Good day, everyone. Welcome to The Littelfuse Second Quarter 2023 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Head of Investor Relations, Trisha Tuntland. Please proceed. Good morning. Welcome to The Littelfuse Second Quarter 2023 Earnings Conference Call. With me today are Dave Heinzmann, President and CEO, and Meenal Sethna, Executive Vice President and CFO. Yesterday, we reported results for our second quarter. 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. 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, Trisha. Good morning, and thanks for joining us today. Let's start with highlights on slide four. While our second quarter financial results were below our expectations, our global teams delivered solid results, driven by our strong operating fundamentals within an ongoing dynamic environment. design-in activities remain quite robust, and we secured significant new business in sustainability, connectivity, and safety applications, and continued to advance our strategic investments in high-growth end markets. Our strong overall performance to date in 2023 reflects the resiliency of our business model. I'm confident with our diverse technologies and capabilities, and the strength of our execution continue to position us to deliver on our long-term growth strategy. Together, our global teams have achieved significant performance within our strategy, and I want to extend my gratitude to our associates for their unwavering dedication and remarkable contributions. Meenal will provide additional color on our financial performance and outlook. As announced in June, we entered into a purchase agreement to acquire a 200mm wafer fab located in Dortmund, Germany, from Elmos Semiconductor. This acquisition is an important element in our long-term growth strategy for power semiconductors, key to our sustained success in expanding our portfolio of technologies and growing in internal capabilities to enable us to meet the increasing demands of our customers in high-growth power conversion applications. This strategic investment will expand our long-term business opportunities in Industrial end markets like renewables, energy storage, automation, motor drives, power supplies, and e-mobility off-board charging infrastructure. The Dortmund fab will complement our current footprint, adding a highly skilled technology team, extensive 200mm manufacturing and development experience, and an efficient, high-quality wafer processing operation. We are excited about the future prospects with our combined teams and capabilities, which I am confident will continue to position us for long-term profitable growth, consistent with our strategy shown on slide five. Moving on to sustainability, we recently published our 2022 report, which is available on our website. Slide six provides an overview of our 2022 highlights. We believe we have a responsibility to our customers, employees, investors, and the communities where we live and work to conduct our business in a thoughtful, sustainable way. I am proud of the efforts of our global teams, who everywhere, every day, help to create a culture that embraces diversity, bold solutions, and sustained success as we make ongoing progress on our continuous improvement journey, which will continue to play an instrumental role in the growth and advancement of the company. We are proud of our achievements and remain committed to the long-term value of a robust ESG strategy. Before we get into business design wins, I would like to start with the market and customer dynamics we are seeing. Taking a step back, our company's end market exposure remains highly diversified, balanced, and broad. Where we are selling into Industrial markets, we are seeing strong growth. Across passenger vehicle markets, we achieved double-digit content outgrowth across our product portfolio. Design activity remains robust, and we are capturing new business with our differentiated capabilities and intensifying focus on enabling applications around sustainability, connectivity, and safety. Our execution is accelerating the rate of new business wins and expanding the product content with leading customers, which positions us well for the future. End market demand remains healthy across many of our end markets. We are seeing value creation and strong demand driven by our strategic positioning within renewables, Industrial automation and safety, medical, specialty high-end power supplies, cloud computing to support artificial intelligence applications, and electrification of vehicles and their charging infrastructure. We continue to see inventory destocking across parts of our Electronics commercial vehicle businesses. With our lead times coming down and current POS levels, we expect this to continue through the year as customers adjust their inventory levels to a more stable demand. Given that many of our end markets are in a growth trajectory, this will continue to help moderate the transitory destocking that is taking place. I am particularly proud of our strong year-to-date performance as we continue to leverage our sound business fundamentals to successfully navigate the varying end markets and inventory management trends across our businesses. Our global teams remain focused on driving long-term growth, profitability, and cash generation. We continue to actively manage costs to align to business conditions, while also advancing our strategic initiatives across the Industrial, Transportation, and Electronics end markets we serve, demonstrating our ability to balance short-term cost optimization and long-term strategic investments. Looking ahead, I am confident that our global execution will deliver long-term, best-in-class financial results consistent with our growth strategy. Now let's move on to business design wins during the second quarter. For Industrial end markets on Slide seven, our leading technologies are critical for empowering greater sustainability and safety. The ongoing focus on renewables is expanding the requirement for our reliable products. During the quarter, we leveraged our deep customer relationships and technical expertise to secure significant business in combiner boxes for solar and battery storage systems. Given the breadth of our product portfolio, we also see substantial new business opportunities related to government-funded initiatives and infrastructure investments that support electrification. We won business with several of our solutions for a construction project for a battery plant, the major automotive manufacturer. Our high-power solutions captured business with customers in their energy management systems. Within Industrial safety, our leading product performance and application knowledge won us additional business for commercial kitchens with major retailers. We also grew our business in HVAC and Industrial motor drives based on our customer relationships and expansive offerings. Our differentiated capabilities position us well to partner with customers to meet their increasing requirements within the global structural themes of sustainability and safety, which will continue to drive our long-term growth. Turning to our Transportation end markets on slide eight, we continue to see meaningful product content opportunities driven by the ongoing push towards greater sustainability, connectivity, and safety. In passenger vehicles, our new business opportunity pipeline is robust, given the increasing complexity related to the electrification of platforms. During the quarter, our differentiated high-voltage product features and technical support delivered wins for onboard chargers and high-voltage power distribution. For our electrical sensor products, we are seeing intensifying design activity for battery management systems and drive applications. Our technical capabilities and innovative solutions won significant business with a multinational automotive manufacturer. We captured business by leveraging our proprietary technologies and unmatched designs to grow our presence in conventional low-voltage applications. Within electronification, as it relates to safety, our design expertise and broad portfolio won business within in-cabin cameras and for Hands-On Detection applications. Across commercial vehicle applications within electrification, our design capabilities and innovative solutions secured significant business for high-voltage power distribution modules in construction equipment and battery management systems in two and three wheelers. In broader commercial vehicle markets, with our local engineering support, we continue to increase our product content in agriculture equipment applications. EV charging infrastructure expansion efforts continue to accelerate with the electrification of Transportation applications. With our broad range of solutions, we secured significant global business with our power semiconductors, electronic components, and fuses. Solutions from our Western Automation portfolio further expand our new business opportunity pipeline. Given the intention to make charging infrastructure more accessible and widespread on a global scale, we're extremely well-positioned with our comprehensive technologies to participate in the proliferation of stations worldwide. Moving on to slide nine, in Electronics end markets, we continue to engage in very robust design activities. Customers focus on meeting future needs across the structural growth themes of safety, connectivity, and sustainability. Our global reach and superior design support are accelerating demand for our reliable products. We won global business for life-saving medical devices across multiple applications, including a wearable defibrillator and in an implantable device. Connectivity requirements are driving wins across data centers, including for our C&K switch portfolio for communications infrastructure. We expect opportunities like these to become more prevalent as high-performance computing for machine learning and AI expands requirements for next-generation platforms. We are seeing good success with cross-selling C&K products to Littelfuse customers. Sustainability continues to drive wins in power supplies for power tools and LED lighting. Our pipeline of new business opportunities remains strong, and our global teams are positioned to support customers, which will continue to expand our Electronics content across diverse applications, with a focus on sustainability, connectivity, and safety. We continue to generate robust design win momentum, and the array of new business wins we have secured spans a wide spectrum of end markets, applications, and geographies, highlighting our global capabilities and footprint. Through engaging closely with our customers' engineering teams, our collaborations have been instrumental in expediting next-generation product development and design-in activities. With the organic growth stemming from these new business activities, complemented by our strategic acquisitions, we are confident that our long-term growth trajectory will be further fortified and sustained. I will now turn the call over to Meenal to provide additional color on our financial performance and outlook. Thanks, Dave. Good morning, everyone, and thank you all for joining us today. Please turn to slide 11 to start with our second quarter results. Revenue of $612 million was down 1% and down 8% organically vs last year. Acquisitions added 7% of growth. GAAP operating margins were 15%, adjusted operating margins were nearly 17%, and EBITDA margins were 22.5%. For the first half of this year, we've delivered adjusted operating margins just shy of 18% and EBITDA margins of 23.6%, continuing to drive results in our targeted margin ranges. Our strong margin performance reflects our portfolio diversification efforts across both end markets and technologies, expansion of our partnerships with customers and distributors, and continued focus on operational excellence. Second quarter GAAP diluted earnings per share was $2.79. Adjusted diluted EPS, $3.12. Adjusted EPS finished lower than projected due to a combination of the drop-through from slightly lower sales than expected, unfavorable non-operating items, partially offset by some reductions in operating expenses. Our GAAP effective tax rate was 18%. The adjusted effective tax rate was 17.4%, which was higher than projected. The combination of the higher tax rate and unfavorability from non-operating investments reduced EPS by $0.09. Operating cash flow in the quarter was $98 million. We generated $82 million in free cash flow. Year to date, we've generated $110 million in free cash flow, yielding a 69% conversion rate. We reduced inventory levels through the first half of the year, contributing to our solid cash flow performance. We expect to drive both a higher cash generation and free cash flow conversion rate in the second half as per our typical seasonal patterns. Our capital structure remains very strong, ending the quarter with 1.4x net debt to EBITDA leverage. We remain both disciplined and consistent in our capital allocation. We continue to prioritize organic and inorganic opportunities, driving ongoing growth in returns while ensuring return of capital to our shareholders. Our board of directors approved an 8% increase in our quarterly cash dividend, equating to a $2.60 annual rate. We've grown our dividend 12% on a compounded annual basis since inception, a testament to our long-term earnings trajectory and cash generation power. Moving to our second quarter results across our segments, please turn to slide 12. Electronic sales were down 2% year-over-year and down 13% organically, the delta being the C&K acquisition. Operating margins were nearly 23%, and EBITDA margins ended at 28.5%. While transitory inventory destocking has impacted our near-term growth trajectory, we continue to see underlying growth drivers across our portfolio. In the quarter, we continued our positive momentum across industrial, medical, and renewable applications and also auto electrification themes. Along with the operational groundwork we've laid over time, we've maintained strong margin performance in a challenging market environment. Turning to the Transportation segment on slide 13, sales were down 5% overall and down 6% on an organic basis. We saw divergent trends across end markets, with our passenger vehicle business growing 7%, a significant driver of the double-digit content outgrowth we realized across the breadth of our automotive portfolio. Our commercial vehicle business was down 17% on an organic basis. While end-market growth continued, we saw higher-than-expected inventory destocking across our customers. Segment operating margins finished just under 5% and EBITDA at 11%, below our expectations. Weaker sales and related volume deleverage across our commercial vehicle business slowed down our expected margin improvement. We are taking actions to reduce costs further, expand the scope of our operating footprint shifts, and optimize product and customer profitability. We are also progressing on our integration initiatives to overcome the margin dilution from the Carling acquisition. We remain committed on driving an improved segment margin trajectory to our mid-teens margin target. Across our Industrial segment on slide 14, sales were up 15% and up 9% organically. We continued to drive wins across a broad set of higher growth and newer end markets while demonstrating the value we continue to deliver to our customers. Operating margins were 16.8%, and EBITDA margins finished at over 21%. Turning to the forecast on slide 15, we continue to see growth across many of our end markets. However, we expect this to be overshadowed by inventory destocking within Electronics and Transportation through this year, affecting both sales and margins with the volume deleverage. With this backdrop, we expect third quarter sales in the range of $570 million-$595 million. At the midpoint, we project sales to be down 12% vs last year. By segment, we expect sequential sales growth across Industrial, offset by a decline across Electronics and Transportation. We expect adjusted EPS to be in the range of $2.48-$2.72, which assumes a 19.5% tax rate. Slide 16 includes some additional full year 2023 color. At current foreign exchange rates, we expect a $0.35 unfavorable impact on EPS and no material impact to sales. We expect $66 million in amortization expense and $40 million in interest expense at current interest rates. We expect a full year tax rate of 18%-19%, higher than previous projections, due to shifts in earnings mix across jurisdictions, and we are modestly reducing our capital expenditures to the range of $100 million-$110 million. Dave referenced our announcement on the future acquisition of the Dortmund Semiconductor fab. As the expected close is early in our fiscal year 2025, we do not expect this transaction to have a material impact to our 2023 or 2024 financial results. Over the years, we've diversified our portfolio, continuing to pivot to higher growth markets and increased organic investments while leveraging strong secular themes. Our portfolio expansion is helping us weather the interim cycling across certain markets and transitory destocking. We remain focused on driving our business forward in the second half, elevating our cash generation and continuing our operating margin trajectory in the high teens for the year. We're confident that our ongoing execution positions us to deliver on our long-term growth strategy. I'd like to extend my gratitude to all of our team members for their unwavering hard work and dedication. Your efforts have been instrumental in continuing to drive our success. With that, I'll turn it back to Dave for some final comments. Thanks, Meenal. In summary on slide 17, we've achieved strong year-to-date results. The Littelfuse business model has proven its resilience in this dynamic environment while supporting the strength of our growth strategy. This is evident in the consistent double-digit sales and earnings growth achieved over the past five, 10, and 15 years. Our expansion into high growth end markets, technologies, and geographies has diversified our business and significantly improved our profitability. Our experienced teams have refined our playbook, enabling us to effectively navigate through ever-changing environments. We remain excited about the opportunities we have ahead of us and confident in our ability to deliver sustained long-term value for all stakeholders through continued execution, diversification, and strategic investment for growth. With that, I will now turn the call back to the operator for Q&A. Thank you. At this time, if you'd like to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. We'll take our first question from Luke Junk with Baird. Your line is now open. Good morning, Luke. This is a question probably for Meenal, and I'm just wondering if you can help to animate what's underpinning the guidance in the third quarter for Electronics. Specifically, you're signaling it should be down sequentially overall, but I'm just wondering if we look at the passive and semiconductor portions of the profile, profile of that business, you know, the, the sharp decline that seems to be implied here, is this just further weakening in passive, or should we be thinking about semi also weakening sequentially, possibly? Thank you. Yeah. Thanks, Luke. You know, of course, we've been talking about all the transitory destocking that's been going on, and really the bulk of what we're seeing within the, the quarter, the sequential quarter, Q2 to Q3, is destocking, primarily, you know, because of the size, you see it coming through Electronics, some of the passive side. We also, have semiconductors that are a little bit more passive-like in terms of, going through distribution, et cetera, and so that's really where we're seeing the sequential down. Then, of course, we also talked about in the prepared remarks within our Transportation segment, we're expecting the continuation on the commercial vehicle side of the business and some continued destocking there as well. Got it. Then, oh, sorry. Luke, actually on the power semi side, we actually continue to enjoy seeing growth in that business. It's really kind of focused on Industrial applications. You know, in the kind of the balancing between the two, we continue to see pretty good strength in the power side. Got it. That's helpful to me, to cut you off there, Dave. My, my second question, I think would probably be best for, for you, Dave, and I was just hoping you could zoom out and give us a better view of the overall picture around auto or passenger vehicle this quarter, thinking on a combined basis between Electronics and what's in the Transportation segment. I know that, you know, you've made comments about the content growth that you're seeing, and I think that might maybe better animate the underlying trend in the business vs what we can just see for pass car and Transportation. Thank you. Sure. Happy to, Luke. Overall, the passenger car business remained a very positive spot for us. As we stated in the prepared portion of the remarks, we continued to see double-digit outgrowth. While reported in Transportation, specifically in this segment, we show that a 7% growth in pass car. We've talked about this before. A great deal of our growth in the electrified applications actually come from products outside of our segment reporting in passenger car. With that, we actually saw a double-digit. We continue to see, and, you know, over the last three years, we've seen double-digit outgrowth. Our design wins continue to be quite robust there. Really, when you look at the challenge of the Transportation segment, it's really focused on kind of the destocking challenge within the commercial vehicle side. Got it. Thank you for that. Then if I could just sneak in one more question. Dave, you mentioned in your prepared remarks, sensor applications, specifically some increased demand for, I think you said battery management and drive-related applications. I'd just be curious if we could zoom out and look at what's in your sensor business in Transportation right now. I think it may be something that is a little ignored by investors, and it'd be great just to get a quick primer on what are some of the key opportunities that you're looking at within the sensor portfolio. Thank you. Yeah. Historically, our, our sensor portfolio within the passenger car side of the business was related to solar sensors in the applications, in the cabins for cabin comfort and also in safety applications for speed and position sensing and that type of thing. That's been our core. Over the last a year and a half or so, we've been focused heavily on how do we transition to also focus on the electrical systems as vehicles electrify. We have organically developed and launched current sensors that are used extensively within electric drive applications and battery management types of applications, and we have launched those and have had some nice traction in the early days there with some design wins with multinationals that'll be meaningful for us over time. Appreciate your questions, Luke. Thank you. We'll take our next caller, please. Okay, next, we'll go to David Williams with Benchmark. Your line is now open. Good morning, David. Good morning, and thanks for letting me sneak in a question here. I guess, Dave, if we kind of think about the inventory rebalancing, it feels like this has been ongoing for some time, and in the electronic segment, at least the last four quarters or so. I guess my question is, how should we think about the normalized run rate here? Just kind of given that maybe you've been over shipping to consumption over the last several quarters. Yeah, it's a, let me start with the backdrop, that I'm not sure what normal is anymore over the last, you know, handful of years with COVID-related challenges and massive supply chain issues. If you look back at our history, obviously in the Electronics that, you know, products, we ship a great deal of our product through distribution to a very broad customer base. That model certainly does create a swing in inventories as demands increase and lead times go out. As lead times begin to shorten, and availability comes down or demand starts to soften, then there's a correction that takes place. Historically, what would be kind of normal for us there would be kind of from a peak to trough of about a four to five quarter sort of cycle there. You know, certainly, you know, kind of, about this time last year is really where we were seeing the big peaks within the electronic sort of side of our business. We're clearly going through that cycle. We've been going through destocking actions by our channel partners, you know, over the last two quarters. We certainly saw it, you know, for the bulk of this year. We kind of expect that to go through this year to get through that peak to trough that we need to. The good news is underlying design activity continues to be quite robust, and we see pockets where we continue to see really good strength. Still softness in kind of consumer-facing sorts of products, kind of working our way through that normal cycle. Okay, great. Thanks for the color. Then maybe one for you, Meenal. At the current midpoint of the guidance, revenue profitability seems to be deteriorating about 3x out of the top line, at least on a percentage basis. How should we think about the leverage, again, whatever normalized may be, but how do we think about that leverage going forward as sales begin to rebound, and you really start to see the benefits of the strategy come into play? Yeah, no, great question, and, and maybe going back to one of the earlier ones. I talked about the fact, you know, when you take a look at sequentially what's happening and really where, where we're seeing a lot of the transitory destocking is coming through Electronics, which, you know, as we know, has our strongest margins today. That incremental variable, you know, variable margin, I'd call it, tends to be pretty strong on the upswing. When we, when we see this destocking environment, we tend to see, you know, a bit of a higher decline than normal, I'd say, you know, over that 50% mark. As part of what we do, knowing that that's, you know, that's, that's part of what we see, we quickly react to making sure that we're sizing our operations and adjusting, adjusting our cost structure to, to really manage through that and mitigate some of that. That's really, you know, where you're seeing some of that degradation coming through. Great. Thanks, thanks so much for that. Then one more, if I can, real quick. Just maybe you talked about the product and customer profitability optimization. Can you give us a little color on what, what the process is there and, and maybe, anything around what the expectation should be? Thank you. Yeah, sure. This is, you know, this is pretty standard of things we normally do, and especially, you know, when we talk about acquisitions, and we talk about this idea of, of integration, this is absolutely something that we do with every acquisition coming into the portfolio. Between both areas like Carling, which is specific to Transportation, but even C&K, you know, we'll do a lot of work in a, I call it a deep dive into really understanding the products, the mix, the customers, geographies, a whole bunch of things. Recall last year, where we normally would have done that all in year one, we were really spending a lot of time working with customers. There was a pretty significant backlog going on, so that was really our priority last year. Given where we are now, especially in the current environment, we're really shifting our focus to make sure we go through that assessment. Also, I would say even in legacy parts of our portfolio, where we've seen that price-cost equation move around, we think there's an opportunity for us to just make sure that we are still on the right path and the right priority focus on that. That's really what we're gonna be going through in the next few quarters. I appreciate your questions, David. We'll take our next caller, please. Thank you. Next, we'll go to David Silver with C.L. King. Your line is open. Good morning, David. Yeah. Hey, good morning. Just a couple of areas to touch on. First one would be, I guess, China, right? Roughly 25% of your revenues, and I think compared to expectations at the beginning of the year for a number of my companies, you know, the development or the, the rebound from their lockdowns and whatnot, has been less than, less than expected. I was wondering if you could just take a minute or two and characterize, you know, how you think that your operations in China and whatnot, have developed over the first half of this year, and maybe your expectations a quarter or two out. Thank you. Sure, David. I, you know, happy to take that. And certainly, you know, there was an expectation, I think that as China came out of the lockdown after two or three years of lockdown environment, that there'd be a pretty strong rebound in demand overall. While I would say there has been an improvement in the past car portion of China and kind of a bounce back a bit on the passenger car, you know, car build in China, we certainly are not seeing a lot of strength bouncing back in China in the broader demand. From our standpoint, a lot of customer base that we have in Asia in general, and certainly in greater China, is, you know, focused also on consumer-oriented, think small appliances, tablets, laptops, et cetera. Yeah, that market, of course, is down, and we have seen that for some time. We haven't seen that bounce back yet. So clearly, I would say China remains a bit of a drag from our expectations going into the year, but I don't think we're alone in that. Okay, great. The second question, I think I would maybe characterize it as just maybe I'd like some incremental commentary on integration of recent acquisitions. At a couple of points in the slide deck and in your comments, you've talked about kinda next, next steps of integration, let's say, with Carling in the, in the auto or in the Transportation segment, and I believe, C&K, in the Electronics area. I was wondering if you could just take a minute and kind of maybe discuss, you know, from a historical perspective, how that integration has gone to date. You know, has it met expectations? Where have you had the greatest success? In particular, maybe if you could highlight, you know, the incremental integration moves that, that you called out in the slide deck at a couple of points. Thank you. Sure. I'll, I'll take that, and Meenal, you can add color if, if you'd like. Overall, if we take a step back and let's look at the two bigger ones, the C&K and the Carling. Carling coming first. As Meenal talked about just, just in the last couple of minutes, overall, the Carling acquisition is going well, and we had a very strong year last year. If you remember our first year of full ownership, we were up 20% over the prior year under the previous ownership, and that was really a year where we cleaned up significant amounts of backlog. We would say year one of that integration was well ahead of our plan because of that cleanup. Clearly, it's challenged now with kind of both not building out that backlog. Then also we're seeing kind of inventory rebalancing from, yeah, supply chain and customers that are driving a bit of a pause there. Overall, I think it's going well. Clearly, there is the challenge as you focus year one, to make sure you're serving those customers and, and embracing those customers the best we can. Now, a lot of heavy lifting going on with some footprint work that's ongoing, as well as Meenal talked about, kind of our traditional way of, of looking at product line and customer profitability that we're deep in the midst of now. Overall, we believe, you know, that over the next couple of years, we'll very much be on our plan for the integration of that business. We feel good about that. On the C&K side, you know, it had some similar sorts of feels to it. Last year was, was quite solid. We also, in that case, see destocking that's taking place with customers there, particularly that go through the channel. Because you should remember, that was one of the leverage points for us with C&K, is the fact that our ability to leverage our channel. There is destocking that's taking place there. However, we're really seeing good momentum and taking C&K products to the Littelfuse core customer base. We're seeing a lot of good cross-selling opportunity, and as you recall, there, our big opportunity there is, is really sales synergies, and we're beginning to see good momentum there, and we feel good about that. Overall, yeah, a few dwells on inventory sorts of corrections going on right this year, but overall, the integration's going quite well. Okay, great. Thank you very much. Thanks, David. Appreciate your questions. We'll take our next caller, please. Okay, next, we'll go to Joshua Buchalter with TD Cowen. Your line's open. Good morning, Josh. Morning. Question for Dave. Thanks for taking, taking my questions. I wanted to ask big picture on the destocking. Your inventory on books went down in the second quarter. Clearly there's, you know, a good bit more to go. If we sort of disaggregate that, can you help us understand where things are at on books and where levels are now in the channel? If any way you can quantify where they need to be in the back half of the year for us to be comfortable it's sort of wrapped up by the end of the year. Thank you. Sure. Yeah. You know, we, we have both opportunities for us. One certainly is on-book inventories, and you've seen that decline through the course of the first half of the year, and we have more work to go there. Clearly, as a, like a lot of companies are working through, as supply chains have balanced out now and ability to kind of pull back on the inventory position there to support the business. That's ongoing. We'll continue to do work on that. From a channel destocking and cleanup that's ongoing, as I mentioned earlier, kind of typical is that four to five quarter peak-to-trough sort of cycle, and we're kind of halfway through it. Our, our view now is, we expect it to kind of go, as we have seen in the past, and we'll see that, you know, bleed through the back half of the year. Thank you, and maybe one for Meenal. I, I wanted to ask about margins. They're, they're obviously running still above where they were in, you know, 2019, 2020, but coming down as volumes come down. Has there been any change in the pricing environment as you go through this extended period of destocking, and, and how are you feeling about your ability to continue to pass on inflationary costs, on the input side? Thank you. Yeah. Thanks, Josh. Maybe just, I'll, I'll step back because this is probably also part of the overall question. You know, we had back in January, talked about our overall company margins and the target we had for this year. I talked about this high teens, 17%-19% average for the year, and we continue to remain committed to that. You know, as part of that, as we're going through the year, we've spent a lot of time laying the foundation around... You know, Dave talked a lot about the integration work that's going on. On the price-cost side, so far, we've maintained price, and we've seen, you know, the costs balance out, some increases in some places, decreases in others. We continue to remain neutral around the price cost side. I think compared to the last cycle, which was our intent, last cycle, 2019, 2020, we were running in the 14%, 14.5% margin range. We feel good with all the work we have done and continue to do to keep the margins in that higher target range. Thank you. I appreciate all the color. Thanks, Josh. Appreciate your questions. As a reminder, if you'd like to ask a question, press star, then one on your telephone keypad. We'll go to William Kerwin with Morningstar. Your line's open. Good morning, Will. Morning, all, and thank you for the question. A lot of my main questions have, have already been asked, so I, I think I'll switch a little longer term here. Haven't talked too much about the Industrial segment. Some nice growth in the quarter. Definitely a place where some peers have been seeing some weaker performance. Just curious, you know, what you would call out as, as doing particularly well there this year. You know, ask if you're seeing any incremental weakness, and then also, you know, what's exciting you most for the long term out of the Industrial market? Yeah. From an Industrial end market, we continue to see overall strength in that end market. There is some mixed bag between different pieces of it, if you will. We see particular strength out of renewable energy and energy storage types of applications that are quite strong. We see kind of Industrial safety applications also continuing to be, you know, quite positive as well, that we're seeing kind of play through there. The area where maybe we see a bit of weakness that we've talked about in the last two quarters is HVAC. Particularly residential HVAC tends to be down a bit and is a bit softer, and there may be a little bit of softness in Industrial automation types of applications, but it really kind of bounces off. We're also beginning to see, and it kind of crosses over between Industrial and Electronics applications, with communications and data centers, as there is a push to invest in and drive AI types of installations to support the, the higher compute needs. We have both on the servers and the power supplies for those servers, there's lots of content for us, but also in the infrastructure of the data centers themselves and the power systems there. We have a lot of Industrial play there, which we're beginning to see, you know, more activity again on as well there. Awesome. That's, that's great color. Then one more for me, if I may. I know it's a small part of your business, but I think it's been a while since we've heard about the silicon carbide business for your semiconductors. Just wondering if there's, you know, any update there? Sure. No real change or update from what we've talked about in the past. You know, obviously, this is getting, you know, a significant amount of attention from the large semiconductor players, particularly for traction drive applications and EV applications, where there's, you know, billions of dollars being invested to support that. That is not our core market. That is not where we're focused. We do have a silicon carbide offering that's part of our more industrial-focused power semiconductor business. We do see design-in activities there in things like renewable energy, some off-board charging types of applications and things, but we just have that as an offering, as a part of our broader portfolio. It's not an outsized investment area for us. Great. Thanks, Will. Thank you, Will. Yep, appreciate your questions. We'll take our next caller, please. Next, we'll go to Christopher Glynn with Oppenheimer. Your line's open. Good morning, Chris. Thanks. Yep, good morning, Dave, Meenal, and Trish. Dave, I, I was intrigued by your comment around accelerating rate of, rate of, new business wins, design activity. Is there any way to quantify that, maybe ratios or otherwise? You know, is it oriented more to, you know, your actual win rates or proliferation of opportunities? Thank you. Yeah, I, I think it's kind of a, you know, obviously, we track design-in activity as a key metric across all of our businesses. You know, we make kind of general statements about that, where we're seeing those design-in activities. I think particularly on the electronic side, but overall, if you look back over the last couple of years, engineers and our customers' engineers have spent an awful lot of time on, you know, redesigns to get better sources, to keep their operations running and things like that, which kind of backed up, you know, some of the new design activity that they wanted to do. Well, that's free back up, and the engineers are very engaged in that. We're seeing a lot of activity there. Increases in activities in design-in and design wins for things like renewable energy, power conversion types of applications. On that Industrial side of things, quite robust. Also, on the pass car side, and, you know, we, we don't share every quarter what we're doing on design wins there, but we're actually a bit ahead of where we were last year in design wins. We had a robust year last year in overall pass car design-ins, and we're actually a bit ahead of that this year. We feel good about the activity, and, you know, it's, it's easy for us sometimes to kind of internally get turn in towards the challenge of the near term, but the reality is, the bulk of our activities and our, and our people are focused on the long-term gains, and we're seeing really good progress there. Great. Then, follow-up on the Dortmund acquisition. I know closing is a little way out, but, you know, any kind of indication on the scale of investment or run rate, even in generic terms, like small, medium, large? You know, obviously, that's an acquisition that hasn't closed yet. It being, you know, maybe an atypical acquisition for us in some ways, it's an area where we're really focused on supporting and accelerating our activities on the Power Semiconductor for Industrial applications, power conversion, you know, renewable energy, those sorts of areas. You know, we have agreed upon with Elmos, a capacity sharing application over the next few years. As they move some of their products out to other facilities, you know, we'll begin the activity of porting in some of our designs and developing new, new products that we launch within that fab during that transition period. It'll be a meaningful impact to our Power semi business over the next several years. You know, as a company, I would say it's more of a small, you know, sort of investment. It really is, it's really focused on, solidifying that power semi portion of our business. Great. Thank you for that. I appreciate your questions, Chris. We'll take our next caller, please. Thank you. Next, we'll go to Matt Sheerin with Stifel. Your line is now open. Good morning, Matt. Yes, thanks. Good morning, everyone. I do have a few follow-up questions. Just on, on the, the inventory correction within Electronics, Dave, could, could you give us an idea of, of what the inventory days at, at your distribution partners look like and what the book, book to bill looks like? Yeah. You know, let's start with kind of days. Normal for us, kind of on average across both our broad line distributors and high service distributors, yeah, normal for us would be in that mid-teens of weeks of inventory. That's kinda normal. Right now, I'd say we'd be running three to four weeks heavy on that. That's less than we were, you know, a couple of quarters ago, and we're seeing month-by-month reductions in that inventory level. It's kind of going as expected, I believe, there. We're, we're working our way through that, and I think that'll be a, a positive. Do you know what the, the point of sale or POS, the sellout numbers look like relative to your sell-in? Is that starting to soften as well? Yeah, there's pockets of it, right? You know, there's areas where the POS is hanging in there really well, and there are pockets of applications where that's softer. Yeah, kind of our view of how things are going is based upon what we see as current POS levels. Underlying POS remains pretty good, you know, we continue to kind of watch that carefully. Okay, thank you. And your, your book to bill is still negative, I imagine? Our book to bill is, is, is below 1, and that's a combination, right, of a couple things. One is this inventory destocking that's taking place. The other is, as we've worked our way back, our lead times on almost all products are now have moved to pre-COVID levels of kinda normalized lead time. Every time we pull those back, you know, that drops orders, and so that. Between those two things, certainly, it's, it's running below 1. Got it. Okay. Just a, a couple of modeling questions on Meenal. It looks like sort of backing in, based on your EPS and revenue guide, it looks like, operating margins are gonna be sort of in the low 15% range, with lower gross margin, sequentially. From an OpEx standpoint, are there any plans to reduce costs, or are you gonna hold steady here, based on where you were? Yeah, a great question. Just, you know, circling back, we don't guide, of course, to operating margins in an individual quarter, but what I would say, stepping back from one of the earlier questions, we're still committed to that high teens margin range we talked about for the year. At the same time, we may have quarters, right? Some might be on the higher end, some may be at the lower end or even below that. You know, we know that there's gonna be a balance there. In terms of, you know, actions we're taking or things that we're doing, especially in the businesses where a lot of discussion on the transitory destocking, we're absolutely looking at cost, whether it's, you know, interim costs right now, variable costs that we can look at, or even just the cost structure as we think about businesses. Especially across the electronic side, you know, we, we talked a little bit about on the Transportation side, we've got work to do around the Carling integration. You know, Dave and I both talked about that. We're looking at the customer and product line profitability, and absolutely, we're also looking at cost structure in that business. A number of different things going on to make sure that we continue to invest in the business for the future because we know this is transitory, but I'd say also tighten up our cost structure for the environment that we are in today. Okay, thanks for that. I appreciate that you don't give specific guidance for the year. I know seasonally, your Electronics business is usually down sequentially, and I would expect it to be perhaps more than that with this inventory correction, and then Transportation, kinda same thing. In terms of, kinda how margins look like in Q4 and, and, you know, when they expect to bottom, would you expect Q4 to be down from Q3 in terms of margins and revenue? Yeah, at, at this point, right, we, we gave you the visibility that we have, right? With a Q3 guide talking about really both Electronics, we expect Q3 to be sequentially down, a little bit also on the Transportation side, a lot of that really coming because of the destocking. After that, I'll, I'll even go back to what Dave made a comment earlier about it's tough to pinpoint a normal anymore, so we're not, you know, we're not offering a sequential view or really have enough there. I, you know, again, I would say in our prepared comments, we talked about destocking going through this year. Okay, thank you. Just lastly, on, on the automotive or Transportation margins, which are probably your lowest level in many quarters, is it really just the matter of the volumes or also, you know, getting synergies from the acquisitions and getting costs out? You're still committed to that mid-teens, but it looks like it's gonna take a while to get there. What's the timing of that? Yeah. Maybe, maybe just a little bit more color on Q2 and the path forward for us. Absolutely, in Q2, some of the comments, the destocking that we saw on the commercial vehicle side of the business, definitely higher than we were expecting. You saw it in our sales, you know, you see it in the margins. I'd say that was probably 200 basis points margin impact. Just flat out right there, you know, we would've been at a, had we been able to take out that destocking, the margins definitely would have trended where we expected. I'd also say, the Mexican peso for us, because, Mexico is such a big footprint, a manufacturing hub for us. We saw a pretty sudden strengthening in the peso last quarter, pretty unexpected, and that also hampered margins a bit, maybe 100 basis points. That was a little bit of the color. I'd say outside of those, we would have seen absolutely margin projection expected in that, that trajectory. I talked about earlier, look, we're looking at costs. We're looking at footprint work that we're doing, which includes some of the activities that Dave mentioned as it related to Carling. We're also across the automotive business. It's really been now four years of car build that's in the upper 70s or lower 80 million build range. We're also looking at the footprint that we have for automotive and maybe scaling that back a little bit. Then I also talked about that customer product line profitability that we're working on, especially with the newer parts of the business. I think the combination of all that, we continue to expect in that margin trajectory moving forward, positively moving higher, and we're still committed to that, that mid-teens margin range for Transportation. It'll take us maybe a little bit longer than we were expecting, given the destocking, but we're absolutely committed to that. Matt- Okay. Matt, I think. Yeah, go ahead. I think it's important to take a step back overall, right? Take a look at overall performance of, of the margin profile in the business through the course of this year, which we still believe to be for the year in the high teens. When we take a look at that vs previous cycles, when we've been in the depth of previous cycles, we've been in that 14%-14.5% range. That has improved meaningfully, really with our strategy to, to diversify the mix of the business in the end markets we're serving, execution across the businesses. By the way, that's at a time, you know, we've made some sizable acquisitions over the last couple of years, which overall is about a 200 point drag on corporate margins. Seeing that overall improvement, even while digesting these sizable acquisitions. I think generally, we're moving up in the ability to execute through, through the bottom side of a cycle. Got it. Okay, thanks for all that. Appreciate it. Thanks, Matt, for your questions. We'll take our next caller, please. Next, we'll go to David Williams with Benchmark. Welcome back, David. Hey, thanks for letting me ask another question. I mean, I just wanna ask quickly on the cash cycle. It looks like that peak maybe last quarter, and it come down a bit this quarter, but just kinda thinking about your internal inventory levels where you're comfortable, where do you think that number should be as you're thinking about working capital and just getting that right size on your internal inventories? Thanks. Yeah. There's a lot of work that our teams have been doing around inventories. You know, our days right now are somewhere in about the 120, 130 days. I would expect that over time, as we continue to work that down, we get back closer to the 100-day mark and even lower over time. That's really where we were pre-pandemic as we adjust our, you know, as we think about adjusting our supply chain. I think the other thing I would add is, you know, some of that also comes with acquisitions, right? Typically, a big part of our synergies also come from working capital management, whether that's really the focus around day sales, DSO, and inventory level. That's also work that we're doing as it relates to areas like the C&K and the Carling acquisition. Absolutely, we're making good progress and more to go on that. Thank you. Appreciate your follow-up question, David. That concludes our Q&A session. Thank you for joining us on today's call and your interest in Littelfuse. We look forward to talking with you again soon. Have a wonderful day.