Vishay Intertechnology, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing also reports selected fourth-quarter operating metrics; it is an annual report, not a standalone Q4 filing. Dollar amounts are U.S. dollars.
Business context and reporting period
Vishay manufactures discrete semiconductors and passive electronic components for automotive, industrial, computing, consumer, telecommunications, military, aerospace, and medical markets. It reports six segments: MOSFETs, Diodes, Optoelectronic Components, Resistors, Inductors, and Capacitors. Approximately 76% of 2021 revenue came from customers outside the United States.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $3.240 billion | $2.502 billion |
| Gross profit / margin | $887.9 million / 27.4% | $581.9 million / 23.3% |
| Operating income / margin | $467.8 million / 14.4% | $209.7 million / 8.4% |
| Net earnings attributable to Vishay stockholders | $298.0 million | $122.9 million |
| Diluted EPS | $2.05 | $0.85 |
| Cash provided by operating activities | $457.1 million | $314.9 million |
| Capital expenditures | $218.4 million | $123.6 million |
| Free cash (non-GAAP) | $240.0 million | $191.7 million |
Revenue rose 29.5%, primarily from higher volume as demand recovered from the pandemic-related 2020 downturn; pricing, currency, and acquisitions also contributed. All six segments increased revenue. Diodes grew 41.2%, MOSFETs 33.2%, Capacitors 30.6%, Optoelectronic Components 27.9%, Resistors 24.1%, and Inductors 14.3%. Annual segment operating income was $750.6 million, compared with $455.9 million in 2020; this is a management-defined measure that excludes certain costs.
Cash and cash equivalents were $774.1 million and short-term investments were $146.7 million at year-end. Debt carrying value was $455.7 million, leaving $465.2 million of net cash and short-term investments under the company’s non-GAAP definition. The $750 million revolving facility had no borrowings outstanding at year-end and was substantially available. The current ratio was 2.9, and the company reported compliance with credit-facility covenants.
Fourth-quarter revenue was $843.1 million, up from $667.2 million in Q4 2020 and $813.7 million in Q3 2021. Q4 gross margin was 27.3%, operating margin 14.4%, backlog $2.307 billion, and book-to-bill 1.09. Demand remained strong, but management said shipments were constrained by capacity; Q4 margins were lower than Q3, mainly due to transportation, metals, and materials costs. The filing text does not provide a clear standalone Q4 net earnings or EPS value.
Material changes and unusual items
- Net earnings increased substantially from 2020, alongside higher sales volume, improved manufacturing efficiency, and improved margins. Higher transportation and materials costs partly offset those gains.
- The 2021 effective tax rate was 31.2%, versus 21.8% in 2020. A fourth-quarter change in Israeli tax law led to $53.3 million of tax expense related to plans to distribute approximately $385 million of accumulated Israeli earnings to the United States. Management’s adjusted net earnings were $337.3 million and adjusted diluted EPS was $2.32; these are non-GAAP measures.
- Capital expenditures increased to $218.4 million. The company plans further capacity investment, including a 12-inch wafer fab in Germany, and expects 2022 capital expenditures of approximately $325 million.
- On February 8, 2022, the company announced a policy to return at least 70% of free cash flow, net of scheduled long-term debt principal payments, to stockholders annually. For 2022, it expected at least $100 million of returns: approximately $58 million in dividends and at least $42 million in repurchases.
- The company acquired substantially all assets of Barry Industries for $20.8 million on December 31, 2021; the acquisition did not affect 2021 consolidated results. It also completed the global cost-reduction and management rejuvenation programs announced in 2019.
Outlook, commentary, and risks
Management expects higher internal growth over the next few years, citing factory automation, vehicle electrification, and 5G infrastructure. It intends to expand strategic capacity, R&D, and technical sales resources. No specific revenue or earnings guidance for 2022 is provided in the supplied filing text. Management said demand was robust and backlog continued to grow, but production was capacity-limited; it also noted Q4 order and backlog growth slowed versus the prior quarter.
Key risks include the cyclical electronics market and possible order cancellations, supply-chain and shipping disruption, constrained manufacturing capacity, inflation in metals and transportation, and dependence on limited-source materials and third-party foundries. Other material exposures include foreign currency and geopolitical risks, customer concentration at certain subsidiaries or product lines, environmental remediation, tax examinations, and pension obligations. The company reported $10.9 million of accrued environmental liabilities and is contesting CERCLA-related groundwater claims concerning a former Hicksville, New York site. Management did not expect the matters discussed to have a material adverse effect, but outcomes remain uncertain.
Important facts for investors to verify
- Whether rising transportation, metals, and other input costs can be offset by pricing and manufacturing efficiencies, and whether capacity expansion relieves shipment constraints.
- The conversion of the $2.307 billion year-end backlog into shipments and revenue; the company warns that customer orders may be cancelled or rescheduled without penalty.
- The timing, cash-tax impact, and execution of the planned Israeli earnings distribution, and the sustainability of the 2021 tax rate.
- Delivery and cost of the planned 2022 capital program, including the Germany wafer-fab expansion, against the approximately $325 million spending expectation.
- Progress toward the announced stockholder-return policy and the availability of cash held predominantly outside the United States to fund U.S. obligations.
- Developments in environmental proceedings, tax audits, supply commitments, and the $465.3 million principal amount of 2025 convertible notes.