Good day, everyone, and welcome to the Littelfuse First Quarter 2024 Earnings Conference Call. Today's call is being recorded. At this time, I will turn the call over to the Head of Investor Relations, David Kelly. Please proceed. Good morning, and welcome to the Littelfuse First Quarter 2024 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 first quarter, and a copy of our earnings release and slide presentation is available in the Investor Relations section on 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. Also, 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 on the Investor Relations section of our website. I will now turn the call over to Dave. Thank you, David. Good morning, and thanks for joining us today. Let's start with highlights on slide four. The first quarter of 2024 brought a continuation of several of the themes we previously discussed and expected to continue into the new year. We continue to see meaningful new business opportunities and design activity across our diverse set of end markets. Our customers remain committed to advancing sustainability, connectivity, and safety themes, and we are helping them drive innovations across a broad base of applications. Our experienced global team continues to deliver solid execution amid an ongoing challenging macro environment. Following a record cash flow year in 2023, our strong first quarter cash generation reflects our disciplined operating model. Finally, our balance sheet and significant financial capacity provide us with the continued flexibility to enhance our long-term positioning. Our first quarter results reflect our resilient business model, ongoing diversification initiatives, and strong execution. We delivered first quarter sales above and earnings within our prior guidance range. I want to thank our global teams for their continued hard work and commitment to serving customers and growing our business. With the dynamic environment we experienced in 2023 continuing into 2024, I wanted to provide a brief update across our businesses. In the first quarter, we continued to see channel and OEM inventory reductions, and also some areas of expanded end market weakness across our businesses. Regarding our electronic segment distribution exposure, while still elevated, we saw consistent channel inventory reductions throughout the quarter. As we have discussed in prior earnings calls, we have been in an elongated electronic destocking cycle, and we continue to see signs of ongoing inventory reductions at EMS and end customers. However, we see emerging signs that suggest we are potentially nearing an inflection point. Our Passive Electronics business benefited from an uptick in order rates late in the first quarter and entered the second quarter with a more typical backlog and a Book-to-Bill above one. Regarding our Semiconductor exposure within the Electronics segment, we are seeing weakening industrial demand and ongoing softness across consumer applications. We expect the softer industrial outlook will impact our Semiconductor sales through the next couple of quarters. Despite near-term trends, our Electronics segment remains well positioned to capitalize on strong long-term growth drivers, and our portfolio diversification initiatives have driven improved profitability relative to prior trough cycle levels. Moving on to our Transportation segment, our passenger vehicle exposure continues to benefit from our balanced product capabilities and broad technology leadership. We are seeing solid interest in our core products as customers seek to better align with consumer demand for internal combustion and hybrid vehicles. In China, we continue to show solid traction in low-voltage applications for high-growth local OEMs. The China auto industry is aggressively delivering vehicle advancements, and we are benefiting via strong content per vehicle expansion in the region. Globally, we believe customers are aiming to balance near-term consumer preferences with long-term electrification plans, and we continue to generate solid design wins with our high voltage fuses and current sensors. Regardless of powertrain mix, we are well positioned to support our global passenger vehicle customers with innovative products that will drive long-term growth. Regarding our commercial vehicle exposure, we are also seeing ongoing distribution channel inventory reductions. Yet our commercial vehicle initiatives are driving cost improvements, while pricing actions are also bearing fruit, ultimately benefiting our Q1 results. Taking a step back, we are making solid progress with our previously disclosed transportation segment actions, as our product line initiatives and cost structure improvements helped to drive sequential margin improvement in the first quarter. Finally, with our industrial segment, we're seeing softer than expected end market demand, which we believe will continue through the next couple of quarters. In the first quarter, we saw incremental end demand weakness led by MRO and construction, charging infrastructure, and factory automation applications. Demand is mixed for renewable applications, with energy storage strong across all regions, while the solar market softened in the quarter. Yet industrial safety applications continue to show signs of growth, and we are seeing early indications of troughing residential HVAC demand. Meenal will provide more segment-level details shortly. Now let's turn to our end markets and design activity. Moving to slide six, and electronics design activity, we continue to be a leading technology enabler for a broad base of customers. We are seeing new product launches gain traction as customer design activities accelerate. In the quarter, we secured a meaningful medical win with our custom power semiconductors for a customer in China. We also won business for multiple appliance customers in China for both fuses and switches. We delivered a semiconductor win for a space-related communications application. We also won business for data server power supplies for a customer in Taiwan. Finally, we delivered a meaningful telecom win in India that will utilize our core circuit protection offering. Beyond near-term trends, structural electronics end market drivers such as artificial intelligence, automation, and technology reliability remain key opportunities as our customers continue to depend on us for innovative engineering expertise. Turning to Slide seven, industrial design activity remains solid across our exposures, supporting long-term industrial end market growth themes. In the first quarter, we had success in North America and renewables, where we had a meaningful win within an energy storage application with a leading customer. We won business with multiple customers for industrial safety applications in North America, highlighted by commercial kitchen. We also secured wins for EV infrastructure applications across multiple regions, including Level 2 charging wins in North America and Europe, and DC fast charging win in Asia. Taking a step back, long-term industrial investment remains strong, supported by infrastructure spend, increasing electrical efficiency requirements, and global commitments to decarbonization. We will continue to benefit from deep engineering expertise and product offerings, as well as continued execution, reflected in ongoing strong design wins and broad customer momentum. Moving to Slide eight. Within transportation and our passenger vehicle exposure, we continue to leverage our balanced product capabilities, global scale, and technology leadership as customers adapt to evolving consumer preferences. In the quarter, we secured customer wins for high voltage fuses across multiple regions, including North America, China, and Korea. We won multi-technology business for an onboard charging system in Europe. We also won low-voltage fuse business for multiple OEM customers in Europe. Finally, we secured a motor protection win for an electric motor application in Europe. We remain encouraged by our passenger vehicle momentum, supported by our continued solid cadence of design wins across electrification and electronification applications. While we are seeing customers in North America and Europe adapt to shifting consumer preferences, which could impact the pace of EV adoption, we are confident in our well-rounded, long-term automotive content opportunity. Regarding our commercial vehicle exposure, we delivered several wins from various applications and regions in the quarter. We secured a custom multi-technology opportunity for an electric commercial truck provider in Europe. We won switching business for an agriculture equipment provider in North America, and delivered wins for material handling and mining customers. Long-term, we believe we were well-positioned to enable ongoing electrification and electronification advancements in material handling, agriculture and construction equipment, and heavy-duty truck and bus markets. Across our businesses, our innovative solutions and technical expertise continue to resonate with our broad customer base. 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 for joining us today. Please turn to slide 10 to start with details on our first quarter results. Revenue in the quarter was $535 million, down 12% versus last year, both in total and organic. The product line pruning actions we discussed last quarter reduced sales 2%. GAAP operating margins were 10.3% and adjusted operating margins 11%. Adjusted EBITDA margins finished at 17.1%. Foreign exchange had a 50 basis point unfavorable impact to margins, largely due to cost increases from a stronger Mexican peso. First quarter GAAP diluted earnings per share was $1.93, and adjusted diluted EPS was $1.76. Our first quarter GAAP effective tax rate was 13%, and adjusted effective rate was 19.3%. Our adjusted effective tax rate was slightly lower than expected due to some one-time discrete benefits. Please turn to slide 11 for updates on our capital allocation. Starting with cash generation, we began the year on a strong footing, generating $57 million in operating cash flow, up 7% versus last year. Free cash flow was $42 million, an 86% conversion to net income. We remain on track to achieve our expected 100% free cash flow conversion target for the year. We continued our focus on working capital optimization this quarter, reducing both inventory dollars and days on hand. We ended the quarter with $562 million of cash on hand and net debt to EBITDA leverage of 1.4 times. We're able to leverage the strength of our balance sheet as we continue to assess opportunities and remain disciplined in our capital allocation strategy. Our goals are unchanged, with an intent to return about 40% of our free cash flow to shareholders and the balance invested in strategic acquisitions. In the quarter, we returned $32 million of capital to shareholders, evenly split between our quarterly dividend and share repurchases. During the second quarter, we've repurchased an additional $23 million in shares through last Friday. We also announced yesterday that our board approved a new three-year, $300 million stock buyback authorization, effective May first. We will continue to assess periodic share buybacks, especially when we believe our valuation doesn't reflect our continued confidence in our long-term growth strategy. Please turn to slide 12 for our product segment highlights, starting with the Electronics product segment. Sales were down 19% versus last year in total and organic. On an organic basis, sales across passive products were down 10% versus last year, while semiconductor products declined 25%. The increased weakness we saw across industrial markets was a greater headwind across our semiconductor products. Operating margins in the quarter were 13%, while EBITDA margins finished at 19.8%. We remain confident in the margin resiliency in the Electronics segment with the work we've done on portfolio diversification, improved execution, and cost structure. We expect robust improvements in our segment margins as we return to growth. Moving to our Transportation product segment on slide 13, segment sales were up 2% and up 3% organically. Sales were negatively impacted 6% versus last year from the pruning actions we've been undertaking. Across our passenger vehicle business, sales grew 12% organically. We continued to see strong growth from both content and product launches we supported, especially in China. Within commercial vehicles, sales for the quarter were down 6% organically, a combination of continued inventory destocking at distribution partners and our product line pruning actions. For the segment, operating margins were 9.5%, and EBITDA margins finished at 14.6% in the quarter, expanding margins sequentially, 480 basis points and 380 basis points, respectively. We've taken a number of concrete actions to drive improved profitability, including a balance of price increases and product pruning, as well as structural cost actions to improve gross margins and reduce operating expenses. We are focused on steady improvements as we work our way back to double-digit margins. On slide 14, the Industrial product segment was down 13% and 14% organically. We saw weakness from an expanded set of industrial end markets and continuation of inventory reductions at some OEMs. Operating margins finished at 6.5%, and EBITDA margins were 11.9%, both down versus last year and below our expectations. Volume is a key driver in our typically strong margin profile. We are also in the midst of footprint shifts to improve profitability and add capacity, which produce some near-term manufacturing costs and constraints. We expect progressive margin recovery in the coming quarters. Please move to slide 15 for the forecast. Summarizing Dave's earlier comments, we continue to see channel and end customer inventory reductions, so we believe we are nearing an inflection point. We're also seeing select areas of expanded industrial market weakness, and as reported through the headlines, inflationary trends are continuing. With these assumptions, we expect second quarter sales in the range of $525 million-$555 million, equaling 1% sequential growth at the midpoint. By segment, we expect sales across Electronics to be flat and for Transportation and Industrial to be slightly up. With the recent shifts in a number of currencies, foreign exchange is a net unfavorable impact to us for revenue and earnings. For the second quarter, we project a 1% headwind on sales and a $0.16 negative impact to EPS. We're projecting adjusted EPS to be in the range of $1.65-$1.85, which assumes a tax rate of approximately 23%. As we've discussed historically, our second quarter guidance also includes higher stock compensation expense versus other quarters due to certain retirement provisions. This has an unfavorable $0.30 impact to EPS and a negative 170 basis point effect on margins in the quarter. Please turn to slide 16 for our full- year 2024 expectations. We anticipate a return to sales growth later this year. We expect product line actions to reduce total sales about 2% and reduce transportation sales growth about 5%, slightly less than our projections last quarter. At current rates, we expect foreign exchange to be a headwind of 1% to sales and a $0.50 headwind to EPS. We've made significant progress in improving through cycle margins within our electronics segment and are on a solid path for improvements to our transportation segment profitability. However, the elongated inventory destocking and end market variability has impacted the timing of our volume recovery. With these market undercurrents, we expect company operating margins to finish in the mid-teens for the year, with improvements as the year progresses. Across our segments, we expect electronics operating margins to average in the upper teens and industrial operating margins in the mid-teens. We remain confident in the progress we are making in transportation and expect to exit the year with high single-digit operating margins. On other modeling items, we're assuming $64 million in amortization expense and about $39 million in interest expense. We are estimating a full- year tax rate of around 22%, slightly higher than our prior estimate due to shifts in earnings mix by jurisdiction, and we expect to invest about $100 million in capital expenditures. We are executing through a difficult macro environment, and we're well positioned as we emerge out of it. Our priorities remain focused on the areas we can control, ensuring we are well poised as destocking diminishes and markets recover to drive growth and commensurate margin expansion. We're leading sustained profitability improvements across our transportation segment and continuing our path forward to best-in-class profitability and cash generation. Thank you to our Littelfuse colleagues worldwide and their unwavering commitment in steering our company forward every day. And with that, I'll turn it back to Dave for some final comments. Thanks, Meenal. While the first quarter brought a continuation of many of the themes we had discussed last year, we believe our results and customer momentum continue to support our long-term growth strategy. Our increasingly diversified business model and agile teams have improved the profit resiliency while positioning us for meaningful long-term earnings expansion. Our continued design win momentum reflects our robust technology offerings across broad end markets and the strength of our customer relationships. Our strong cash generation and balance sheet position us to further capitalize on growth opportunities, while we are remaining confident that we will return to growth during 2024. We are also confident that we will continue to execute through cycles, drive long-term double-digit revenue growth, and leverage earnings expansion, and deliver top-tier shareholder value. I want to again thank our global Littelfuse team for their hard work and commitment to our customers and supplier partners. With that, I will now turn the call back to the operator for Q&A. Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and you are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Luke Junk from Baird. Your line is open. Morning, Dave, Meenal. Thanks for taking the question. Dave, hoping we could start with just your view that inventory destocking on the passive side is close to inflecting, and really what I'm hoping to tease out is your view of underlying point of sales demand and just kind of regardless of timing, ultimately, what kind of feedback you're getting from distributors and, and customers relative to the level of, you know, real demand, if you will, once you finally clear these channel dynamics. Thank you. Thanks. Thanks, Luke. Thanks for the question. You know, certainly it's been a, you know, kind of a messy several quarters as corrections have been driving through the electronic side of the business. And you know, the, the positive sign we see is that our book-to-bill is above one for the first time in seven quarters for our passives products. So that's a good positive indicator. Now, POS numbers are not, you know, you know, dramatically increasing yet, as we still think there's a little bit of time for EMS customer inventories to kind of work their way down, which is dampening the POS at the distributor level. But, as we've kind of walked through these types of cycles in the past, and these are certainly kind of the early indicators for us that things are about to turn on that side. Okay. ... That's helpful. Thank you. And then, my follow-up would be for Meenal in transportation. Just hoping you can help us bridge from the mid-single-digit level that the business was at from a margin standpoint last year to this quarter's 9.5. And specifically, just trying to tease out anything that was maybe unique to the first quarter, and would you expect margins to sustain at this level or maybe dip some and come back to the high single digits exiting 2024? Sure. Thanks, Luke. Yeah, happy to talk about our transportation margins. So, you know, as I mentioned last quarter, we have put a lot of effort, as you saw in the first quarter results, really on improving the transportation margins. They've been running below our expectations. I'd say some of the key actions over the past several quarters, one is cost reductions that we had put in place that are really bearing fruit, as you can see through the margin improvement. Really breaking down some of our product line activities and working with customers, looking at our profitability, and then talking with customers about really the value that we're bringing, and either that drives improved pricing for us, which we did in several areas, and we believe that's gonna be pretty sticky. In other cases, you know, we've exited some product lines, and overall, that includes the margin profile as well. And then along the way, we're working on what I call the rooftop reductions. Not just, you know, looking at our manufacturing supply chain, but also some administrative sites that we're getting out of as well, and that falls into that cost category. So as I look ahead with all of that to 2024, some of that you'll see continuations of all that activity bearing fruit. And I would say with, you know, volume and mix shifts across our commercial vehicle and on the automotive side of the business, we expect that high single digits to continue, but it may not necessarily look linear as we go through 2024, but our expectations is still this margin level overall. Got it. Thank you for the detail. I'll leave it there. Thanks for your questions, Luke. Your next question comes from the line of Matt Sheerin from Stifel. Your line is open. Yes, thank you. Good morning, everyone. Just a question, Meenal, on the margin targets for the full- year, particularly electronics margins, for the high teens from the low twenties now. So that would imply pretty significant expansion, particularly Q3, Q4. And I know you're expecting a year-over-year growth, I suppose, by Q4 of this year. But what's gonna drive the margins, given that demand is still weak? And I would imagine that you're seeing, and maybe you can comment just on the pricing environment, that you're at least seeing the normal price downs or cost downs from customers. Sure. Why don't I—I'll try to address your question specific on electronics, because I think that's where, where you were going more. And maybe just taking a step back as a reminder, you know, we talked about the fact that all of our margin targets are through the cycle targets, right? And so the past few years, we've seen margins in electronics, you know, above that 20% range. This year, we're talking about something a little bit lighter. Last year, we raised our overall through cycle margin target to that 20%+ range. So that is really a testament of all the work we've done really around portfolio, diversification, all the cost reductions, all the execution. For this year, you know, what you're seeing in the first quarter and going into the second quarter guide is really the destocking that, you know, Dave talked about in the earlier question that continues on the passive product side in select areas of our semiconductor side. But then on top of that, now the enhanced industrial market weakness that we're seeing, that really impacts a lot of our power semiconductor pieces as well. So destocking, market weakness, that's sort of where we are in this first, second quarter range. You heard Dave's comment just a few minutes ago about we see inflection points, we see some good signs in the market, and that's what gives us some positive signs on growth coming forward. And then our incremental margins coming out of these recovery periods tend to be pretty strong. So that's what we're really basing our margin for the year on. Again, lower than the average, but when you look at a through-cycle average for the, you know, three to four years, we still expect to be in that 20+% range. Okay, thank you for that. And could you talk about the pricing trends that you're seeing? And also, could you talk about the inventory levels within distribution and versus where it was and expectations? Sure. I'll take that, Matt. Yeah, from a pricing standpoint, we start out with kind of creating the basis point that the pricing that was gained in the last few years has continued to be pretty sticky, so we really haven't seen that erode or swing back because costs continue to be elevated, right? But from a normal month-to-month, quarter-to-quarter sort of outlook, what we've seen is really a pretty return to normal types of pricing activities. You know, and often there's a worry that as you have little slower periods, that there's gonna be higher levels of pricing pressure. While we've seen it in a couple of small pockets, in general, we've seen more normal sorts of pricing pressures across the business on that. From an inventory perspective, if you look at our electronics channel partners and channel distribution levels,... You know, we're beginning to get to healthier levels there, where we would say we're probably 85% of the way through the inventory burns that need to take place there. So there's still a little more to go. But, you know, keeping in mind, yeah, the big opportunity for us as even if end market demand remains fairly muted, when we reach that inflection point of getting down to the inventory levels that are appropriate, we'll get gains in sales driven by that. And we also think there are some positive signs on the demand side and the broader electronics part of the business. Industrials are a little softer. That impacts, as Meenal said, the power semi side, but, you know, we're beginning to approach a healthier position on the inventory side. Got it. Okay. All right. Thank you very much. Thanks for your questions, Matt. Your next question comes from the line of Joshua Buchalter from Cowen. Your line is open. Hey, guys. Thanks for taking my question. Maybe following up on, on the previous one, so it sounds like you're-- you moved from 70%-85% of the way through the inventory digestion. Do you expect the vast majority of the remaining 15% to be wrapped up by the June quarter? And if so, I know it's generalizing across your, your total business, but maybe you can remind us, like, if you were to ship to end demand in the back half of the year, maybe help us with what normal seasonality would look like. Thank you. Well, I'm not sure what normal seasonality is anymore with the amount of disruptions that we've seen in the last several years. But what I would say is, it's always a little challenging to pick exactly when you hit that inflection point, you know, and it's really by product line, by distributor, where we have some product lines that are there already. They're at kind of target inventory levels and are quite healthy, and others that they're still a little farther to go. But we think the bulk of the channel destocking, we will work through in the next quarter. You know, that's kind of the math as it works out and what we've been seeing the burn rates, you know, on our inventory position. We think we'll probably head into the back end of the year in our passive products that are pretty healthy inventory position. So the challenge then becomes what's normalized, you know, from a calendarization, because we'll have both impact normal calendarization, and typically, third quarter is a little stronger than fourth quarter. Second and third quarter are kind of similar. That would be normal calendarization, but you throw on top of that, destocking ends. So you'll still... we would expect, you know, if all things play out, that we'll start to see some things turning in the back half of the year, because that end of destocking or slowing of destocking will help, you know, drive that and actually could produce better than normal seasonality in the back half of the year. Got it. Thank you for all the color, Dave. And then on the second quarter guidance, you know, it looks like a decent 100-200 basis points of operating margin expansion, back of the envelope based on a, you know, 1% revenue growth. Maybe you could help us understand the drivers across, you know, OpEx or, or is it gross margin, whether mix, volume, or pricing. Thank you. Yeah, you know, I would say, margins overall as sales pick up a little bit, and again, there's been cost work that we continue to do when we see, you know, businesses that are in decline. So whether that's discretionary spend, some cost work, a little bit of margin recovery on things that we've done. So I think those are positive as we think about the second quarter. The other things I wanted to mention that are also, you know, in the slides and prepared comments were the fact, A, you know, with foreign exchange, as we've seen, strengthening dollar, in the mix of currencies that we have, FX is a headwind for us on the margin, about 90 basis points for the second quarter. You know, I think those who have been with us historically know that we have this bit of a second quarter phenomenon on our stock compensation, where just because of the provisions in some of our stock grants, there's a little bit of a, what I call a bullet vest that happens in the second quarter. So while it's not an outsized cost, it's just that we have to recognize it all in the second quarter versus taking it over a longer period. That's about, you know, that's about $0.30 impact in the second quarter. If you're just looking at sequential, sequential pieces, that's a little bit of hit there, too. Got it. Thank you, Meenal. Thanks for your questions, Josh. Your next question comes from a line of Christopher Glynn from Oppenheimer. Your line is open. Thanks. Good morning, everybody. Good morning. I had a question about the pruning. So, you know, you took it down, I think, from 6%-8% to a 5% impact. Is that related to market dynamics and market timing and customer service considerations? Or just curious about the narrower scope there, and if, you know, this is a couple-year process or this is predominantly a 2024 adjustment. Yeah, no, great question, Chris. So, you know, on the pruning side, if I take a step back, we're really for us, the pruning is really taking a look at more granular pieces of the portfolio, really understanding the customers, the product, and the profitability on both of those pieces. So for us, it's really trying to ultimately balance the profitability and return in, you know, where we can, as much as possible, we prefer to retain customers. We prefer to continue doing business with the customers, but it has to incorporate the values that we bring at a, you know, expectation of a profitability and return. So in this specific case, where we've brought down the numbers a little bit, we've gone back to a number of customers, and even internally looked at ways to improve profitability. We found that, hey, maybe we have to prune a little bit less, and, you know, Dave talked about some of our pricing being sticky. You know, in the case of our transportation segment, we have priced up this quarter, and we went back to a number of customers, again, around price, and we expect that to stick. So that's really what's really driving a little bit of that trend, where it's less pruning. And I would say, yes, this will go through this year, but I would also say this is not a one and done either. This is something that we constantly look at. We don't always talk about it as much. This is just because we're going through a bigger effort through the transportation segment right now, but this is something that we look at continuously. I just don't expect it to continue at this level as we go into 2025. Oh, okay. So good, good chance it's not a talking point next year beyond a discussion of how you run the business, in theory? Correct. Yep. Okay. And then, yeah, I just wanna go back to Matt's questions about the electronics and industrial margins implied steep second half ramp to get to, you know, upper teens for the full- year result for electronics and, you know, mid-teens for industrial. Is that just really all volume related? I guess, I don't know about how mix and absorption are factoring into that equation, but, you know, the first and second quarter guide, it does look like a steep ramp, so we wanna kinda understand the model a little bit better. Sure. So yes, on both electronics, industrial, a little bit different for both. On the electronics side, it's definitely we're counting on definitely a some volume improvements, right? And I won't reiterate everything Dave talked about, but we see the signs, right, where the destocking will end, and as we, you know, start to replenish inventory, that drives some growth there. So that's part of it. There's also some cost things also that we're continuing to look at, especially as we consider the semiconductor part of the business, where we've seen some market weakening there. So those are really the two drivers as we think about electronics. So I feel good about the margin, the margin trajectory, and just basically the work that we've done over the past several years on electronics. With industrial, yes, on some volume, we're counting a little bit on that, but I would also say there's more, some more internal work that's going on. You know, that's really the business where we've had, over the past few years, some very strong organic and also inorganic growth. So there's a lot of work we're doing behind the scenes around footprint to make sure we're getting closer to customers, getting the cost structure right, and also adding capacity as well. Some of what you saw in the first quarter was we're in the midst of a couple of these actions right now, and so there were some manufacturing constraints, also some costs that we recognized. I expect that to improve in the next few quarters, and that's what's also helping to drive the profitability. Got it. That makes sense. Thanks. Thanks for the answers. Thanks for your questions, Chris. Your next question comes from the line of Saree Boroditsky from Jefferies. Your line is open. Hi, thanks for taking my question. Just building on what you're just talking about, you mentioned some manufacturing issues impacting the first quarter margin in industrials. Could you just size that impact for us so we can think about the recovery in margins there? Yeah, I mean, I would think about it as I mentioned two things. One, I would say just some additional costs we incurred, but also just some capacity constraints as we were, you know, without getting into the weeds, you know, doing some things on moving equipment around. So I'd say, you know, from a growth perspective, I'd say we were probably looking at a couple points of growth on the top line, which of course, you know, drops into the margin, and then just, you know, maybe a point or so on cost. So again, as we work through that, I expect we still have a little bit of activity here in the second quarter, but we absolutely expect it to get better. That's helpful. And sticking to industrials, you talked about some weaker industrial markets, and you provided some great detail on there. Maybe just think about, as you think about the improving signs of destocking, how do we actually think about the overall end market demand and how that impacts sales as we think about the remainder of the year? Yeah. Specific to the industrial kind of softening, I would say that kind of impacts two different parts of our business. Within the electronics segment, our power semiconductor business is heavily indexed to broad-based industrials. There, we clearly saw softening demand, and our current view is we can expect that to probably continue for the next couple of quarters in that side of it. And then it also shows up in our industrial segment, where we saw, and we talked a little bit about it on the prepared remarks, kind of mixed signals there, where some broad-based areas that were slower, but other areas that had strength. So in, like, renewable energy side of things, where we tend... The big driver for us there is in two categories. One is energy storage, and the other is kind of grid-level, sort of solar installations and wind energy. The grid-level solar has slowed, and we've seen that be slower, but the energy storage side continues to be continuing really robust. So our best view right now is that industrial space, you know, probably remains at this slower pace for perhaps a couple quarters before we start seeing that come back, you know, a little stronger. Appreciate all the color there. Thank you. Thanks for your question, Saree. Your next question comes from a line of David Williams from Benchmark. Your line is open. Hey, good morning, and thanks for taking my questions. I guess first, David, is there a way to think about the level you're under shipping relative to maybe in consumption? And maybe if you can speak to how you're feeling about your level of visibility there across maybe the full supply chain. I think in the past, you've mentioned that EMS inventory was still elevated, that, but it was challenging to get a good view there, or at least some better granularity. But you mentioned you feel like that's getting better. So just anything that could help there around around those two? Thank you. Sure. Yeah, and we've talked about how in the electronic side of our business, that it's been a bit of a elongated cycle. So it's, the peak to trough has been a little longer than we have typically seen before, and we really think that based on our analysis and the work we do with customers, is that it was really driven out of the fact that end customers, EMS, OEMs, you know, bulked up a little more on inventory in this past cycle than historically they have because of all the disruptions that were taking place. So that's what's kind of elongated it. So right now, as we try to get a better handle on the end customers' inventories, we have discussions with them, we have discussions with our distribution partners to kinda get a sense of what they're seeing on demand and, you know, what they're seeing from, as example, EMS customers. What the general sense is we're getting at this point in time is that, you know, it's getting closer to working its way out, so maybe in the next quarter or so that the excess at the end customers begin to get to a more normal level. And we have full visibility, of course, to our distribution partners in the channel. So that mix of it, that's what gives us a little more confidence that we think things will get back to a bit more of a normal sell-in to sell-out sort of mode as we head into the back half of the year. Okay, thanks. And how about any thoughts on the what level of under shipment relative to demand? You know, that's the, it's a complex, you know, equation on that, and it really comes down to looking at what the inventory burn is every month, you know? And then the harder one to get a handle on is the piece that lower POS at our distribution partners. So I wish I could give you a bit crisper answer on that. That's a challenging one to kind of put our arms around at this point, because we, while we can tell you exactly what it is on the inventory burn at our distribution partners, we can't get that pure visibility at the OEM customer or EMS customers. So it's a little more challenging to give you a great visibility on that, and it's hard for us to have fantastic visibility as well. Hey, that, that's fair. Thanks for the color there. And then just lastly here, I think last quarter you had pointed to maybe the semi inventory being cleaned up coming out of the fourth quarter, but it seems like now maybe it's more of a demand issue. And if you're looking across that, is that still kind of a fair way to think about it, that it's demand-driven as inventory is clean, or is there still some excess you're cleaning up and maybe a little softer in demand? Thank you. Yeah. Within the, within the semiconductor piece of our business, we have two pieces. We have our protection semiconductor business, which behaves a lot more like our passives, and there's still some excess inventory in the channels to work our way through. On the, power semiconductor side of things, we really are talking probably more about backlog at our sites as opposed to excess inventory, 'cause there has not been a lot of excess inventory on the power semiconductor side of things. We have cleaned up a lot of that backlog, and we're back to more normal sorts of lead times on the power semiconductor side, which itself brings down then our shipping levels. And then in addition to that, we would see that there is softness in the industrial markets. We're seeing that with a kind of, kind of broad-based industrial side of things there, where we're seeing that softness. We're not alone in that. You know, I think, a lot of our peers are seeing that as well right now. And that's, you know, think about things of, industrial automation in areas like that, where they're seeing some of that slowness at this point in time. So we've got both the lack of backlog cleanup to drive, as well as a little slower demand there, but not so much an inventory overhang in that side. Great. Thanks so much for the color. Appreciate it. Thanks for your questions, David. Your next question is a follow-up from the line of Christopher Glynn from Oppenheimer. Your line is open. Yeah, thanks. I just wanna ask about a comment you made about HVAC signs of a bottom there. I think that's primarily the Hartland acquisition, but you know, what are the signs? What is that? Is that like a much more pressured Q1 than you expected, so almost by default it's a bottom, or what, what's kind of the context behind that comment? Yeah, I think the comments behind that are really - and they're primarily driven out of the view of residential HVAC space, which is a heavier piece of that Hartland Controls business... where, as you're aware, the inventory of our HVAC customers' inventory in the channel with their distribution, things like that, has been pretty elevated, which has certainly dampened demand on that. It feels like signals we're getting from some of our customers that, you know, they're beginning to clean up some of that inventory, and so there's a, you know, a bit of view of positive trend on inventory or on demand orders on us from that side. It's not, you know, snapping back. That's not what I'm talking about, but it's - it feels like it's kinda found the bottom a little bit there. Okay. And then, wondering if we put any more color on the electronics book-to-bill being greater than one. Was it, you know, materially so? And, are the bookings kind of projecting normal lead times, as opposed to the different behaviors in 2021 and 2022? Sure. Yeah, yeah, and absolutely, they're reflective of normal lead times. You know, our lead times are quite normal across our electronics business at this point in time, so they're reflective of that. And, and when we talk about the Book-to-Bill being above one, that's specific to the passives part of the business. The power semi business- Yep ... is below one, but the passive side of it, yeah, it's about 1.1, which is actually a pretty nice, you know, step. So it's, you know... Again, first time we've seen a positive book-to-bill there in seven quarters. You know, so we, you know, we find we look at that as a signal that, you know, the bottom has been found, and we're about to get to the end of inventory burn, and we really are starting to see more short cycle orders, which is also another sign for us when you get short cycle orders coming in. Great. Thank you, Dave. Sure. Thanks for your follow-up, Chris. That concludes our question and answer session. I will now turn the call back over to David Kelly for some final closing remarks. Yeah, thanks, everyone. We look forward to also speaking with you at the May sixth Oppenheimer Virtual Industrials Growth Conference, the June fourth Stifel Cross Sector Insight Conference in Boston, and also the 5th June Baird Global Consumer Technology and Services Conference in New York. Have a wonderful day. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.