• Revenue: $735.4 million for Q3 2024, flat with Q2 2024, and down 13.9% compared to Q3 2023.
• Automotive Revenue: Increased 4.3% versus Q2 2024.
• Industrial Revenue: Decreased by $18.5 million from Q2 2024.
• Medical Revenue: Declined 6.2% from Q2 2024, but up 7.4% from Q3 2023.
• Gross Margin: 20.5%, down 150 basis points from Q2 2024.
• SG&A Expenses: $128.5 million, up from $125 million in Q2 2024.
• Operating Margin: GAAP operating margin at -2.5%, adjusted operating margin at 3%.
• EBITDA: $30.9 million, with an EBITDA margin of 4.2%.
• Adjusted EBITDA: $71.5 million, with an EBITDA margin of 9.7%.
• Net Loss Per Share: GAAP loss of $0.14 per share.
• Adjusted EPS: $0.08 per share.
• Book-to-Bill Ratio: 0.88 overall, 0.79 for semiconductors, 0.97 for passives.
• Cash and Short-term Investments: $657 million at quarter end.
• Free Cash Flow: Negative $9 million for Q3 2024.
• CapEx: $60 million for Q3 2024, with $40 million for capacity expansion.
• Inventory: $687 million, with inventory days at 106.
• Guidance for Q4 2024: Revenue expected to be $720 million, plus or minus $20 million.

• Warning! GuruFocus has detected 6 Warning Sign with VSH.

Release Date: November 06, 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 a steady revenue of $735.4 million for Q3 2024, maintaining stability despite challenging market conditions.
• The company is seeing increasing demand in smart grid infrastructure, military, high-voltage DC applications, and AI servers, indicating potential growth areas.
• Automotive revenue increased by 4.3% compared to the previous quarter, driven by strong demand in China for EVs and hybrids.
• Vishay Intertechnology Inc (NYSE:VSH) is actively expanding its product portfolio and capacity to prepare for future demand, particularly in e-mobility and sustainability sectors.
• The company is implementing a strategic plan, Vishay 3.0, to enhance customer focus, drive profitability, and improve operational efficiencies.

Negative Points

• Revenue in Europe declined by 3.3% due to worsening macroeconomic conditions and seasonality, impacting overall performance.
• The company experienced a 13.9% year-over-year revenue decline, reflecting a decrease in volume and average selling prices.
• Vishay Intertechnology Inc (NYSE:VSH) reported a GAAP operating margin of -2.5% for Q3 2024, a significant drop from the previous quarter.
• The company anticipates being free cash flow negative for the year, requiring reliance on its revolver for liquidity.
• Distribution revenue decreased by 1.2% quarter-over-quarter and 7.2% year-over-year, highlighting challenges in the European market.

Q & A Highlights

Q: How do you see the inventory of Vishay products at distribution, and when do you expect distribution to start pulling product and growing inventory again? A: The inventory at distribution is nearing a normalized position for passives, while semiconductors will take more time due to over-inventory from competitors. Asia inventory is at about 18 weeks, Europe at 22 weeks, and the Americas in the low 50-week range. We expect normalization of passives this quarter and semiconductors by Q1.

Q: What areas of growth do you see for Vishay in 2025, and how should we think about the region mix of revenues over the next few quarters? A: Growth areas include smart grid infrastructure, AI applications, military, aerospace, and automotive. Smart grid infrastructure is expanding, with large orders in Saudi Arabia and Europe. AI opportunities are growing, particularly in servers and automotive. Military and aerospace demand remains strong, and automotive negotiations for 2025 show increasing quantities.

Q: Can you discuss the current pricing environment and the mix of commodity versus custom products? A: The pricing environment is consistent with previous calls, with spot opportunities requiring competitive pricing. We are expanding our commodity portfolio through subcontractors, aiming to be a full-service supplier. Both commodity and specialty products are expected to grow as overall revenue increases.

Q: What are your priorities for the use of cash over the next 12 months? A: Our main focus is on executing our strategic plan without jeopardizing capital. We have committed to returning $100 million to shareholders this year. While we have done several small acquisitions, the strategic plan remains the priority, and we will borrow to fund Newport.

Q: How is Vishay positioning itself for future growth and market trends? A: Vishay is expanding capacity and focusing on innovation, particularly in semiconductor and passive components. We are on track with capacity expansion projects and are increasing our product portfolio through subcontractors. Our silicon carbide strategy is advancing, with plans to release new products and engage with automotive OEMs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.