow north of 100%. Quarter to date, we’re at 114% conversion. So as I think about our capital deployment strategy moving forward, look, we’re going to continue to fund the organic investments, right?

That’s a no brainer. The payback is pretty low. It’s typically a pretty good payback. And so we’ll do that. M and A is a big part of our strategy.

And as you think about the work that we’re talking about doing and the work that we want to share with the broader teams during Investor Day, M and A is going be a big part of it. So we’re going to continue to deploy capital. And then lastly, I’d say, look, dividend is going be a part of how we return share back to cash holders coupled with strategic share buybacks. So nothing earth shattering in terms of how we’re going to do this. But for us right now, what we’re really excited about is really honing in on where we’re to play and what gives us the right to win.

Seri Bordetsky, Analyst, Jefferies: Maybe we’ll get a preview of the Investor Day here. What criteria are you focused on when evaluating some of your M and A targets? How do you think about some white spaces?

Abby Kennewall, CFO, Littelfuse: Yes. So again, will deploy capital in the areas that we believe are strategic to us. That said, when I think about our criteria, think about our metrics that we care about. I mean, look, at the end the day, what we’re focused on is ROIC of double digit in three to five years. Part of this is going to come down to And what I mean by that is certain acquisitions, if they’re a fixer upper and all it is is you go take out a bunch of costs, you get there faster.

But long term, over three to five years, our goal is to be double digit ROIC. That’s how we’re thinking about return on capital, return on our M and A capital deployment.

Seri Bordetsky, Analyst, Jefferies: Leverage is pretty low currently, I think under 1x net debt to EBITDA. Like, how do you think about the optimal balance sheet?

Abby Kennewall, CFO, Littelfuse: Well, look, I think for the right M and A, we’ll go as high as 2.5%. Now the good news is even if we push this slightly higher, we generate enough cash that will pay it down. But ideally, with 2.5% is the ceiling and that’s where we would want to be. To your point, we’re way below 2.5%. So we have ample capital to go deploy.

And the good news is our cash flow is pretty robust. So as we deploy capital, we’ll continue to delever as we move forward.

Seri Bordetsky, Analyst, Jefferies: It’s a good position to be in.

Abby Kennewall, CFO, Littelfuse: It’s a great position to be in. I’d rather have this problem.

Seri Bordetsky, Analyst, Jefferies: Yeah. How do think about the pricing opportunity here at Littelfuse? Is there opportunity to increase price within the businesses? And just like, what’s your philosophy Yeah. On price in general?

Abby Kennewall, CFO, Littelfuse: Well, look, I I’ll start again by by coming back to what we do around safe and efficient transfer of you know, or safe and efficient electric transfer, I think I think that is the core to who we are. It’s pretty the work that we do is pretty critical. The cost of failure is super high. So as you kind of think about exiting q two, what we talked about, just given the world we’re in, we said we’re price cost neutral is our goal. But at the end of the comes down to, hey, what value are we creating?

What problem are we trying to solve? So we stay on top of it. Our philosophy is we’re going be neutral to slightly positive as we move forward. But at the end of the day, again, the advantage or these the the place that I love that we are at is we’re a small part of the overall solution and the cost of failure is pretty high.

Seri Bordetsky, Analyst, Jefferies: You mentioned some recovery on the power semi side, I think, into into the quarter. But can you just talk about the normal electronic cycle and how you’re thinking about growth across the product lines? And is there anything about this upcoming cycle that’s different from the past?

David, Unidentified speaker, Littelfuse: Yes. Maybe I’ll start with that one, Sari. And I think I’d almost flip the last question on its head and say the last three to four years have been very different, right? ’twenty one and ’twenty two in electronics, a pretty robust and unique growth cycle, know, as you know, in terms of golden screws, right, unique pricing environment, a lot of interesting things going on at the time. And then the flip side of that, ’twenty three and ’twenty four, pretty what we’d call elongated down cycle, right?

Because I think depending on when exactly you stop and start your stopwatch, maybe eight quarters of an inventory correction in electronics. Historically, a normal correction in electronics has been four to five quarters. So certainly a bit unique going into what’s been a stronger recovery in passive electronics for the last couple of quarters. So we don’t know exactly what the future holds other than it’s been a unique past four to five years. I will say on the power semis side, things turned a bit later versus passives and we’ve seen the same thing happen in the recovery.

Passives again, end of Q4 last year, we started to see some pretty nice momentum, have had strong book to bill, strong order flows, improved visibility in that business. And in Power Semis, we talked about on the earnings call starting to see some improvement there as well and feel good about the sequential momentum into the back half of the year for our Power Semis business.

Seri Bordetsky, Analyst, Jefferies: Maybe switching gears to transportation. I mean, it performed better than expected or at least that we expected with strength in commercial vehicles despite what appears to be a pretty weak market. So just talk about your positioning across auto and commercial vehicle and just how we think about market outperformance going forward.

David, Unidentified speaker, Littelfuse: You want to start? Yes. I think historically, you’ve heard us talk quite a bit about mid single digits above production in our auto business. I do think, you know, it’s Greg spoken quite a bit about the transportation segment as a pretty diversified set of vertical end markets and a lot of, you know, meaningful opportunities to build, you know, automotive into commercial vehicles, areas like material handling and logistics, where again, back to this idea of safe and efficient electrical energy transfer, it’s pervasive of any vertical market that’s on wheels when all is said and done. So I do think, yes, automotive, it’s been more mid single digits.

Many of you have heard us talk about high voltage electrification, it’s nice trend for us, electronification. But broader than that, we see some pretty meaningful opportunities. And you heard us talk about on our earnings call some of the commercial vehicle growth that we’ve seen in the last couple of quarters despite what we would consider some continued soft underlying commercial vehicle end market trends.

Abby Kennewall, CFO, Littelfuse: So this is I think to build on what David said, this is one area where you can truly see a couple of things play out. First of all, I think this is not a story of market. This is a story of focus. This is a story of how are we aligning our commercial organization to really go understand our customer needs. And two, if you kind of think about the margin performance in Q2 and the work that the teams have done, This is early days, but you really start to see the operational improvements start to play itself out in the transportation segment, especially given the margin improvement that we saw on a year over year basis.

Seri Bordetsky, Analyst, Jefferies: EV was kind of one of the things that people were very focused on, let’s say, a year ago. Just how are you thinking about that demand as we potentially enter a weaker EV market, at least in North America?

David, Unidentified speaker, Littelfuse: Yeah. Yeah. Fair question. I think a couple of things that really position us relatively well from whatever the EV market ends up looking like. One, if you think about our auto exposure today and by the way, we talked about our Transportation segment, which is mentioned as automotive commercial vehicle markets.

Automotive all in is maybe 20% of Littelfuse revenues, but it’s a global business. And we’re a scaled supplier and partner to, OEMs, whether in North America, Europe or in China as well. So I think to your point, one of the trends that we’ve seen, it’s pervasive throughout the market, is continued strength in China from an EV growth standpoint and softer trends in North America and Europe. But what has helped us is having those global relationships and a pretty diverse customer base with all said and done. And the last thing I would add is automotive electrification is trend, electronification tends to benefit us as well.

If you think about things, let’s call them in the cockpit, the infotainment system, again, more electrical energy transfer really brings higher value opportunities for us when all is said and done.

Seri Bordetsky, Analyst, Jefferies: Transportation, I think you guys mentioned, achieved mid teens margin in the quarter. Is this a good steady assumption? How should we think about the puts and takes there? And is there opportunity to expand margins, maybe to reach electronics and industrial levels at some point?

Abby Kennewall, CFO, Littelfuse: So there is opportunity in the Transportation segment. What you see, again, as I mentioned, is early work tied to our operational execution. But I will tell you, again, without putting a number to it, there’s definitely room for margin enhancement. The other thing you’re seeing in our Transportation segment is the work that we’re doing to simplify our business. So what we’re trying to also do in the Transportation segment is look at the tail of customers, look at the tail of customers that we serve.

And for customers that have complexity, really no profitability, It’s a large list of customers but a very small amount of top line. We’ve simplified that business, walked away from some business, quite frankly, so that we can improve profitability and a profitable growth. So more to come on that, but I do believe there is room for further improvement in margin on the transportation side.

Seri Bordetsky, Analyst, Jefferies: Sounds very eightytwenty. Maybe I should pause on the end market stuff and talk, what’s the eightytwenty opportunity here? How Yes. Do you think about applying

Abby Kennewall, CFO, Littelfuse: So look, the transportation piece, especially the commercial vehicle part of the transportation segment is run by a gentleman who’s well versed in an 08/20. I’ve actually worked with him in a prior life. So we’ve done some work there. And again, early days, there’s definitely opportunity. The size and the magnitude of it, we’re still working through.

But that’s one place you really start to see the margin enhancement driven by not just top line leverage and the operational execution, but it’s also simplifying the business, applying some eightytwenty work.

Seri Bordetsky, Analyst, Jefferies: And then on maybe turning to industrial markets, you’ve seen some robust growth there this year. Is that all related to end market demand? Are you benefiting from any restock there? And just how is the growth across some of your high value markets such as energy storage?

Abby Kennewall, CFO, Littelfuse: Yes. So I’d say industrial is a good example of broad based strength with the exception of construction and MRO. I think what you’re seeing in industrial is a couple of things. First of all, it is end markets. But part of this is about the work that we’re also doing in terms of higher energy, higher density and the focus that we put on it.

It’s this whole go to market conversation that we just had. But I mean I think if you look at the performance for the segment for Q2, we’re up, what, 19% top line 17% top line and had really robust margins at 19%. Our goal is to continue to invest in the Industrial segment, continue to move the organic needle forward. So I think pretty excited about where we are with that.

David, Unidentified speaker, Littelfuse: Yes. And I would just add, Industrial segment, we’re pretty diverse in our exposure. But again, back to the hitting on the same things, but safe and efficient transfer of electrical energy, whether it’s grid storage or example of we talk about industrial safety, right? Some of the increasing regulatory requirements around electrical energy transfer in a commercial kitchen, right? Think about a fryer and a fast food restaurant.

I mean these are really meaningful kind of growth trends for our business. So our Industrial segment with some of the new product innovations they’ve had and kind of expanding and kind of developing these next gen architectures with the customer base has been a good trend for us.

Seri Bordetsky, Analyst, Jefferies: One thing I was noticing as I went through my model to prepare for this is just kind of the uneven margin performance across the quarters within industrial. How do think about the current target for high teens? And is there a way to reduce this variability? Or is it just part of the model?

Abby Kennewall, CFO, Littelfuse: Well, that is actually one of the biggest things that we talk about internally is the variability in the margins. To your point, we saw 19% now. I will tell you it’s not linear. There are certain quarters that are lower than others just given seasonality, so you might see a little bit of variability. But this kind of comes back to really honing in on the operational execution piece and making sure we stay on top of it.

So even as the volume starts to come down, we’re delevering at a much slower pace than what we’ve typically seen. So the operational execution piece is a big piece of how we’re focused on making sure our margins are not as volatile as they’ve been.

Seri Bordetsky, Analyst, Jefferies: As you look in the business into 2026 and beyond, what are two or three key metrics that you’re most focused on just to ensure the durable earnings growth?

Abby Kennewall, CFO, Littelfuse: Organic growth, efficient allocation of capital and then this operational execution piece. And the organic growth ties back to the two strategic priorities we’ve been talking about. Those are the things that we’re laser focused on because I think what we’re trying to again, what we’re trying to focus on is your earlier question, which is how do we have a model that is not so volatile that earnings go up, earnings go down. We’re trying to manage that by, again, focusing really on the go to market and making sure we maximize the wallet share.

Seri Bordetsky, Analyst, Jefferies: One of the questions that we’re super curious on or asking everyone is just as AI continues to improve operational efficiency and expand capabilities, like how do you see that impacting growth or potentially margin expansion in the near term and then over the long term?

David, Unidentified speaker, Littelfuse: Yes. Maybe I’ll start there and maybe work backwards, right? So a couple of examples that Greg has spoken to, as you think about, and Abhi mentioned this earlier,

Abby Kennewall, CFO, Littelfuse: our Asian

David, Unidentified speaker, Littelfuse: manufacturing footprint. We’re really efficient, kind of well run, we’d call best practices that we’re trying to deploy, by the way, throughout the global Littelfuse footprint. AI is an area where we’ve built some capabilities in those factories. So the idea of kind of reducing kind of lost times or defect detection improvements or a couple of areas that we’ve really seen some enhancements from the margin side. Again, I’d say it’s today a little bit concentrated, but opportunities to kind of deploy that throughout the footprint as a broader within that broader realm of operational execution and excellence opportunities.

Seri Bordetsky, Analyst, Jefferies: And I know we’re running up the clock, so lastly, if you could just sum up, what do you think, especially coming from a new position or maybe coming from the side of the fence the other day, what do you think investors might be overlooking at Littelfuse? And looking ahead, is there an aspect of the business or strategy that you feel deserves more attention?

Abby Kennewall, CFO, Littelfuse: Yes. Couple of things. Look, I’ll anchor back to the first question we started with. I think as we solidify our strategy and solidify where we’re headed and kind of lay out the details, a couple of things. First of all, I think we do have a pretty diverse set of end markets we touch.

And we need to do a better job honestly of articulating where we play. Like the data center is a great example. We’ve been part of that end market, we’ve never been able to articulate clearly and we’ll start to do that. So I think as we again, as we sharpen our strategy, really hone in on go to market and drive operational execution, you should start to see that both on our top line and bottom line. We will, again, clearly articulate our three year financial goals as part of the Investor Day.

But all that said, coupled with the balance sheet that we have, we’re really excited about where we’re headed. And we expect to provide a lot more details and clarity around the end markets and our financial commitments as part of the Investor Day.

Seri Bordetsky, Analyst, Jefferies: David, do want to add anything? Please talk to me this.

David, Unidentified speaker, Littelfuse: Yes. And I’d say just excited to have Greg and Abhi on board. And I think if you think about the balance sheet of the company, the cash generation that Abhi pointed to, just a really, really strong foundation to support the strategic initiatives and look forward to sharing more in the

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