LFUS Q2 2025: 10% Revenue Growth, Warns $0.15 Tariff Drag in Q3
- Strong Revenue and Margin Growth: In Q2 2025, Littelfuse delivered 10% revenue growth, with margins exceeding expectations, reflecting solid operational execution and effective cost leverage.
- Robust Industrial and Data Center Opportunities: The Industrial segment recorded 17% organic sales growth driven by high-value markets like grid storage, renewables, and data centers, and the call highlighted new design wins in data center applications, positioning the company favorably within evolving high power solutions.
- Execution of Strategic Priorities: The company is advancing its focus on capitalizing on future growth, evidenced by a double-digit growth opportunity pipeline, operational enhancements, and investments in technology capabilities to serve higher voltage and energy density markets, setting up the bull case for long-term top and bottom line growth.
- Tariff Timing Reversal Risk: CFO Abhi Khandelwal noted a $0.15 benefit in Q2 from favorable tariff timing that is expected to reverse into a headwind in Q3, potentially pressuring margins in subsequent quarters.
- Power Semiconductor Execution Challenges: Management highlighted that the power semiconductor segment has experienced a soft market and some execution challenges, raising concerns about the pace and sustainability of improvements in that business.
- Margin Pressure in Electronics Segment: The sequential decline in electronics margins, impacted by stock-based compensation adjustments and bonus accrual timing, suggests that underlying margin pressures could persist despite sales growth.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Sales | Q2 2025 | $565 million to $595 million | no guidance | no current guidance |
EPS | Q2 2025 | $2.10 to $2.40 | no guidance | no current guidance |
Tax Rate | Q2 2025 | 23%-25% | no guidance | no current guidance |
Foreign Exchange & Commodity Impact | Q2 2025 | $0.15 EPS benefit | no guidance | no current guidance |
Stock Compensation Expense | Q2 2025 | unfavorable $0.10 EPS impact | no guidance | no current guidance |
Sales | Q3 2025 | no prior guidance | $610 million to $630 million | no prior guidance |
EPS | Q3 2025 | no prior guidance | $2.65 to $2.85 | no prior guidance |
Stock & Variable Compensation Impact | Q3 2025 | no prior guidance | $0.31 unfavorable | no prior guidance |
Mark-to-Market Headwind | Q3 2025 | no prior guidance | $0.02 headwind | no prior guidance |
FX & Commodity Headwind | Q3 2025 | no prior guidance | $0.08 headwind | no prior guidance |
Sales Growth | FY 2025 | 2% total sales growth | 2% total sales growth | no change |
Foreign Exchange & Commodities | FY 2025 | 1% tailwind to sales and $0.40 EPS benefit | 1% tailwind to sales and $0.04 EPS benefit | lowered |
Amortization Expense | FY 2025 | $58 million | $58 million | no change |
Interest Expense | FY 2025 | $35 million | $35 million | no change |
Tax Rate | FY 2025 | 23%-25% | 23-25% | no change |
Capital Expenditures | FY 2025 | $90 million to $95 million | $90 million to $95 million | no change |
EPS Impact from Capacity Sharing Arrangement | FY 2025 | neutral impact | no guidance | no current guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Revenue Growth | Q1 2025 showcased moderate growth (4% increase, with challenges in some segments ), while Q4 2024 and Q3 2024 reported declines and softer organic performance ( ) | Q2 2025 delivered robust 10% revenue growth driven by broad-based strength across segments ( ) | Improved momentum and stronger growth compared to prior periods |
Margin Dynamics | Q1 2025 and Q3 2024 noted sequential margin expansions and operational improvements ( ); Q4 2024 showed meaningful margin expansion across segments ( ) | Q2 2025 reported improved adjusted EBITDA margins and segment-specific margin gains, notably in Transportation and Industrial ( ) | Sentiment shifted positively with enhanced margin performance |
Tariff and Geopolitical Risks | Q1 2025 and Q4 2024 contained extensive discussions on mitigation strategies and geopolitical risk planning ( ) | Q2 2025 focused only on tariff timing impacts with a noted $0.15 benefit turning into a headwind subsequently ( ) | Reduced emphasis on broad geopolitical risks with a narrower focus on tariff timing issues |
Industrial Demand Trends | Q1 2025 and Q4 2024 highlighted mixed industrial trends with robust demand in some areas but softness in others ( ); Q3 2024 indicated continued softness in certain regions ( ) | Q2 2025 saw strong organic growth of 17% in Industrial Products driven by high-value markets such as grid storage and renewables ( ) | Marked improvement with more robust and positive industrial demand signals |
Power Semiconductor Challenges | Q1 2025 and Q3 2024 discussed continued softness and execution challenges in the power semiconductor business ( ); Q4 2024 noted weak book-to-bill ratios and margin pressures ( ) | Q2 2025 indicated improved orders and signs of stabilization and positive sequential momentum in the power semiconductor segment ( ) | Signal of stabilization with improved order flow despite earlier challenges |
Supply Chain Diversification and Tariff Mitigation | Q1 2025 and Q4 2024 featured detailed strategies for moving manufacturing closer to customers and mitigating tariffs through pricing and supply chain adjustments ( ) | Q2 2025 did not specifically address supply chain diversification beyond a brief mention of tariff timing effects ( ) | Reduced discussion emphasis compared to previous periods |
Strategic Growth and M&A Activity | Q1 2025 and Q3 2024 emphasized strategic growth through integrated solutions, disciplined M&A, and a robust acquisition pipeline ( ); Q4 2024 highlighted the Dortmund acquisition and growth positioning ( ) | Q2 2025 reiterated strategic focus with new design wins and reference to the Dortmund acquisition driving sales growth ( ) | Continued and consistent focus on strategic growth with reinforcing M&A activity and design wins |
Data Center Opportunities | Q1 2025 showed early design wins and emphasis on higher voltage trends ( ); Q3 2024 and Q4 2024 reported robust design wins and momentum in data center applications ( ) | Q2 2025 presented several new design wins and an accelerating pipeline for data center opportunities ( ) | Consistent positive momentum with increasing significance of data center business |
Vehicle Electrification and EV Trends | Q1 2025 discussed strong EV content growth and automotive electrification architectures ( ); Q3 2024 offered mixed signals and Q4 2024 took a more conservative view ( ) | Q2 2025 highlighted strong global exposure in both EV and traditional vehicles and a diversified approach in markets like passenger, commercial, and agriculture ( ) | Strengthened focus and diversified market positioning in vehicle electrification and EV trends |
Order Backlog and Book-to-Bill Momentum | Q1 2025 reported strong order backlog and positive book-to-bill ratios across segments ( ); Q3 2024 indicated some softness while Q4 2024 showed improving trends in electronics ( ) | Q2 2025 reported a book-to-bill ratio above one and bookings exiting at the highest run rate since 2022 ( ) | Improved order momentum with record-high backlog indicators |
Operational Execution and Cost Management | Q1 2025 and Q3/Q4 2024 emphasized robust operational execution, cost pruning, and margin expansion through disciplined cost management and restructuring ( ) | Q2 2025 underscored operational excellence with the launch of a global operations team and continued margin improvement while managing tariff timing impacts ( ) | Consistent execution focus with continued cost efficiencies and operational improvements |
Foreign Exchange and Commodity Cost Pressures | Q1 2025, Q3 2024, and Q4 2024 discussed mixed impacts with FX tailwinds offset by commodity pressures and varying EPS effects ( ) | Q2 2025 reported a 1% FX tailwind on sales with outlooks for modest EPS headwinds in upcoming quarters due to these factors ( ) | A cyclical pattern continues with similar FX benefits and commodity challenges as previous periods |
Impairment Charges and Asset Write-downs | Q4 2024 saw a significant $93 million impairment charge related to goodwill and intangibles amid EV infrastructure softness ( ); there was no discussion in Q1 or Q3 2024 ([N/A]) | Q2 2025 did not mention any impairment charges or asset write-downs ([N/A]) | Absence of recent impairment charges suggests potential recovery or stabilization compared to prior concerns |
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Margin & Tariff
Q: How are margins and tariffs affecting results?
A: Management highlighted strong operational leverage boosting Transportation and Industrial margins, while a $0.15 tariff timing effect provided a tailwind in Q2 that will reverse in Q3. -
Top-Line Growth
Q: What impact will growth opportunities have?
A: They expect double-digit pipeline growth to drive both top-line and bottom-line expansion, even with necessary investments. -
Electronics Guidance
Q: How are Electronics margins and Q3 outlook?
A: Despite 9% sequential sales growth causing pressure from comp and bonus timing, underlying operational performance remains strong with a targeted 38% EBITDA conversion. -
Data Center Focus
Q: What is the role of data center exposure?
A: Data center business is growing in importance, with design wins in liquid cooling and onboard solutions further enhancing the company’s differentiated position. -
Power Semi Orders
Q: Can power semi orders drive future margins?
A: Management noted that order improvements in power semiconductors are beginning to stabilize a previously soft market, paving the way for margin recovery. -
Demand Visibility
Q: Is current demand a sustainable inflection point?
A: They see improved visibility compared to three to six months ago, projecting 6% organic growth in Q3 despite some seasonal declines. -
Vehicle Share Gains
Q: How are passenger vehicle shares trending?
A: Passenger vehicle sales have shown steady share gains globally, although the business is diversifying into additional segments like agriculture.
Research analysts covering LITTELFUSE INC /DE.