Vishay Intertechnology, Inc. — Q1 2024 Form 10-Q
Reporting period: Fiscal quarter ended March 30, 2024. Amounts below are in U.S. dollars; financial statement amounts are rounded to millions unless stated otherwise.
Business context and reporting period
Vishay manufactures discrete semiconductors and passive electronic components across six segments: MOSFETs, Diodes, Optoelectronic Components, Resistors, Inductors, and Capacitors. Results were affected by an ongoing distributor inventory correction, which management said continued to depress orders and sales volume.
Financial results and liquidity
| Metric | Q1 2024 | Comparable period |
|---|---|---|
| Net revenues | $746.3 million | $871.0 million in Q1 2023; $785.2 million in Q4 2023 |
| Gross profit / margin | $170.4 million / 22.8% | $278.7 million / 32.0% in Q1 2023; 25.6% in Q4 2023 |
| Operating income / margin | $42.7 million / 5.7% | $158.6 million / 18.2% in Q1 2023; 9.9% in Q4 2023 |
| Net earnings attributable to Vishay stockholders | $30.9 million; $0.22 diluted EPS | $111.8 million; $0.79 diluted EPS in Q1 2023 |
| Operating cash flow | $80.2 million | $129.9 million in Q1 2023 |
| Free cash, company-defined non-GAAP | $27.9 million | $84.6 million in Q1 2023 |
Revenue declined 14.3% year over year and 5.0% sequentially. Management attributed the year-over-year decline primarily to lower volume (12.2 percentage points) and lower average selling prices (3.6 points). SG&A was $127.7 million, or 17.1% of revenue, compared with 13.8% a year earlier. The effective tax rate was 29.0%.
Cash and cash equivalents were $796.5 million and short-term investments $37.4 million at quarter-end, versus $972.7 million and $35.8 million, respectively, at year-end 2023. Company-defined net cash and short-term investments (debt) was $14.6 million, down from $190.3 million. Long-term debt, net of deferred financing costs, was $819.4 million, consisting principally of $95.1 million of 2025 notes and $750.0 million of 2030 notes. No credit-facility borrowings were outstanding; the revolving facility provides up to $750 million and matures in 2028. Vishay reported compliance with its financial covenants.
Capital expenditures were $53.1 million. Investing cash use included $168.6 million for the Newport acquisition, net of cash acquired. Cash dividends and share repurchases totaled $26.3 million. Inventory was $665.8 million, up from $647.5 million at December 31, 2023.
Material changes and operating trends
- Backlog declined to $1.253 billion from $2.169 billion in Q1 2023 and $1.382 billion in Q4 2023. The book-to-bill ratio improved to 0.82 from 0.75 sequentially but remained below 1.0.
- Average selling prices declined 2.5% sequentially; inventory turnover was 3.5, down from 3.7 in Q1 2023. The cash conversion cycle lengthened to 124 days from 111 days a year earlier.
- Most segments had lower year-over-year revenue. MOSFETs revenue fell 22.7% year over year and its segment operating margin declined to 5.3% from 29.3%. Inductors revenue rose 10.3% year over year; Capacitors revenue grew 3.4% sequentially.
- Automotive revenue was $287.3 million, broadly stable year over year, while industrial revenue declined to $248.1 million from $326.0 million.
Outlook, management commentary, risks, and unusual items
Vishay plans approximately $435 million of capital expenditures in 2024, within planned spending of approximately $1.4 billion for 2023–2025 and $2.6 billion for 2023–2028. The filing provides no specific revenue or earnings guidance. Management expects free cash to be pressured by elevated expansion spending in 2023–2025 and anticipates higher free cash thereafter, while cautioning that worsening economic conditions could reduce operating cash generation.
On March 5, 2024, Vishay acquired Nexperia’s Newport, Wales wafer fab for approximately $177.4 million cash, net of cash acquired, with up to $15 million of contingent payments tied to an export license. The automotive-certified 200mm facility has stated capacity exceeding 30,000 wafers per month. Vishay intends to develop it as a manufacturing center for MaxPower silicon-carbide products and expects it to initially generate a net loss while equipment is added and products are qualified. Purchase-price allocation remains preliminary; recorded goodwill was $37.7 million and is not tax deductible.
Principal risks highlighted include global demand and economic conditions, distributor inventory correction, pricing pressure, manufacturing and supply-chain interruptions, capacity expansion execution, acquisition integration, foreign exchange, and tax and trade-policy changes. Management reported no material changes to previously disclosed risk factors or legal proceedings. Disclosure controls were assessed as effective, with no material change in internal control reported.
Important facts for investors to verify
- Whether distributor inventory correction, backlog, and book-to-bill trends improve, and whether demand stabilizes across regions and end markets.
- Whether margins recover as volumes and pricing change, particularly in MOSFETs, and how Newport’s initial operating losses affect segment results.
- Execution, timing, and returns on the planned capacity investments, including the $435 million 2024 capital-spending plan.
- Cash generation and liquidity after the Newport purchase, dividends, repurchases, and planned investment; note that most cash and short-term investments were held outside the United States.
- Final Newport purchase-price allocation, export-license-related contingent consideration, and the company’s ability to maintain credit-facility covenant compliance.
- How the annual policy to return at least 70% of free cash flow, net of scheduled debt principal payments, is implemented; the policy is discretionary and may be amended or suspended.