Gordon B. Hunter - Chairman, President and Chief Executive Officer Philip G. Franklin - Executive Vice President and Chief Financial Officer.

Matthew Sheerin - Stifel Nicolaus and Company Shawn M. Harrison - Longbow Research, LLC John E. Franzreb - Sidoti & Company, LLC. Christopher D. Glynn - Oppenheimer & Co. Inc Timothy R. Wojs - Robert W. Baird & Co..

Good day, everyone, and welcome to the Littelfuse, Incorporated First 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. And welcome to the Littelfuse First Quarter 2015 conference call. And as always, joining me today is Phil Franklin, our Executive Vice President and Chief Financial Officer.

As you saw on the news release, we had a solid first quarter despite some headwinds, electronics and automotive continue to perform well, electrical business had another weak quarter, but is starting to show signs of improvement.

I will now turn the call over to Phil who will give the Safe Harbor statement and discuss the first quarter in more detail..

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 first quarter of 2015 were $210 million, which was up 2% year-over-year, and up 6% in constant currency.

GAAP earnings for the first quarter of 2015 were $0.88 per diluted share. Excluding special items, earnings for the first quarter were $1.08 per diluted share, which was above the midpoint of our guidance despite further weakening of the Euro during the quarter.

We were able to offset this additional euro headwind with stronger electronics and automotive sales and lower SG&A spending. Plant operations are improving on pace with our expectations, we also had a good start to the year for cash flow when what is typically our most challenging quarter.

Cash provided by operating activities was $23.2 million compared to $11.5 million for the prior year. As expected we also saw capital spending increased to $12 million in the first quarter compared to $6 million in the prior year. This increase was mostly related to spending for the new Philippines plant and capacity for new automotive products.

Now I will turn it back to Gordon for more color on business performance and market trends..

Thanks Phil. Let me start with some additional comments on the currency headwinds, particularly the Euro. As you all know this is a macro issue for many other companies as well. And as we expected the impacted was the greatest in our automotive business, fortunately however currency hasn’t impacted comp production in the U.S.

which remains strong and our automotive business is also benefiting from the European exports into the U.S. We continue to monitor the currency situation very closely, but our primary focus is on those things we can control, our business and the successful execution of our long term strategies.

As part of this focus last quarter we discussed our initiatives to help offset the currency headwinds by implementing tighter expense controls and selective price increases where possible depending on the competitive environment. And we are making progress on both fronts.

We're also continuing to address the operational performance issues we discussed last quarter, corrective actions are underway and key operational metrics show solid improvement. We are pleased with the results of our spending control and cost reductions projects to date but we still have more work to do.

With that background, let’s move on to the segment reports starting with our electronics business which accounts for about 47% of total Littelfuse sales. First quarter electronic sales of $99.4 million or 4% over the prior year quarter and as we anticipated sales were also up sequentially with the 3% increase.

We saw a sequential growth in all regions in constant currency, normal seasonality and our ongoing design wins and market share gains contributed to this growth. Electronics channel inventories were approximately flat from the end of the fourth quarter to the end of the first quarter.

A level of channel inventory and our book-to-bill of 1.06 at the end of the first quarter are consistent with where we typically are at this point in the year. Year-over-year sales were also up across most product lines. Sales continue to be strong in many of our core markets.

In the consumer segment we had significant wins in product using touch screens and in the display segment. Touch screens have been growing in popularity for many years. By definition these screens are touched by human hands so the position sensing lines require ESD protection using diode arrays and multi-layer varisitors.

Our growth in this area has been from design work with key OEMs as well as working with makers of the integrated circuits that drive the touch screens.

These integrated circuits manufacturers normally incorporate ESD protection schemes into their reference, which include Littelfuse, products of this reference design win generated about $250,000 in revenues in the first quarter for our diode array product and we expect our total revenues for diode arrays from this design alone to be about $1 million for the full year.

In the display segment as the new design architectures get more complex the circuit boards also become more sensitive to surges.

There’s a trend towards using fuses that can withstand higher power surges without having to increase the current ratings, this requires some unique fuse design characteristics and our new series of cartridge fuses meet this need.

Shortly after launching the new cartridge fuse line we quickly secured a design win with a well known LCD LED TV manufacturer in Korea we began shipping product for this win in the first quarter and we expect about $500,000 in revenue in 2015 from this customer alone.

The need for higher surge tolerance is a common design challenge for this application and we anticipate that other TV manufacturers will also choose these new fuses.

Another traditional market segment we haven’t discussed recently is the PC market and here too there is an emerging trend as PC manufacturers add HDMI ports as well as USB 3.1 ports to their new machines.

Both of these ports need ESD protection as well as higher levels of over current protection for the higher power needed to run many of to today’s popular accessories. This trend is creating upside opportunities for Littelfuse.

On recent design win for a top China PC maker we’ll generate about $1.5 million to $2 million in diode array revenues this for ESD protection alone.

Last quarter we discussed our strategy to provide greater performance in smaller size devices and our two new surface mount fuse families that are the smallest 125 and 250 volt fast acting fuses in the market today.

In the LED light bulb segment these new smaller footprint fuses allow bulb designers to meet both safety and efficiency standards to be on maintaining standard light bulb package sizes. During the first quarter we secured a design win for one of our 125 volt small footprint fuses in a small size LED bulb that is used in many homes and businesses.

We expect more than $100,000 in revenues from this one application and anticipate the new fuse line in total will generate about $1.5 million in revenues in 2015. As we've discussed in prior calls packages to over voltage protection for outdoor LED fixtures continues to be a strong and growing market for us.

This past quarter we won new business for our new series connected over voltage module this module is unique and it offers traditional protection against over voltages such as power surges and lightning, but it also notifies maintenance personnel if the module is damaged.

It does this by interrupting power to the fixture, providing a clear indication that maintenance is required. Revenue from this reason design win is expected to exceed $500,000. The push towards LED streetlights is not only occurring in North America and Europe, but in many countries in Asia as well.

However, different countries have different protection specifications for LED street lighting and we are designing products to meet these requirements globally. Our total sales into the outdoor lighting segment are about $3 million today and are expected to double in the next 1 year to 2 years.

This is on top of their $8 million to $9 million of annual revenue we generate from the indoor LED segment. So, as you can see, we’re well-positioned in this growing market. We’re also seeing some nice opportunities in a category we haven’t discussed before; electric scooters.

While we don’t see many of these in North America yet, there’s a push by many governments across Asia to encourage the use of electric scooters to reduce air pollution. This is a major undertaking as gasoline powered two wheelers are the primary mode of transportation for millions of people in Asia today.

The opportunity for Littelfuse is providing protection in the battery management and charging systems of the electric scooters. As part of a recent design win, we are providing both fuse and semiconductor products to a scooter maker in Taiwan that will generate about $250,000 of revenue for 2015.

Moving on to the electronic sensor business, we had a nice win during the first quarter with a Chinese manufacturer of humidifiers where our reed switch-based sensor is used to manage the water level.

This win is worth over a $150,000 a year and our goal is to extend this application to other customers, which could potentially add another $500,000 a year in new business.

In addition to the examples I’ve highlighted, we continue to win new business for our broad line of circuit protection and sensing products at many customers across a wide variety of applications. These ranges from vacuum cleaners and pool and spa controls to irrigation systems, air purifiers, and many other segments.

So, to summarize, this was another good quarter for the electronics business. We’re building on our established expertise and continuing to develop innovative new products that meet evolving customer needs. Next is our automotive business, which accounts for about 40% of the total Littelfuse sales.

Automotive sales of $84.1 million were up 2% from the first quarter of last year and increased 5% from the fourth quarter. All three automotive product groups contributed to the higher sequential first-quarter sales. Passenger car fuse sales continue to outperform global car production with record sales in both Europe and China in local currency.

Commercial vehicle products, once again benefited from a strong, heavy-duty truck market in North America and demand for our automotive sensor products also remained strong. Geographically, first-quarter car production in North America was above 1% year-over-year, while our sales increased 18%.

Low fuel prices have boosted sales of the best selling Ford F-150 and other pickup trucks and SUVs where we have high content including the Chevrolet Silverado, the GMC Sierra and the Ford F Series Super Duty.

The Jeep Cherokee and Chrysler 200 are also selling well and we are well positioned with both high current and low current products on all of these models. The new Europe car production was flat compared to the first quarter of last year but was higher than anticipated.

We had strong demand for our high current products from Volkswagen and robust sales at Tier-1s supplying German car models and we are still ramping up sales in the popular small compact car segment. This includes sales of BS inline fuses for the Volkswagen Polo, Skoda Fabia as well as master fuse products for the Opel Corsa.

The Chinese market continues to grow but at a lower rate, first quarter car production was 7% year-over-year but down 5% from the fourth quarter. In spite of that we set a new first quarter sales record with a 24% year-over-year increase.

New programs, including the SGM 318 produced by a partnership between GM and Shanghai Automotives and new models from a local Chinese OEMs are ramping up. In addition, models from Volkswagen and DCPA, the joint venture between PSA Peugeot Citron and the Dongfang group sold better-than-expected. We also continue to increase our market share in China.

We continue to win new business for our strategically important master fuse for programs including GM and Volkswagen. Together with wings for CablePro fuses for the new Jeep Grand Cherokee in North America, and standard fuses for Alfa Romeo in Europe, these wings will contribute over $5 million in sales at peak.

New business in Asia includes ceramic fuse protection for the sensor lines used in high voltage battery management systems for the new Hyundai hybrid electric vehicle that will generate about $360,000 in sales at the peak. Another win for standard fuses at various OEMs in China will add another $520,000 in peak.

Looking ahead, car sales in North America are typically at their highest level in the second quarter of the year, and there is an expectation that sales of pickup trucks and SUVs where we have high content will continue to be strong.

Higher than anticipated car sales are also expected to continue in Europe, as long as fuel prices remain low and exports to North America to continue at a high level. In China, growth in the second quarter is expected to be less than 4% year-over-year, which is the lowest number in the past three years.

And car production in Korea is expected to be below last year’s levels. Overall, we are well positioned on many of the leading vehicles and we expect to continue to outperform global car production.

The commercial vehicle products group or CVP had another solid quarter with sales up 3% over the first quarter of last year, margins also improved as expected. The heavy duty truck market in North America continues to be strong as indicated by increasing fleet truck orders.

This strength was somewhat offset by continued weakness in the global agricultural segment and the North American construction market. Harsh environment applications are a targeted growth area for our CVP business that builds in our existing expertise in fully sealed power distribution products.

Today’s commercial vehicle end users expect higher quality products with longer warranties and life expectance that can withstand the harshest environments including mud, salt, snow, ice, water, and heat.

During the first quarter, we introduced two new fuses and really hold our products that provide exceptional production in harsh environments for specific heavy duty truck applications. These new products have already been adopted by a North American OEM. Our sales are expected to be about $450,000 annually when production starts later this year.

We also won new business for a new hard wire harsh environment fuse holder for a mobile power generation application beginning in 2016 and valued at approximately $200,000.

Another nice win for the CVP business during the first quarter is with a global agricultural equipment manufacture will be providing the primary power distribution modules for this customer’s medium horse power tractors and the estimated value of this contract is $875,000 with production starting in 2017.

Our automotive sensing product also had another good quarter with sales up 9% year-over-year and up 5% sequentially from the fourth quarter. Demand for our products remain strong, particularly for safety applications in cars produced in Europe and North America.

We added five new sensor programs during the first quarter that will generate about $2.7 million dollars in annual revenues when the vehicles are in full production. A signification win during the quarter is for a high volume seat belt buckle switch that will be applied across multiple OEMs in vehicle platforms in Europe.

While the primary market for our sensors is passenger cars we’re also moving forward with our strategy to expand into the commercial vehicle market. Two recent wins in this area, are for our door safety sensor that will be used in agricultural equipment and a gear shift position sensor for snowmobiles.

So, as you can see, the automotive business is performing well. We are benefiting from new products and technologies and are seeing good results from our strategies to provide more content per vehicle and to expand in targeted growth areas including high current fuses, CBP, and sensors.

Next is the electrical business unit, which accounts for about 13% of total Littelfuse sales. Total electrical sales of $26.9 million for the first quarter were down 6% from the prior year quarter. First quarter electrical fuse sales were soft year-over-year.

Distributor inventory destocking was an issue as early demand in the quarter was impacted by weather-related delays in the construction segment and demand dropped in the industrial MRO segment as a result of manufacturing slowdowns tied to the softness in the oil and gas market.

Despite the slow first quarter industry market conditions, we won several significant projects with two of the largest wins in the solar and telecommunications markets. Non-residential construction has begun to pick up and we should see an increase in power fuse demand as projects are completed and the buildings are energized for the first time.

As we’ve discussed previously, distributor conversions are a key growth strategy for the fuse business. The acquisition of the SymCom lineup protection relays last year broadens our product offering and we expect this will help us to grow share at existing distributors and also help us to gain new distribution.

Sales of our protection relay products remained soft in the first quarter, but we are seeing increased seasonal order activity. We also had several good new business wins during the quarter. One of these is a $300,000 order for a SymCom timer that is the result of our strategy to grow SymCom sales to our existing OEM and distributed networks.

A major concern for our customers is electrical safety and specifically arc-flash protection. This is the fastest-growing protection relay category across our vertical segments.

Our arc-flash relays differentiate us in the market and as a result we continue with to win new business with customers that are retrofitting existing installations as well as with OEMs adopting our products.

We recently expanded the arc-flash line with a new relay that has Ethernet communications capability, so users can remotely adjust settings and monitor their systems instead of relying on someone to perform configuration work in a live electrical panel.

On the custom product side, a very gradual recovery in potash mining that we started to see in the end last year has continued. Courting and booking activity has increased, however, while this progress is encouraging significant mine expansion projects remain delayed.

So, overall, while some of our electrical markets remain soft, we are encouraged by the anticipated improvement in non-residential construction and the continuing gradual recovery in potash mining. That can close a report on the business units, but now I would like to touch on one more topics; our M&A program.

Acquisitions continue to be an important part of our growth strategy and we’ve seen a pickup in overall activity as well as actionable opportunities over the past few months.

We’re currently in the initial stages of due diligence with several smaller acquisitions and anticipate that some of these will move to completion in the second half of the year. In summary, the fundamentals of our business are solid and despite the currency headwinds were optimistic about the year ahead.

I’ll now turn the call over to Phil who will provide the second-quarter outlook and then we’ll take your questions..

Thanks Gordon! Sales for the second quarter of 2015 are expected to be in the range of $221 million to $231 million assuming a Euro/Dollar rate of 1.09. This represents 2% year-over-year growth at the midpoint and approximately 7% growth in constant currency.

Excluding special items, earnings for the second quarter are expected to be in the range of $1.20 to $1.34 per diluted share. This includes the negative currency effects of approximately $0.13 per share compared to the prior year. This concludes prepared remarks. Now we’d like to open it up for questions..

Thank you. [Operator instructions]. And we have a question from Matt Sheerin from Stifel. Please go ahead..

Yes thanks and good morning guys first question was regarding your commentary Gordon and Phil on the price increases that you put through.

Could you give us more color in that is that primarily in your electronics business? And are you seeing any pushback at all or are you also seeing distributors or customers build inventory ahead of future price increases?.

Yes, it’s primarily Europe and it’s primarily the electronics business I think our automotive business tends to have long-term contracts when we win programs that usually got pricing build into it for several years. So there’s not very much we can really do in the automotive area where we continue to quote in Euros.

In the electronics business however, we’ve said we’re being very selective about it.

I would say that we haven’t seen a lot of pushback we’ve had to be selective to find the right products and where the right competition is also suffering from higher cost structure, but we continue to look at that all over the electronics world where there’s much faster turnaround on programs and the opportunity to increase prices..

Okay thanks and could you update us on the various cost improvement initiatives you have with your acquisitions and the both the automotive and electronics businesses?.

Yep we’ve got several initiatives ongoing and we also talked about operational challenges that we had in the fourth quarter and specifically in our Mexico plants and we got corrective actions.

We’ve been monitoring those very carefully so increasing the attention to cost reductions and productivity in our Mexico plants has been a major focus and then in our sensor products both in the automotive area and the electronics area.

We have major programs that are going on there including the opening of our new factory in the Philippines where we’ll be moving production into from our plants in Suzo and Lake Mills Wisconsin. So all of those programs are ongoing and I would say they are all on track right now. .

And we also are in the process we talked about a SymCom plant consolidation that we’re doing we’ll be closing down a plant in New York state and moving into our South Dakota facility and that will be completed sometime towards the end of this year that move will be completed and we talked about I think something little less than $2 million in savings coming from that.

But probably not much of that is going to accrue and hold very late in this year and then into next year..

Okay, great and just one last question if I can sneak in and just regarding your outlook Gordon it sounds like you are looking at seasonal trends aside from the electrical business, which is which explained several other semiconductor and component suppliers are taking more cautious view of course they’ve got exposure PCs and telecom, which appear to be the weak spots right now.

You got some exposure there, but it is that your broad customer exposure that’s enabling you to see more seasonal trends versus what competitors are seeing?.

I think so I think that our exposure to one segment like PCs is relatively small I mean there’s a I did highlight there is a fundamental change happening not just in PCs, but in many kind of peripherals and movement the USB 3.1 is very significant in terms of the power that’s connected through USB in the future and the speed of USB.

And so USB and HDMI ports are very attractive new opportunity, because they only ESD protection behind them, but I think your question is right we’ve got segments like LED lighting that I’d say maybe some other companies are not supplying a product into It’s a very attractive segment for us and we know it’s got a long way to grow both internal and outdoor lighting we talk about electric vehicles, electric scooters, we talk about more sophisticated coffee machines and humidifiers and consumer goods that have touch screens, that have sensors, I think it’s the broad segments that are having more and more electronics and particularly in the human interface, the connection to that equipment it is the breadth of the market and opportunities for us that I think is driving the growth and is able to offset any declines in one segments such as telecom or PCs..

Okay thanks very much..

Thanks Matt..

And our next question comes from Shawn Harrison from Longbow Research. Please go ahead..

Good morning..

Hi Shawn..

First question I have goes back to the comments you made Gordon on M&A, smaller deals if I think about your free cash flow for the year, you have had a great start to the year already, do you guys have excess liquidity, how do smaller deals line up also with buyback activity, I know you have buyback that I think comes to an end here at the end of April but just how would you look at buyback activity for the rest of the year given that you probably have more liquidity than you need it was smaller deals out there?.

Let me take that Shawn I think that certainly as we said I believe in our last call that we continue to evaluate the progress in our M&A program and our progress towards our goal of adding 10% to revenue in year which as you know we are behind that target and what we said previously and still the case is that as we get into the back half of this year if we don’t have some larger deals teed up and there are few that we are working on but they are not I wouldn’t say they are high probability at this point.

But there is still possibilities but if those deals don’t seem more likely by the back half of the year, I think you can expect us to see us revisit the capital allocation targets that we have set out and potentially talk about more returning cash to shareholders either through dividends or through stock repurchase..

Okay and so you would re-up the buyback once it expires your at the end of the April?.

Yes..

Okay. The follow up I have is just looking at the cost reductions in both SG&A and R&D quarter-over-quarter I mean it was a think somewhere in the tune of $2.5 million, $3 million.

How much of that sustains into the second quarter versus just being kind of a temporary cost down, what drove the cost down sequentially?.

So typically we are first quarter is going to be our lowest quarter for SG&A spend, I mean if you look at - if you look at last year’s quarter-by-quarter we had a similar level of spending in Q1 of last year and then it ramped up significantly in Q2 now part of that is what we also mentioned in the press release the lumpiness of the stock comp expense and the way that we recognized that or first to recognize that for the GAAP rules there where we had certain options that in theory accelerate if the people receive those options are of retirement age and therefore we have to accelerate the expense all into one quarter as opposed to spreading it over 12 quarters which is the norm, so we had that big lump in Q2 the stock comp expense alone would go up a little over $2 million in Q1 to Q2 and then we will probably have some increase just due to the fact that Q1 is usually fairly muted quarter for spending generally.

So I would expect to see that that - increase but I think if you want to get a sense of what it shouldn’t look like I think probably look at last year’s seasonality and the patterns through the quarter and even the levels are going to be relatively similar this year to last year.

So we pulled back on certain things, we made certain cuts and I think that the I think what you will more than likely see is that overall spending on OpEx will be at similar levels to last year we will be able to hold it to that kind of level..

Okay and then just to clarify on the tax dynamic for the year, if I am reading this correctly does I mean whenever the R&D tax credit comes through that you get a boost just on the follow through that you get a boost, just on the follow through maybe in the fourth quarter and so incremental earning benefit by 50 to 100 bips..

Yeah, that’s exactly right. So until that time that goes through we’ll be booking rates more than likely above the 23% rate, which was kind of a guidance that we gave for the year.

But we’re still expecting that those will come through at sometime in the back half of the year and at that point, we’d be able to book that impact into our provision which could I mean if it came through in the fourth quarter, we’d book a full year impact of that in the fourth quarter for example.

But we are still expecting the rate for the year to be somewhere near 23% and we are - we have alluded to the fact that we’re working on other tax planning activities as well. In overtime, we are expecting that rate to come down lower but for this year I think 23% is a good target..

Very helpful. Congrats on the results..

Sure. Thanks, Shawn..

And our next question comes from John Franzreb from Sidoti & Company. Please, go ahead..

Good morning, guys. Just regarding the operating margins at that segment level.

Let’s go ahead, a tough quarter with the margin profile held up reasonable well, one of you give right a little color as to why?.

It’s certainly, it held up well I guess on a relative basis. We’re expecting that margin to get better.

Gordon talked about the power fuse business is starting, we had a very slow start to the year for power fuse and we’re starting to see that business come back as non-residential construction comes back, we have some weather issues early in the year and we seem to be recovering from those.

So expect to see seasonality would have that business ramping up anyway in Q2 and Q3 and we certainly expect to see that this year. So I’m not sure that the margin was a whole lot different in the first quarter than we are expecting.

But we as particularly as the power fuse business ramps up and we are also expecting because of some of the new wins that we have expecting to see the real eye business start to improve as well, and those are both very high margin businesses as those businesses start to ramp up into Q2 and Q3.

You should see that operating margin start to improve even more..

Okay.

And so, in the electronics and automotive, do you have a sense of how much the facility consolidations the Philippines are [indiscernible] what kind of a impact it’s having on the margin profile for running we’ve done that line, do you have a sense of?.

The majority of that cost where we pulled out of the non-GAAP number so that there still is some redundancy then I don’t think that’s really started to hit us in a major way, it will start to hit us as more as we get further and further into the year.

I mean it will have an impact, it’s not going to be that significant I mean it may - could be a couple million dollars of extra expense for the year that we don’t pull out. But the cost that we’re pulling out of the numbers are there are specific costs related to severance and some of the costs of shutting down the old plants..

Right..

Some of the transfer cost, the redundancy stuff will just run through the numbers..

It’s not going to be that big but it’s not - you are not going to see a big blip there. But it will be a small headwind probably beginning probably sometime around the middle of the year..

Okay.

And regarding the currency impact, you talked last quarter about $30 million and $0.40 we’ve now taken something along the line just $0.50 of headwinds at the current exchange rates or no?.

It depends a lot what you mean by the current exchange rates. So yeah, but we look - the guidance we gave was at 109 and I think the previous number that we were kind of basing are our guidance around was like around 113, 114, so yeah, it’s probably if the Euro stays at 109..

Yes..

It’s a little bit stronger than that today, it’s up over 110 today but that’s going to vary from day-to-day. If it stays at 109, it would probably be something on the order of closer to a $0.50 impact year-over-year..

Okay. Thanks for taking my questions. I’ll get back in the queue..

Sure.

And our next question comes from Christopher Glynn from Oppenheimer. Please, go ahead..

Yes. Thank you, good morning. On the electrical side of the question on the core electrical fuse side, it was pressured for a lot of last year. I realize you did call out some destocking in the quarter just reported. But if it’s relevant question, then why won’t you expect trends to normalize for the core electrical fuse side.

I think you are starting to talk about emerging distribution games again if I heard correctly? I think we’re already starting to see that in my previous comment related to that business was that we had we had a tough year last year, we had a tough first quarter as well.

But towards the end of the first quarter and into the first month of the second quarter we’ve seen a definite improvement in that business some of its seasonality but I think it’s even a - it’s a bigger improvement and even normal seasonality would suggest. So coming off, some pretty low lows we’re starting to see a bounce back more to more level.

So that’s very encouraging for that business..

Yeah.

And I think the market trends there we’re starting to see the non-residential segment of that is picking up enough but it’s been going through a few quarters where building statics put the electrical system into the building so the construction may have started a few months ago but the electrical sales don’t really go in until later on in that cycle and we’re starting to see that picking up and the transition in the solar area of the movement to 1500 volt DC systems is happening which we’ve talked about to quite a few quarters that we were in the lead in developing products that - the leading products in 1500 volt systems and that’s starting to really happen.

So I would it sort of - it’s back to normal right now..

Great. And then on the electrical side, pretty consistently talking about share gain here, wondering how to think about the long term runway with share gain and is there continual aspect to it given that you’re pretty unique in your global footprints serving these markets..

You are talking about the electronics business?.

Electronics. Yes, thank you..

Yeah.

I think, as we’ve said a few times we very committed to working with our distribution channel so that we can get about long tale of all of those segments I mentioned, all those pieces of consumer grids like copy machines and humidifiers etcetera that have become more sophisticated and how more content for our product than they might have had when they were very simple electro mechanical product a few years ago.

And so getting to that long tail as we call it means we’ve got be very focused on training distributors brining out new products for those new applications and I think if we continue to do that we can continue to gain market share particularly in those emerging segments when we - I mentioned electric scooter s for example the more battery powered vehicles that we have battery powered equipment, they are all opportunities in protection of the batteries and in protection of the charging circuits.

So I think there is a lot of opportunity for us with the combination of the products that we have and adding the sensing products to our circuit protection product that we believe we can continue to gain share globally with good programs to work through distribution..

It sounds good. Thanks..

Thanks Chris..

[Operator Instructions] We have a question from Tim Wojs from Baird. Please go ahead..

Thanks good morning guys..

Okay Tim..

Just to start I guess looking at the electronics business I think book-to-bill is was little slower I think than what you have typically done in Q1, I am just curious if there is maybe timing around that and may be FX had any issue on the book to bill numbers?.

No I don’t think FX really impacts our book to bill much but couple of things you are right, it probably is a little lower I mean if you look at the last five years, I think you’re probably looking at more like a 1.09, 1.1 kind of book to bill would be more typical of what we have seen.

I think with the low inventory levels that we have at distribution with the continuation of pretty good book to bills thus far in the second quarter we are not overly concerned about that, you could really see that in our guidance. We still feel like we are going to have a pretty normal seasonal uptick in Q2 in that business.

I think the other thing that maybe contributed to it little bit is the first quarter was sequentially little bit stronger than you would normally expect, normally the first quarter is kind of flat with Q4, we saw a nice uptick in Q1 and therefore the book-to-bill at the end of the quarter may not have been as strong as it might in a normal quarter.

But I wouldn’t read into that, I think we feel pretty good that we’re going to see a normal seasonal pattern here..

Okay, that makes sense.

That I what I thought I just wanted to just sure and then I guess just on turning to automotive you guys posted really solid growth there 9% on what is your toughest organic comp in Q1 and I know you have pretty good visibility in that business, so is it fair for us to assume that that business could accelerate a little bit throughout the year in 2015?.

No I think we are very optimistic about that business but if you are talking about 9% constant currency growth I am not sure I would expect the acceleration of that kind of a number, I think that we have seen some slowing certainly in China, in the China market our China sales are still pretty strong but the China market clearly is slowed.

Europe we are doing well share wise in Europe at the Europe car builds certainly is growing and so I think it is going to be tough to accelerate of that kind of a number for sure but we still feel good pretty good and same time we feel very good about the long term growth prospects in that segment..

Okay great and then just free cash flow any I guess expectations for the year should we think of free cash flow exceeding earnings like you guys have done historically any puts or takes there?.

I would expect that yes.

We have been the so we had a very strong in fact a by far a record year last year in cash flow, we are going to have this year I think we should have similar to maybe slightly better cash from operations but we are going to be spending more CapEx this year than we did last year mostly related to some of the projects I just mentioned the Philippines plant being the most notable of those..

Okay, great well congrats on the quarter..

Thanks Tim..

We have no further questions at this time. I will now turn the call back to Mr. Gordon Hunter..

Thank you for joining us on today’s call. 2015 is off to a very good start and we look forward to updating you again next quarter. Have a good day..

Thank you. Ladies and gentlemen this concludes today’s call. Thank you for participating. You may now disconnect..