• Fourth Quarter Revenue: $714.7 million, down slightly from Q3.
• Full-Year Revenue: $2.9 billion, below 2023 levels.
• Book-to-Bill Ratio: 1.01, improved from 0.88 in Q3.
• Gross Margin: 19.9%, including a negative impact from Newport.
• SG&A Expenses: $132 million, up from $129 million in Q3.
• Adjusted Operating Margin: 1.4%.
• Adjusted EBITDA: $66 million, with a margin of 9.3%.
• GAAP Loss Per Share: $0.49.
• Adjusted EPS: Breakeven per share.
• Operating Cash Flow: $68 million for Q4.
• Capital Expenditures: $145 million for Q4, $320 million for the year.
• Free Cash Flow: Negative $76 million for Q4, negative $143 million for the year.
• Cash and Short-term Investments: $606 million at quarter end.
• Net Borrowing Position: $136 million outstanding on the revolver.
• First Quarter 2025 Revenue Guidance: $710 million, plus or minus $20 million.
• First Quarter 2025 Gross Margin Guidance: 19.0%, plus or minus 50 basis points.

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

Release Date: February 05, 2025

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 positive book-to-bill ratio of 1.01 for the quarter, indicating improving demand, particularly in semiconductors.
• The company is seeing strong order intake for smart grid infrastructure projects, AI server power, and military defense, suggesting potential growth in these areas.
• Vishay Intertechnology Inc (NYSE:VSH) is actively expanding its capacity, with significant investments in semiconductor and passive component production facilities.
• The company is well-positioned to capitalize on megatrends such as e-mobility and sustainability, with strategic initiatives like Vishay 3.0 aimed at enhancing revenue and profitability.
• Vishay Intertechnology Inc (NYSE:VSH) has increased its external capacity goals, achieving 5% of revenue from outsourced passives and 34% of semiconductor production from outsourced wafer fabs, exceeding targets.

Negative Points

• Fourth-quarter revenue decreased by 2.8% compared to the third quarter, reflecting ongoing challenges in the market.
• The company reported a GAAP operating margin of minus 7.9%, impacted by a $66 million noncash goodwill impairment charge related to its MOSFETs reporting unit.
• Free cash flow for the quarter was negative $76 million, and the company expects negative free cash flow for 2025 due to ongoing capacity expansion plans.
• Vishay Intertechnology Inc (NYSE:VSH) is facing weak macroeconomic conditions in Europe, with distributors working through high inventory levels.
• The company anticipates continued pressure on gross margins due to lower average selling prices and increased depreciation expenses.

Q & A Highlights

Q: Can you provide insights on AI-related revenue and average content per system or board for AI server power? A: Joel Smejkal, President and CEO, explained that AI-related revenue was minimal in Q4, with initial volumes being small. The company is preparing to support demand, particularly for NVIDIA chipsets, with MOSFETs and other components. Content per tray is estimated at $30 to $40, with about 600 trays per rack, but visibility on demand remains limited.

Q: How is Vishay positioned in the non-NVIDIA custom ASIC market? A: Joel Smejkal stated that Vishay is actively designing with other computer and EMS companies for server power designs. The company is well-positioned to support over 80% of components on the board, indicating positive design activity.

Q: Is there potential for positive growth in Q2 given the positive book-to-bill and normalized inventory? A: Joel Smejkal noted that the book-to-bill ratio was positive in Q4 and remains attractive in Q1. The company is optimistic about automotive volumes in the first half of the year and is focused on growing volume despite annual ASP reductions.

Q: Does Vishay have the right amount of inventory in the distribution channel, and is there potential for price increases? A: Joel Smejkal confirmed that inventory is stable at 27 weeks and is fresh, with minimal non-moving items. Pricing adjustments were made in 2024, and the company believes it is competitive, though large volume opportunities may require more aggressive pricing.

Q: What is the expected CapEx spend for 2025, and how does it relate to capacity expansion? A: Joel Smejkal outlined a CapEx spend of $300 million to $350 million, primarily focused on semiconductor fabs like Newport and Itzehoe. The company is modulating spending based on equipment delivery times and subcontractor qualifications, aiming to adjust according to order flow.

Q: What are the capital allocation priorities, and can investors expect similar returns as in 2024? A: David McConnell, CFO, stated that the policy is to return 70% of free cash to shareholders. Despite negative free cash flow in 2024, $105 million was returned. In 2025, the dividend will be maintained, with opportunistic share repurchases planned.

Q: How is Vishay addressing regional differences in demand, particularly with Europe being weak and Asia strong? A: Joel Smejkal explained that the company is positioning its sales and FAE teams strategically in Asia and Europe. In Europe, the focus is on gaining market share despite economic softness, while Asia remains a primary focus due to stronger demand.

Q: How should we think about gross margins through 2025, considering Newport and depreciation expenses? A: David McConnell highlighted that volume is the key driver for margins. Newport is expected to be margin neutral by year-end 2025, with profitability anticipated in early 2026. The focus is on technology transfer and customer approvals rather than immediate profitability.

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