Good day, everyone, and welcome to the Littelfuse Inc.’s third quarter 2015 conference call. Today's call is being recorded. At this time, I will turn the call over to Chairman, President, and Chief Executive Officer Mr. Gordon Hunter. Please go ahead, sir.

Thank you and good morning. Welcome to the Littelfuse third quarter 2015 conference call. As always joining me today is Phil Franklin, our Executive Vice President Chief Financial Officer. We had a strong third quarter despite a challenging economic environment. Total sales were down 1% but were up 4% in constant currency. We finished the quarter with an adjusted operating margin of 19.5%, our best in recent history and a testament to our excellent execution. Our adjusted EPS of $1.43 was a record and was $0.13 higher than the midpoint of our guidance. As we look across our segments, electronic sales declined slightly in a sluggish environment that continued into the fourth quarter. Automotive had another very good quarter, although a slowing car builds in China tempered growth and our electrical business continued to steadily improve on both the top and bottom lines. Operating cash flow was outstanding and manufacturing performance continues to improve. I will discuss the third quarter performance in more detail in few minutes but first, I will turn the call over to Phil who will give the safe harbor statement and a brief summary of the news release.

Thanks Gordon and good morning. Before we proceed, let me remind everyone that comments made during this call include forward-looking statements based on the environment as we currently see it. And as such, do include various risks and uncertainties. Please refer to our press release and SEC filings for more information on the specific risk factors that may cause actual results to differ materially from those expressed in forward-looking statements. Sales for the third quarter of 2015 were $216 million which was down 1% year-over-year but up 4% in constant currency. GAAP earnings for the third quarter included a $30 million non-cash pension charge -- including that charge, they were $0.50 per diluted share compared to $1.32 for the prior year. Excluding special items, earnings for the third quarter were $1.43 per diluted share which was up 6% compared to the prior year and $0.13 above the midpoint of guidance. This strong performance for the quarter reflected excellent manufacturing execution, good expense control, success of higher-margin new products, weaker currencies in the countries in which we manufacture, and several favorable one-time items. We also had another strong quarter for cash flow even after making our final pension contribution of over $9 million. Through nine months, we have now generated cash from operations of $114 million which is up 9% compared to last year's record cash performance. Capital expenditures of $35 million for the first nine months are also well ahead of last year's $19 million, primarily reflecting spending on the Philippines plant and capacity additions for new automotive products. During the third quarter we took advantage of a temporary dip in our stock price to repurchase 350,000 shares at an average price of just over $89 per share. In the third quarter we also completed the final settlement of our US pension plan for which we transfered full administrative and payment responsibility on a nonrecourse basis to an insurance company. Now I will turn it back to Gordon for more color on business performance and market trends.

Thanks, Phil. I will begin with the electronics segment which accounts for about 48% of total Littelfuse sales. Electronics sales were down 2% in constant currency compared to the third quarter of last year which was primarily due to continued adjustments in channel inventory and continued capacity constraints for electronic sensor products as we transfer production to the Philippines. Electronics channel inventories were down slightly at the end of the third quarter compared to the second quarter with the decrease primarily in North America. We see this trend continuing into the fourth quarter as we continue to see signs of sluggishness in the global markets. Some of this reflects reduced lead times across the industry, resulting in channel partners being comfortable with current inventory levels. Our strongest region was Europe where third quarter year-over-year sales were up 14% in constant currency. Much of this growth is coming from green initiatives such as smart metering and LED lighting. Smart metering is a growth opportunity for us as Europe plans to replace 80% of its existing power meters or approximately 250 million units by the year 2020. Smart meters are more complex and require a higher level of protection. Two large European manufacturers have approved our thermally protected TMOV metal oxide varistors for their smart meters which is expected to add over $500,000 in incremental revenue next year. Similar to smart metering, LED lighting is also driven by the need to save energy. And during the third quarter we added new LED lighting customers in Europe, Asia and the Americas that we expect will generate more than $500,000 in annualized incremental revenue. Global sales of all of our LED related products now total more than $15 million. While the slowing China market is being well reported, we are still experiencing modest growth.…

Thanks, Gordon. So far in the fourth quarter we are seeing continued softness in electronic sales and orders but automotive and electrical demand is holding up fairly well. In the press release, we indicated that the fourth quarter this year includes 14 weeks instead of the usual 13. Including this extra holiday shortened week, our guidance for the fourth quarter is as follows. Sales are expected to be in the range of $212 million to $222 million. Earnings for the fourth quarter are expected to be in the range of $1.12 to $1.24 per diluted share. This concludes our prepared remarks. Now we’d like to open it up for questions.

[Operator Instructions] And from Stifel we have Matt Sheerin online.

A couple of questions. Just on that extra week, Phil, in the December quarter, it doesn’t sound like you’re getting a full week there because it’s the end of the quarter and presumably your customers will be cutting inventory and orders at that point. But if you look – and, but you'll get a full week of cost, so trying to figure out the difference there. And then also looking into the March quarter then, would you expect it to be down a little bit more than seasonal because of that extra week going away or because of inventory refresh and the fact that you are seeing the low season in some markets for December that may be a bit different.

Yes, I mean it’s a little bit hard to call the first quarter at this point but I think the way I would look at that is -- as we roll into next year and if you're looking at kind of a normal sequential progression from Q4 to Q1, you’d need to take the $10 million that we say that the extra week is going to contribute to Q4 out of that number. So that would be my guidance there but relative to some of the other trends you talk about, I think we’re not -- we don't have enough visibility into Q1 at this point to really have much comment on that.

And I mean you’ve seen some nice margin improvements year over year in automotive and electronic continues to track along and I know some of that is getting the execution you talked about, there are also some of the benefits from some of the cost-cutting initiatives. So how far along are you there and how much benefits should you get from that over the next few quarters?

So the cost-cutting particularly the planned consolidations that Gordon referred to, we haven't really gotten any benefit from that yet. In fact, there will continue to be some negative impact for that even into the fourth quarter as we get close to completing particularly the Philippines move. As we roll into 2016 we will start to see those benefits and they will start out slow in the first quarter and then they will start to ramp up from there, and we had talked about -- we talked about for a while and Gordon reiterated it, we’re looking at about $5 million of benefit from the Philippines transfer. Again that hasn't kicked in all yet and about 1.5 million from SymCom consolidation into the South Dakota plant. So those will start, probably we will see a little bit of that in the first quarter of next year and they will ramp up and should be close to full contribution by middle of the year. So the improvement that we saw this quarter really – so it doesn’t relate to those things, that relates to some of the other things that we mentioned and certainly we’ve seen – we saw some decent top line leverage, we saw some benefit from very good manufacturing performance, including improvement in the Mexico facility which we cited as a weakness a few quarters ago. We saw pretty favorable product mix this quarter. We had a number of things that I think contributed good expense control. We did have a few small one-time items that weren’t worth pointing out individually but in total probably added something on the order of 50 basis points of margin to the quarter. So I wouldn’t look at that 19.5% margin as being a sustainable number but certainly margin improvement trends we think are well-established and should get better next year as we start to get contribution from some of those big restructuring projects.

And just last quick question regarding your commentary, Gordon, on revisiting your capital allocation strategy going into the end of the year here. I suppose that’s contingent on the M&A activity and whether -- what your pipeline looks like and whether you get deals done or not?

Yes, Matt, that’s exactly right. So we had indicated that we have a number of deals that we are working on right now depending on our success on those that will directly reflect in our capital allocation strategy. So we will make some decisions on that by the end of this year and probably most likely we will talk about that on the fourth quarter conference call in January.

From Baird, we have Josh Chan online.

Could you talk about the cadence of demand that you saw in the electronics business, kind of the order patterns as you went through different months of the quarter and maybe bridging into what you’re seeing in October, just how the months sort of fold there?

I don’t think we really saw a much change in the patterns. I mean we’ve talked about sluggishness in electronics for a few quarters now. I think the one thing we did indicate is we had probably a slightly better than typical book to bill for Q3 but by the same token I think our seasonal pattern for Q3 for shipments wasn't particularly strong and we did indicate that we saw some weakness in October in the electronics business. So -- but no real major changes there, we haven't seen a lot of change in distributor behaviour. In terms of their ordering patterns they continue to order on short lead times. The end markets I would characterize at this point as really neither improving noticeably or getting any worse noticeably and we did indicate that while China has certainly weakened, we think our China business is held up maybe better than some of our competitors have.

So it’s more of a steady pattern compared to earlier in the year then I guess. So when you talk about normal seasonality into the fourth quarter, still in electronics, are you talking about kind of a 7% to 10% decline from Q3 that I think that’s sort of the average over the last few years, would that be in the right ballpark?

Yes, so I mean I think that the overall company would be more in the mid single-digit declines but the electronics business would be probably closer to 10% or maybe even little bit above that. But of course that gets a little bit masked by the extra week as well. So I think if you take out the $10 million that we said that the extra week adds, I think we would expect pretty normal seasonality for the electronics business.

And if I can switch to the electrical business, it looks like that solar contributed significantly to the growth in the quarter, is that something that we can count on – keep contributing to growth at a similar rate or should we assume that probably it won't contribute as high of a rate and therefore the segment could grow at a more modest level?

Well I think we’re still extremely bullish about our solar business. It was probably very strong because we introduced a lot of new products that got very good traction. So we saw a particular bump which was the reason we called that out as a particular step up in the third quarter. So may not be quite at that level, it will depend on the end market but we think we've got a very good set of products, we’ve got some industry-leading products and we’re having very good global traction, we got success in many other parts of the world. So I think we’re very confident about it, maybe not at the growth rates of the third quarter, but I think it’s a very solid outlook for next year.

And the last questions is on the pension settlement, is there an income statement benefit at some point in the future because of the pension settlement or how should we look at that?

Not significant. I’d say the benefit that we get ongoing because we haven't really been taking significant charges through the P&L on an ongoing basis there. What we will benefited is all the administrative costs of the pension that will now be -- those have moved over to the insurance companies, so we won't have the actuarial fees, we won't have all the other administrative costs that relate to that, and that could be – it’s not millions of dollars but it could be $0.5 million to $1 million a year kind of a number that we would – that we would have some savings for.

From Longbow Research, we have Shawn Harrison on line.

I guess just a couple clarifications on my end. First, if I remember correctly, last quarter there was two sensor companies that you – I don’t know if you’d signed a memorandum of understanding for acquisitions or something along that line but I saw only one close this quarter, maybe you can give me an update on the second company?

So we indicated we have a number of things in the pipeline that we’re fairly optimistic about. There was one sensor company that we had a signed deal with quite a few contingencies on that did not happen and that is not completely dead but it’s probably not going to happen but there are some other things in the pipeline that we feel pretty good about. So stay tuned on those.

And then just I guess a couple of clarifications on guidance expectations for the tax rate for the fourth quarter and kind of CapEx for the year?

Yes, so the tax rate we said should be about the realm of 24% that we've been running. I think certainly we expect that to improve materially next year, we’ve talked about something in the very low 20s next year, so that – there will be a big change but that won't happen. We won't see that start to come through until the first quarter of next year. On the CapEx, I think we haven't really changed our view there. I think we are about on track, we spent about $35 million so far this year. We’ve always said something in the $40 million to $45 million range and we still will likely be somewhere in that range for the full year.

And then I guess the final question, some of your supply chain peers have talked about within China automotive, they are seeing a discrepancy between local OEM production levels versus the multinational production levels and while citing down 5% some cited production down substantially more than that. If you could just kind of talk about what you’re seeing within China automotive production, is there excess inventory where you expect production to go even into the first half of 2016 based upon what you’re seeing right now?

Shawn, you are right. The data we have which we get from independent source shows the production levels were down significantly double-digits for the Western OEMs and also add the Korean OEMs into that group but there was fairly good growth, almost 5% growth for the local OEMs. So there was quite a change in the market and there was a lot of new vehicles coming out made by the local OEMs who have really brought out some new vehicles that have got some good features particularly in the small SUV segment. And so I think for a long time we thought that eventually the local OEMs will start to catch-up, they will get a better brand image, better quality and I think that’s starting to happen. So it's much tougher competition for the Western OEMs, so our data shows total production down 5% but you really need to get to the next level to understand what really happened in the market. And although we have more content on the Western OEM vehicles we’re increasing the content in those local OEMs. So for us over the long term staying very close to all those local OEMs is critically important even if we don't have as much content per vehicle. We think that will increase over time.

Does the dramatic variance between multinational and local production shift at all as you move into 2016 so that maybe you'll see something a bit more favorably in terms of just the overall mix of growth?

I think it’s pretty hard to tell. I think for a long time and we follow this pretty closely, there's been a feeling that some of the Chinese OEMs might go into consolidation, they might have more success and yet it’s been amazing how the Chinese public is still preferred to have a Western brand and it seems that what we are seeing now is the brand image and the quality of the vehicles from the local OEMs improving, and whether they can continue that through next quarter I think is going to depend on the Chinese consumers. So I think it’s quite hard to predict that but my feeling is what we've seen recently is that there's going to be a strong performance over the long term from the Chinese OEMs once they get their brand image and their quality up to Western levels.

From Oppenheimer, we have Christopher Glynn on line.

Hey, just as we think kind of very generally about 2016 at this point relative to your long-term growth targets, anything structurally or cyclically that you could help us contemplate and maybe in particular around the implications of the market share, transitions of China automotive and if in electronics there's any early handicapping to be done?

So I think we’ve said for a while that and we certainly saw it this quarter that kind of the overall -- certainly the overall car build that’s been – we’ve been benefiting from last few years, we’re certainly expecting that to be much more modest, probably low single-digit kind of numbers for next year. So for our automotive growth we’re going to have to depend on the content play that we have and in the sensor area probably some market share gains as well as we bring on new programs, new platforms, new OEMs. But that’s how we’re going to get the growth is through that content play and we’re pretty optimistic about that. We still think automotive is probably not going to grow double digits next year because of the much lower car build but we think certainly mid to high single-digit growth is very doable based on our content there. Electronics is pretty hard to handicap at this point. I mean I think we’re still optimistic that because inventory levels are low and that I think right now distributors are being very careful but at some point they’re going to go back to kind of more standard, more normal behavior and that will benefit us when it happens. In terms of the end markets, I am not sure we have a clear view of that yet. And then on the electrical side, we've been showing good progress there certainly. We become more optimistic on our relay business with some of the opportunities that Gordon mentioned. The power fuse business has rebounded nicely and certainly things like solar or that Gordon talked to, are helping that out and the orders that we've been receiving for custom has been encouraging in that segment as well as with some recovery in the potash market with some of the new opportunities from JRS. So I think electrical should be positioned pretty well for growth in 2016 as well.

And then on the 10 million from the extra week, is that localizing more so in one of the segments are kind of proportional?

It’s probably -- it's not completely proportional. I would say the businesses that have more Asia business will be less impacted. So electronics -- they'd have something that look a little bit more like a normal week because 60 -- over 60% of their business is in Asia, so certainly less affected by the Christmas holidays. Probably on the other end of that spectrum, the electrical business which is the majority of their business, the vast majority their business is in North America, that would probably be most impacted. And automotive would be somewhere in between.

And then you gave a good high level comment on the 19.5% margins and 50 basis points that helped. In particular auto really kind of surged the margins there, somewhere, and if we could talk about – it sounds like mix was negative because sensors outpaced the fuses but maybe some of the mix efforts you have been making within sensors was a big deal in the quarter.

Yes, we did see a nice step up in our sensor margins for the quarter which did help the overall automotive margins. I am not sure all of that and most of that was related to more favorable mix that we've been talking about. I think the mix was probably a little more favorable than we can expect for the near-term there. So I do think that -- that I wouldn't count on the third quarter automotive margin being kind of the new normal. I think we will probably see that margin come back down again but we do expect steady improvement like through next year and even into 2017 with some of the initiatives that we've talked about previously and some of the benefits from some of the cost programs that we have and the manufacturing improvement programs that we have starting to kick in.

And from Sidoti and Company we have John Franzreb on line.

Just regarding the M&A pipeline, can you just talk about the size of these acquisitions that you are hoping to close between now and year-end, are they the size of Sigmar? And then secondly, Sigmar has quality sensor, I know that was a one-time sizable opportunity in Europe. Can you talk a little bit about Sigmar’s position in that product line?

I think it’s probably little too early to talk about that. Certainly we’re not typically going to spend the time and effort to acquire a $6 million revenue company unless we think there is significant growth opportunity there. So I will leave the comment at that. We bought that company for the technology and the products, not for the $6 million of revenue. So we feel good about that. I think that -- we have talked about in the past that -- we had some larger potential deals in the pipeline, that’s still the case, I am not going to give any more update other than that. But there are still some of those that we’re working on and there are some other kind of smaller to midsize deals all of which are bigger than Sigmar, that we’re working on now as well and hopefully we will have at least some news before the end of the year on one of these -- one of these ones that we are working on currently.

Let me just add a couple of words on Sigmar since I visited the plant that’s highly automated plant, extremely talented technical and operations focused founder and leader of the business, very good team of people. But a small company like that really only has the scope to be able to contact European customers, so their base of customers is quite small in Europe. As we’re doing with the rest of our automotive sensor business, since we’re growing so much is taking those businesses we acquired globally and being able to take the products – the customers that we have relationships around the world and that explains part of the growth we’re having in our automotive sensor business overall. So we look at this as very good technology, very good team and being able to take those products to other customers as being the way to grow that business.

And on your automotive commentary about maybe tempered expectations in 2016, how much does that encompass -- the likelihood or at least what we are hearing is lower commercial vehicle product sales next year, how much is that built into expectations?

I mean that’s clearly built into our thinking as well. I think that a number of other of our peer companies have commented on trends in that segment and that market for us has been buoyed up over the last year or more by the strength in the heavy truck market. Obviously that market is – those growth rates have slowed down significantly and we don't expect a recurrence of that strength in 2016 and there hasn't been any great signs that construction or ag or some of the other markets there are coming back. So I would say while we always have opportunities for new programs and new wins and new products, the overall market overlay for commercial vehicles I would say is going to be weaker next year than it has been for the past couple of years.

And one last question, can you just give me a sense of the size of the solar business for you, especially in light of the fact that the end of 2016 those tax incentives go away in solar, maybe we should be thinking about how the business is going to be post that transition?

I mean it’s now well north of $10 million and it depends on – it’s going to be shy of $15 million but north of $10 million, let’s put it that way.

And from Barrington Research, we have Gary Prestopino on line.

Most of my questions have been answered. But they revolve around China in the automotive business, but if you said the car build was down about 5% in China in the quarter, could you give us some idea of what your revenues were like in the quarter or do you break it down that granularly, what was the increase or decrease relative to that build?

We don't normally break it down to that level of granularity but I did say that we were down more than the car build, so more than 5% and the reason for that is really the lower content that we have on the Chinese OEM -- the indigenous manufacturers compared to the Western manufacturers that we work with. So the content per vehicle is what drove our sales below that 5% decline. End of Q&A

And we have no further questions at this time. We will now turn it back over to Mr. Gordon Hunter for closing remarks.

Well thank you for joining us on today's call. We do believe we are performing well in a challenging economic environment and we certainly look forward to the next quarter and update you at the end of the quarter. Thank you.

Ladies and gentlemen this concludes today's conference. Thank you for joining. You may now disconnect.