Vishay Intertechnology, Inc. (NYSE:VSH) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presented a mix of positive and negative indicators. While the book-to-bill ratio and stockholder returns are positive, revenue and gross profit declines, alongside unclear guidance on AI business size, are concerning. The Q&A session highlighted some optimism for future quarters, but economic uncertainties and flat revenue in key regions temper expectations. With a market cap over $3 billion, the stock's movement is likely to be less volatile. Overall, the sentiment is neutral, with a potential range of -2% to 2% over the next two weeks.
Key Financial Performance
Revenue $715 million, flat compared to the fourth quarter; decreased $31 million year-over-year due to a 3% reduction in average selling prices and a 1% exchange rate impact.
Gross Profit $136 million, resulting in a gross margin of 19.0%, down 90 basis points from the fourth quarter primarily due to lower average selling prices.
Operating Margin GAAP operating margin was 0.1%, compared to -7.9% in the fourth quarter and 5.7% in Q1 2024.
EBITDA $54 million, with an EBITDA margin of 7.6%, down from an adjusted EBITDA margin of 9.3% in the fourth quarter.
EPS GAAP loss per share was -$0.03, an improvement from -$0.49 in the fourth quarter and earnings of $0.22 in Q1 2024.
Cash Flow from Operations Generated $16 million in operating cash for the first quarter.
Free Cash Flow Negative $45 million, an improvement from negative $76 million in the fourth quarter.
Capital Expenditures Total CapEx for the quarter was $62 million, including $54 million for capacity expansion projects.
Inventory Increased to $712 million, resulting in inventory days outstanding of 110 days, up one day from the fourth quarter.
Book-to-Bill Ratio 1.08 for the quarter, with semis at 1.12 and passives at 1.04, indicating positive order intake.
Stockholder Returns Total stockholder returns for the first quarter amounted to $26.1 million, consisting of $13.6 million for dividends and $12.5 million for share repurchases.
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Operating Highlights
New Products: Released additional three products in silicon carbide technology, bringing total to eight products. Released Gen 2 1,200-volt planar for industrial and automotive applications.
Product Expansion: Plan to release additional 12 products of different on-resistance and packages this year.
Reference Designs: Released reference designs for automotive applications into catalog distribution, with several automotive OEMs and Tier 1s sampling.
Market Expansion: Revenue from smart grid infrastructure projects and AI increased, with strong demand signals.
Geographical Revenue Growth: Revenue in Europe increased 8% sequentially, reflecting inventory overcorrections.
Automotive Market Positioning: Positioned to drive volume in automotive with increasing electronic content in hybrid vehicles.
Operational Efficiency: Increased capacity for MOSFETs by 12% in 2025 compared to 2024 through partnerships.
Inventory Management: Total distribution inventory weeks decreased from 27 weeks to 26 weeks, indicating improved inventory management.
Strategic Shifts: Executing Vishay 3.0 strategic plan to achieve 2028 financial goals, focusing on capacity expansion and customer engagement.
Capacity Expansion: Plan to spend $300 million to $350 million in 2025, with at least 70% for capacity expansion projects.
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Risk or Challenges
Tariffs: The evolving tariff situation poses risks and opportunities for Vishay, particularly with higher tariffs impacting costs and supply chain availability. The company has systems in place to pass along tariff costs to customers, but the increased tariffs and the number of affected countries present new challenges.
Supply Chain: Vishay's supply chain is affected by global trade actions, particularly between the U.S. and China. The company has a diverse manufacturing footprint, which provides flexibility, but ongoing issues in the mechanical parts supply chain for aerospace and defense are a concern.
Economic Factors: Global economic uncertainties are acknowledged, with the company noting that while they expect a revenue increase, the overall market conditions remain unpredictable.
Inventory Management: The company is managing inventory levels carefully, especially in light of the previous overcorrection in inventory by customers, which could impact future demand.
Market Demand: While there are positive signals in demand for Vishay products, visibility into future demand remains unclear, and program timing can be dynamic, posing a risk to revenue projections.
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Guidance & Outlook
Vishay 3.0: Vishay continues to execute its five-year strategic plan, focusing on capacity expansion and leveraging growth levers to support market upturns.
Capacity Expansion: For 2025, Vishay plans to spend between $300 million to $350 million, with at least 70% allocated to capacity expansion projects for high-growth product lines.
Silicon Carbide Strategy: Vishay is advancing its silicon carbide technology, with multiple product releases planned for 2025, including automotive-grade components.
Solution Selling Initiative: Vishay is engaging with customers through reference designs developed in their e-mobility lab, targeting automotive, industrial, and AI applications.
Q2 2025 Revenue Guidance: Vishay expects Q2 2025 revenues to be $760 million, plus or minus $20 million, representing a 3% volume increase.
Gross Margin Guidance: Gross margin for Q2 2025 is expected to be in the range of 19.0%, plus or minus 50 basis points, inclusive of tariff impacts.
CapEx Guidance: Total CapEx for Q2 2025 is expected to be approximately $62 million, with a focus on capacity expansion.
Free Cash Flow Outlook: For 2025, Vishay expects negative free cash flow due to capacity expansion plans, while maintaining dividends and opportunistic share repurchases.
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Shareholder Return Plan
Quarterly Dividend: $13.6 million for the quarterly dividend.
Share Repurchases: $12.5 million for share repurchases, with 0.7 million shares repurchased at an average price of $17.21 per share.
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Key Q&A
Q:Can you give us an overall thought on what you’re seeing at distribution?
A:There’s still work to be done. We’ve got 17 different business units working with distributors in various regions. We are adding SKUs and have seen improvements in POS in Europe and the Americas, while Asia was flat. Our inventory in Europe and the Americas decreased, indicating we have the right products on the shelf.
Q:Can you go into a little bit of detail in terms of how you came up with the 1% to 2% increase in revenue from tariffs?
A:We did a deep dive on the country of origin and where the product was sold to in Q1. Less than 4% of our sales are China-based going to U.S. customers. We are offering customers alternate solutions to navigate tariffs.
Q:If tariffs remain unchanged, can we think of the full year impact being 1% to 2%?
A:Yes, we are assuming the current tariff rules will be in effect for the whole quarter.
Q:Why is the gross profit impact zero or the gross margin impact negative?
A:The revenue and cost dynamics lead to approximately 30 basis points on our margin decrease due to tariffs, but we have minimal exposure to input costs affected by tariffs.
Q:How do you see the Newport fab filling up through the course of the year?
A:We are qualifying the Vishay structures now and will be adding volume quarter-on-quarter. The target is for the fab to be gross margin neutral in the first half of ’26.
Q:Can you give us a sense on the size of the AI business now and your relative market share position?
A:Our Q1 was more than double versus Q4, but we are not ready to put a number on the overall business size at the moment.
Q:Is it fair to infer that you might be seeing some above seasonal trends for your second half of the year?
A:We are starting to see backlogs building for Q3, Q4, and Q1 of next year, which gives us confidence. However, we expect seasonal effects in Q3.
Q:Can you talk about the gross margins being kind of flattish despite a higher revenue number?
A:We have factored in the tariff impact and have positive volume impacts and cost reductions, but metal prices are also baked into the Q2 number.
Q:Review of Unclear Management Responses
A:Management did not provide a clear answer on the overall size of the AI business or their relative market share position, stating they are not ready to put a number on it at the moment.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
China
Europe Asia
Newport
OEM
POS
Slide
Taiwan
application
basis point
capacity
cash
country origin
day
demand
design activity
distributor
dividend
expansion
flow
increase
investment
level
loss
margin basis
month
order intake
passive
powertrains
program
rate
revenue
segment
semi
share
supply
system
tariff adder
tariff effect
volume
VSH Transcript
Vishay Intertechnology, Inc. (VSH) Q4 2025 Earnings Call Transcript
Unknown2-4
The earnings call presents a mixed picture. While there are positive aspects like strong demand in AI-related applications and stable revenue in healthcare, there are concerns about rising SG&A expenses and declining EBITDA margin. The Q&A reveals cautious optimism with mid-single-digit growth expectations and price adjustments to counter cost pressures. However, uncertainties around share gains, M&A, and memory pricing impact add ambiguity. Given the company's market cap and the balanced positives and negatives, the stock price is likely to remain neutral, with limited short-term movement.
Vishay Intertechnology, Inc. (VSH) Q3 2025 Earnings Call Transcript
Unknown11-5
The earnings call presented mixed signals: revenue and EBITDA improved, but gross margins and book-to-bill ratios were slightly concerning. The Q&A highlighted management's uncertainty on key issues like export restrictions and margin impacts, while also noting no share buybacks due to liquidity constraints. However, the positive revenue growth and margin expansion outlook for 2025, along with improved cash flow, provide a balanced view. Considering the market cap, the stock is likely to experience minimal movement, resulting in a neutral sentiment prediction.
Vishay Intertechnology, Inc. (VSH) Q2 2025 Earnings Call Transcript
Positive8-6
The earnings call reveals strong financial performance across multiple segments, with record high revenues in sectors like AI and industrials. The management's guidance is optimistic, expecting improved margins and a stronger second half of the year. Despite negative free cash flow due to capacity expansion, the strategic focus on growth and customer expansion in AI is promising. The Q&A session supports this positive outlook, highlighting corrected inefficiencies and expanding AI customer base with major tech companies. Given the market cap, the stock is likely to react positively, with a projected increase of 2% to 8%.
Vishay Intertechnology, Inc. (NYSE:VSH) Q1 2025 Earnings Call Transcript
Unknown5-8
The earnings call presented a mix of positive and negative indicators. While the book-to-bill ratio and stockholder returns are positive, revenue and gross profit declines, alongside unclear guidance on AI business size, are concerning. The Q&A session highlighted some optimism for future quarters, but economic uncertainties and flat revenue in key regions temper expectations. With a market cap over $3 billion, the stock's movement is likely to be less volatile. Overall, the sentiment is neutral, with a potential range of -2% to 2% over the next two weeks.
VSH Slides
VSH Report
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