VISHAY INTERTECHNOLOGY INC Q3 FY2024 earnings call

Joel Smejkal started by discussing revenue by end market, channel, and region. Dave McConnell then reviewed financial results: Q3 revenue $735.4M (flat QoQ), gross margin 20.5%, SG&A expenses $128.5M, restructuring charges of $40.6M. Operational highlights include initiatives under Vishay 3.0 like capacity expansion projects, use of subcontractors to increase capacity, progress on silicon carbide strategy, and reference designs for various markets such as AI, automotive, and industrial.

For the third quarter, revenue was $735.4 million. Automotive revenue increased 4.3% vs Q2, but EV demand weakened in Americas and Europe. Industrial revenue decreased $18.5 million, with Newport legacy products accounting for $8.5 million of that. Aerospace and Defense revenue was flat QoQ but up 20.2% YoY. Medical revenue declined 6.2% QoQ but was up 7.4% YoY. Other segments (telecom, computing, consumer) were up 3.2% QoQ but down 32% YoY. By channel, OEM and EMS revenue was flat QoQ, distribution revenue decreased 1.2% QoQ and 7.2% YoY. By region, Europe revenue declined 3.3%, Americas were down slightly, and Asia revenue increased 2.1% due to pickup in automotive volume and AI.

For Q4 2024, revenue is expected to be $720 million plus or minus $20 million. Gross margin is expected to be in the range of 20.0% plus or minus 50 basis points. Newport is expected to have an approximately 175-200 basis points drag on gross margin. Depreciation expense is expected to be approximately $53 million for Q4, and SG&A expenses are expected to be $126 million plus or minus $2 million for the quarter.

Macroscopic uncertainties such as prolonged inventory destocking, slow consumption by industrial customers, worsening macroeconomic conditions in Europe, geopolitical developments clouding end-market demand, and potential differences between forward-looking statements and actual results due to various risks and uncertainties.

Q: How do you see the inventory of Vishay products at distribution? And when do you think distribution will start pulling product and growing inventory again?

A: Inventory at distribution is nearing normalized for passives; semiconductors will take a bit more time. Normalization of passives is ongoing, and semiconductors will be into Q1.

Q: As we look into 2025, what areas of growth do you see for Vishay?

A: Smart grid infrastructure programs accelerating, AI opportunities, military and aerospace growth, space exploration, and increasing automotive LOI quantities for 2025.

Q: Can you talk about the pricing environment and product mix trend?

A: Current pricing environment has spot opportunities; product mix will see growth in both commodities and specialty products as overall revenue increases.

Q: How would you prioritize the use of cash over the next 12 months?

A: Focus is on the strategic plan, with Newport funded mostly from the U.S. and borrowing to support, while continuing to return $100 million to shareholders.