Vishay Intertechnology, Inc. (VSH) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Fourth Quarter Revenue $801 million, slightly above the midpoint of guidance of $790 million and 1.3% higher than the third quarter. Year-over-year, revenue increased 12%, driven by an 11% increase in volume and a 3% benefit from favorable foreign currency, partially offset by a 1% decline in average selling prices. The sequential increase was driven by growing broad-based business in Industrial Power and AI-related power applications.
Automotive Revenue Decreased 3.4% versus the third quarter, mostly related to lower pull rates during the end of December holiday weeks in the Americas and Europe. However, Asia automotive revenue grew in a seasonally strong quarter. Orders for the quarter grew in each region due to capacity readiness and new opportunities with OEMs and Tier 1s.
Industrial Power Revenue Increased 3.2%, driven by increasing shipments of high-voltage DC power capacitors to smart grid infrastructure projects, multiproduct inventory replenishment, and strengthening market demand for building security power requirements and new industrial programs ramping up.
Aerospace-Defense Revenue Slightly down 1.2%, reflecting the impact of the U.S. government shutdown on billings and some project delays in Europe. Orders increased with strong demand, particularly for capacitors.
Healthcare Revenue Flat compared to the third quarter. Revenue declined in the Americas and Asia but Europe had its strongest quarter in 3 years due to demand for hearing aids, implantables, and diagnostic equipment. Bookings increased.
Other Revenue (AI-related applications) Grew 10.6% versus the third quarter, primarily due to customers ramping up production for new products to support AI power management applications. Order intake grew due to increased production of AI servers and extended component lead times across the industry.
Gross Profit $157 million, resulting in a gross margin of 19.6%, modestly above both the midpoint of guidance and the third quarter. Year-over-year, gross margin improved due to higher volumes, which helped offset continued pressure from elevated metals and material costs.
SG&A Expenses $142 million, compared to $135 million in the third quarter. The increase was primarily due to higher compensation costs, higher R&D spending, and legal costs and fees related to accounts receivable securitization transactions.
EBITDA $70 million for an EBITDA margin of 8.8%, down from 9.6% in the third quarter.
Free Cash Flow $55 million, reflecting high capital expenditures partially offset by the securitization of accounts receivable, compared to a negative $24 million in the third quarter.
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Operating Highlights
Revenue from new AI-related power applications: Sequential increase in revenue driven by growing business in Industrial Power and AI-related power applications.
New product designs: Released 8 Gen 2 1,200-volt Planar MOSFETs for industrial use and first trench MOSFET, the silicon carbide Gen 3 1,200 volts for industrial and automotive applications.
Reference designs: Released 3 new reference designs, including eFuse designs and an isolated current sensor for high-voltage applications.
Geographical revenue growth: Revenue growth driven entirely by Asia, which grew 3.6%, while the Americas and Europe remained flat.
Market share gains: Gained market share in Industrial Power, Automotive, Aerospace-Defense, AI Computing, and Healthcare markets, representing 95% of core business.
Customer reengagement: Reengaged with previously underserved and inactive customers, gaining orders and developing new customer relationships.
Capacity expansion: Heavy investment over the past 3 years to expand capacity for high-growth, high-profit products.
Operational readiness: Maintained capacity readiness to meet urgent supply needs of automotive OEMs and Tier 1s.
Inventory management: Improved inventory days outstanding to 107 days and reduced distribution inventory to 22 weeks.
Vishay 3.0 strategic plan: Focused on faster revenue growth, profitability, and enhanced capital returns through capacity expansion, innovation, and customer engagement.
Silicon carbide strategy: Released advanced silicon carbide trench MOSFETs for automotive and AI applications, positioning for 800-volt applications.
Subcontractor initiative: Qualified over 10,000 part numbers, broadening product portfolio and increasing share of customers' bill of materials.
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Risk or Challenges
Automotive Revenue Decrease: Automotive revenue decreased 3.4% in Q4 due to lower pull rates during holiday weeks in the Americas and Europe, despite growth in Asia. This reflects potential risks in regional demand fluctuations and seasonality.
Aerospace-Defense Revenue Decline: Revenue in Aerospace-Defense was down 1.2% due to the U.S. government shutdown and delayed projects in Europe, highlighting risks tied to geopolitical and governmental factors.
Healthcare Revenue Volatility: Healthcare revenue was flat, with declines in the Americas and Asia, and fluctuations tied to customer program milestones. This indicates risks in demand consistency and dependency on specific program timelines.
Newport Facility Drag: The Newport fab negatively impacted gross margins by 130 basis points in Q4, with ongoing challenges in ramping up production and customer audits, posing risks to profitability and operational efficiency.
Elevated Input Costs: Continued pressure from elevated metals and material costs impacted gross margins, reflecting risks from supply chain and raw material price volatility.
Extended Lead Times: Extended lead times for diodes and MOSFETs in Asia and the Americas could strain customer relationships and operational efficiency, posing risks to meeting demand.
CapEx and Cash Flow Constraints: High capital expenditures for capacity expansion, including delays in equipment delivery, are straining free cash flow, with negative free cash flow expected for 2026. This poses financial risks and limits flexibility.
Geopolitical and Regional Risks: The U.S. government shutdown and European project delays impacted Aerospace-Defense revenue, while Asia's growth is heavily reliant on AI demand, indicating risks tied to geopolitical and regional dependencies.
Customer Dependency and Program Risks: Revenue in Healthcare and Aerospace-Defense is tied to specific customer programs and government funding, posing risks from dependency on external timelines and approvals.
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Guidance & Outlook
5-year strategic plan: Focus on driving faster revenue growth, raising profitability, and enhancing capital returns through capacity expansion, customer engagement, and innovation.
Capacity expansion: Planned CapEx of $400 million to $440 million in 2026, with a focus on investments in the 12-inch fab and other facilities. Peak spending expected in the first half of 2026.
Customer engagement: Reengaging lost customers, attracting new customers, and strengthening relationships with existing ones to drive growth.
Innovation: Release of new silicon carbide Gen 3 trench MOSFETs for industrial and automotive applications, along with new reference designs to promote Vishay products.
Revenue guidance for Q1 2026: Expected to be between $800 million and $830 million, with growth in key segments like Automotive, Industrial Power, Healthcare, Aerospace and Defense, and AI Computing.
Gross margin guidance for Q1 2026: Expected to be 19.9%, plus or minus 50 basis points, including impacts from tariffs and input costs.
CapEx for 2026: Planned spending of $400 million to $440 million, with a focus on capacity expansion projects, particularly in the 12-inch fab.
Customer demand and backlog: Solid book-to-bill ratio of 1.2, with backlog development supporting revenue growth each quarter in 2026.
Market trends: Positive demand trends in Automotive, Industrial Power, Aerospace-Defense, AI Computing, and Healthcare, with customers ramping up production of new projects.
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Shareholder Return Plan
Quarterly Dividend: $13.6 million was distributed as a quarterly dividend in the fourth quarter.
Share Repurchase: No shares were repurchased during the fourth quarter.
Stockholder Return Policy: The company aims to return at least 70% of free cash flow to stockholders through dividends and stock repurchases. However, for 2026, negative free cash flow is expected due to capacity expansion plans.
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Key Q&A
Q:What is the current view on industry growth expectations compared to 90 days ago?
A:The view remains mid- to high single digits. By market segment: Industrial Power is mid- to high single-digit growth, Automotive is flat to mid-single digit, Aerospace-Defense is mid- to high single digit, AI is mid- to high single digit, and Healthcare is mid-single digits. Vishay aims to outperform the market growth rate.
Q:How are gross margins expected to progress through the year given higher material costs and FX pressures?
A:Annual contractual negotiations resulted in less price decrease than historical. Vishay raised prices on several products in Q4, effective early Q1. ASP declines are front-loaded, and volume efficiencies are expected to improve margins as the year progresses. The Newport fab ramp-up will also contribute to margin improvement.
Q:What is the company seeing in the overall automotive demand environment?
A:Vishay has gained share in MOSFET and diode markets due to geopolitical issues. Automotive demand is driven by battery management, infotainment, electrification, and ADAS. Car count is generally flat, but platform changes and these applications are driving design activity. Automotive growth is expected to be flat to mid-single digit depending on program starts.
Q:Have customer conversations changed due to recent increases in memory pricing?
A:Yes, memory supply concerns are being closely watched. Vishay serves segments like Industrial Power, Automotive, and Aerospace-Defense, which have lower memory consumption compared to AI and compute. No negative revenue impact is forecasted due to memory pricing.
Q:Are there any share gains in the Automotive segment, and how is content in vehicles expected to trend?
A:Vishay has gained share by supporting shortages and engaging OEMs and Tier 1s. Content is similar across ICE, hybrid, and EVs, but EVs have the greatest content due to redundant systems. Vishay is now participating in 400-volt and 800-volt EV systems, which will grow automotive content in the future.
Q:How much are share gains benefiting revenues in the March quarter?
A:Share gains are starting small and will ramp up beyond the March quarter as site qualifications and audits are completed.
Q:What are the areas of CapEx and OpEx spending, and will they be sufficient for future demand?
A:CapEx spending for 2026 is $400-$440 million, with $230 million for the 12-inch fab. Other investments include capacitor projects, tantalum polymer expansion, and inductor production. CapEx intensity will decrease after mid-2026, returning to normal levels. Manufacturing capacity is expected to meet future demand.
Q:What is the approach to capital allocation and M&A?
A:70% of free cash flow is allocated to shareholder returns, but free cash flow is expected to be negative or near zero in 2026 due to 12-inch fab expenditures. The dividend will be maintained. M&A is on the table, focusing on passives and semis with select technology. Optimization of the manufacturing footprint is also planned.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on how much share gains will benefit revenues in the March quarter, only stating that the impact will start small and ramp up later. Additionally, no specific M&A targets or technologies were disclosed, and the response on memory pricing lacked clarity on potential long-term impacts.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Computing
AI demand
AI power
Aerospace Defense
Asia AI
Asia Americas
Defense AI
Europe aerospace
Europe end
Healthcare
Industrial Power
Orders
Vishay bill
anticipation
billing
booking
core
decline selling
diode MOSFETs
end holiday
equipment
fee
gain
high
incentive stock
inch
inventory replenishment
lead time
midpoint
power application
rate end
securitization account
semiconductor passive
shutdown
tax expense
time diode
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.
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