Vishay Intertechnology Inc (VSH) Q2 2024 Earnings Call Highlights: Navigating Market Challenges ...
Revenue: $741.2 million, flat versus the first quarter.
Automotive Revenue: Declined 6.7% from the first quarter and 13.6% year-over-year.
Industrial Revenue: Essentially flat quarter-over-quarter, excluding Newport acquisition.
Aerospace and Defense Revenue: Declined 3.3% from the quarter, up 17.2% year-over-year.
Medical Revenue: Increased 14.7% from the first quarter.
Other Categories Revenue: Down 2.3% quarter-over-quarter and 37.3% year-over-year.
Gross Margin: 22.0%, including a negative impact from Newport of approximately 170 basis points.
Operating Margin: 5.1%, down from 5.7% in the first quarter.
EBITDA: $88.4 million, EBITDA margin of 11.9%.
EPS: $0.17 per share, down from $0.22 in the first quarter.
Book-to-Bill Ratio: 0.86 overall, 0.82 for semiconductors, 0.90 for passives.
Inventory: $671 million, 105 days sales outstanding.
Free Cash Flow: Negative $87 million for the quarter.
Cash and Short-term Investments: $688 million at quarter end.
Guidance for Q3 2024 Revenue: Expected between $725 million and $765 million.
Guidance for Q3 2024 Gross Margin: Expected to be 21.0%, plus or minus 50 basis points.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Vishay Intertechnology Inc (NYSE:VSH) reported second-quarter revenue of $741.2 million, in line with guidance, supported by the Newport acquisition and increased demand from AI server markets in China and Taiwan.
The company is making progress with its Vishay 3.0 strategic plan, focusing on customer engagement and capacity expansion, which has resulted in increased distribution revenue and improved bookings from automotive and industrial customers.
Vishay Intertechnology Inc (NYSE:VSH) has signed a significant silicon MOSFET supply agreement with an automotive OEM, indicating strong engagement and potential future growth in the automotive sector.
The company is actively expanding its product portfolio and capacity, including the acquisition of Ametherm and the development of silicon carbide technologies, positioning itself for future growth in e-mobility and sustainability markets.
Vishay Intertechnology Inc (NYSE:VSH) is seeing positive trends in the medical segment, with a 14.7% increase in revenue from the first quarter and the hiring of a new medical segment leader to drive further growth.
Negative Points
Automotive revenue declined by 6.7% from the first quarter and 13.6% compared to the previous year, impacted by lower demand from Tier 1 automotive customers and postponed EV production.
The company reported a decrease in gross margin to 22.0%, with a negative impact from the Newport acquisition and a reduction in ASPs, particularly in the semiconductor segment.
Vishay Intertechnology Inc (NYSE:VSH) experienced a book-to-bill ratio of 0.86, indicating a decline in new orders compared to shipments, with a backlog decrease to 4.6 months.
The company used $25 million in operating cash for the second quarter, with a negative free cash flow of $87 million, impacted by significant tax payments and capital expenditures.
Vishay Intertechnology Inc (NYSE:VSH) is facing challenges in the semiconductor market, with continued inventory digestion expected to last until the end of the year, affecting revenue growth.
Q & A Highlights
Q: Can you provide an update on the capacity expansion, particularly for MOSFETs, given the current market conditions? A: Joel Smejkal, President and CEO, explained that the capacity utilization for semiconductors is at 63%, with MOSFETs specifically at 79%. Despite a market correction, they are confident in their capacity investments, including the addition of key foundries and the Itzehoe project, which is slightly delayed due to market softness.
Q: What is the outlook for the automotive market, and how does it impact your guidance? A: Joel Smejkal noted that while automotive demand signals are positive, they have guided flat for Q3 due to fewer workdays and seasonal holidays. They are cautious because of previous adjustments in customer schedules.
Q: Could you elaborate on the AI and data center opportunities for Vishay? A: Joel Smejkal highlighted that Vishay is positioned on initial AI server reference designs, with content valued at around $50 per server. They are working to increase their presence in AI markets, particularly in Asia, despite the overall small quantity of AI devices.
Q: How are inventory levels at Tier 1 automotive customers, and what is the outlook for inventory correction? A: Joel Smejkal stated that consignment inventory is at normal levels, but there is still some inventory to digest, particularly in semiconductors. They expect passive inventory to normalize in one quarter, while semiconductors may take until the end of the year.
Q: What are the current distribution inventory levels, and how do they align with your strategy? A: Joel Smejkal reported that distribution inventory is at 26 weeks worldwide, with variations across regions. They are working to bring down inventory levels while continuing to add SKUs to participate in more markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.