Financial Data and Key Metrics Changes - Revenue for the second quarter increased by 7% sequentially to $762 million, aligning with guidance, driven by growth in both semiconductors and passive components [7][22] - Gross profit was $149 million, resulting in a gross margin of 19.5%, at the high end of guidance, primarily due to increased volume [24] - Book to bill ratio was positive at 1.02, marking the third consecutive quarter above one, with a backlog of $1.2 billion [23][24] Business Line Data and Key Metrics Changes - Automotive revenue rose by 4% due to improved demand from tier one customers and new ADAS programs [11] - Industrial segment revenue increased by 9%, driven by normalization of inventories and demand for smart grid infrastructure [12] - Aerospace defense revenue grew by 5%, while medical end markets saw a 4% increase, reflecting stronger demand [15][16] Market Data and Key Metrics Changes - Revenue in Asia grew by 12%, driven by AI power requirements and smart grid projects, while The Americas saw a 7% increase due to improved automotive and industrial demand [20] - Distribution revenue grew by 11%, contributing significantly to total revenue growth, while OEM revenue remained flat [18][19] Company Strategy and Development Direction - The company is focused on capacity expansion under the Vishay 3.0 initiative, with approximately $775 million invested over the past two and a half years [9][10] - Strategic initiatives include strengthening customer relationships, expanding product portfolios, and advancing silicon carbide technology [10][41] - The company plans to invest between $300 million to $350 million in 2025, with a significant portion allocated to high-growth product lines [37] Management's Comments on Operating Environment and Future Outlook - Management noted that the inventory correction cycle is largely behind, with normalized inventory levels for passives and some excess in semiconductors [7] - Positive demand momentum is expected to continue, particularly in smart grid infrastructure and AI applications, with a stronger second half of the year anticipated [45][46] - The company is preparing for a market upturn, with increased backlog and capacity readiness to meet customer demand [45][46] Other Important Information - The company reported a negative free cash flow of $73 million for the quarter, attributed to capacity expansion investments and tax payments [31][32] - The effective tax rate is not meaningful at low levels of pre-tax income, with expectations for normalization as profitability returns [27][35] Q&A Session Summary Question: Impact of Newport fab on gross margin - The Newport fab had a lower than expected impact on gross margin in Q2, with guidance for Q3 indicating a range of 160 to 185 basis points [49][50] Question: MOSFET gross margins decline - MOSFET gross margins declined due to manufacturing inefficiencies, which are expected to improve in Q3 with increased IC sales [51][52] Question: US tariff impact - Less than 4% of products are manufactured in China and returned to the US, indicating a minimal impact from tariffs on overall revenue [55] Question: Inorganic growth and M&A opportunities - The company is actively looking for M&A opportunities, particularly in the semiconductor sector, to enhance customer presence and fill portfolio gaps [56][58] Question: Visibility and backlog for Q3 - The company is seeing a faster building of backlog and anticipates a stronger second half of the year compared to the first half [64][65] Question: Customer demand and inventory management - Customers are still cautious in planning demand, with a significant portion of orders for quick delivery, indicating a transition from an inventory-heavy market [67][68] Question: AI customer expansion and revenue metrics - The customer count for AI applications is growing, with a focus on expanding the part count and customer diversity [72][73] Question: Slipping customer programs - Adjustments in customer programs were due to design changes, impacting planned orders [76][77]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 grew sequentially by 7% to $762 million, in line with guidance, driven by growth in both semiconductors and passive components [7][22] - Gross profit was $149 million, resulting in a gross margin of 19.5%, at the high end of guidance, primarily due to increased volume [24] - Book to bill ratio was positive at 1.02, marking the third consecutive quarter above one, with a backlog of $1.2 billion [23][24] Business Line Data and Key Metrics Changes - Automotive revenue increased by 4% due to improved demand from tier one customers and new ADAS programs [11] - Industrial segment revenue rose by 9%, driven by normalization of inventories and demand for smart grid infrastructure [12] - Aerospace defense revenue increased by 5%, while medical end markets saw a 4% growth, reflecting stronger demand in implantables [15][16] Market Data and Key Metrics Changes - Revenue in Asia grew by 12%, driven by AI power requirements and smart grid projects [20] - The Americas saw a 7% increase in revenue, supported by improved automotive and industrial demand [20] - Europe remained flat due to fewer workdays and inventory corrections [20] Company Strategy and Development Direction - The company is executing a five-year strategic plan, Vishay 3.0, focusing on capacity expansion and innovation in high-growth product lines [6][37] - Significant investments of approximately $775 million have been made to add capacity for high-growth, higher-profit products [8] - The company aims to enhance its presence in emerging markets such as e-mobility and sustainability [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the inventory correction cycle is largely behind, with normalized inventory levels for passives and some excess in semiconductors [7] - Positive demand momentum is expected to continue, particularly in smart grid infrastructure and AI applications [8][46] - The company anticipates a stronger second half of the year compared to the first half, with backlog building at a faster rate [44][46] Other Important Information - The company reported a negative free cash flow of $73 million for the quarter, attributed to capacity expansion investments and tax payments [31] - The effective tax rate is not meaningful at low levels of pre-tax income, but a normalized rate is expected as profitability returns [27][35] - The company plans to maintain its dividend and opportunistically repurchase shares based on available liquidity [35][32] Q&A Session Summary Question: Impact of Newport fab on gross margin - The Newport fab had a lower than expected negative impact of 160 basis points on gross margin in Q2, with guidance for Q3 set at 160 to 185 basis points [50][51] Question: MOSFET gross margins decline - MOSFET gross margins declined due to manufacturing inefficiencies, which are expected to improve in Q3 with increased IC sales [53][54] Question: US tariff impact - Less than 4% of products are manufactured in China and returned to the US, indicating a minimal impact from tariffs [56][57] Question: Inorganic growth and M&A opportunities - The company is actively looking for M&A opportunities, particularly in the semiconductor sector, to enhance customer presence [58][60] Question: Visibility on Q3 and backlog growth - The company is seeing a faster backlog build and anticipates a stronger second half of the year, with Q4 expected to outperform Q3 [64][66] Question: Customer demand and inventory management - Customers are still cautious in planning demand, with a significant portion of orders for quick delivery, indicating a transition from an inventory-heavy market [68][70] Question: AI customer expansion - The company has seen significant growth in AI customer count and is expanding applications beyond MOSFETs to include a broader portfolio [73][74] Question: Changes in customer programs - Adjustments in customer programs were noted due to design changes, impacting planned orders [76][78]

2Q 2025 Earnings Conference Call August 6, 2025 © VISHAY INTERTECHNOLOGY, INC. ALL RIGHTS RESERVED. operating income determined in accordance with GAAP, adjusted for items that Management believes are not indicative of the intrinsic operating performance of the Company. The measurement is used by Management to evaluate our performance. Reconciling items to arrive at adjusted gross profit are also considered in the calculation of adjusted operating income; and reconciling items to arrive at adjusted operatin ...

Financial Data and Key Metrics Changes - Revenue for the first quarter was $715 million, flat compared to the fourth quarter, with a 2% increase in volume offset by a 1% decrease in average selling prices [28][29] - Gross profit was $136 million, resulting in a gross margin of 19%, which includes a negative impact from Newport of approximately 200 basis points [30] - GAAP loss per share was minus $0.03 compared to a loss of minus $0.49 in the fourth quarter [32] Business Line Data and Key Metrics Changes - Automotive revenue decreased by 2% versus the fourth quarter, reflecting lower average selling prices associated with new OEM contracts [13] - Industrial market revenue increased by 3% from the fourth quarter, driven by strong demand for smart grid infrastructure projects [15] - Aerospace and defense revenue declined by 5% quarter over quarter due to inventory management by distributor partners [16] Market Data and Key Metrics Changes - Book to bill ratio improved for semiconductors to 1.12 and held at 1.04 for passives, indicating positive order intake [10][29] - Distribution customer point of sale (POS) was up in all regions, with a 4% increase worldwide, reflecting improved inventory management [25] - Revenue in Europe increased by 8% sequentially, while The Americas saw a 6% decline in industrial sales [25] Company Strategy and Development Direction - The company is executing its five-year strategic plan, focusing on capacity expansion and leveraging growth levers to participate in market upturns [42][43] - Investments between $300 million to $350 million are planned for 2025, with at least 70% allocated to capacity expansion projects [44] - The company aims to enhance its product portfolio and customer engagement through innovation and strategic partnerships [51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in the second quarter, guided by strong demand signals and improved inventory levels [10][51] - The company is closely monitoring macroeconomic uncertainties and is prepared to adjust spending plans as necessary [52] - Future visibility remains uncertain, but there is confidence in sequential growth based on current demand trends [51] Other Important Information - The company has been charging tariff adders to customers since February 2018 to offset increased tariff costs, with minimal impact on gross profit [29][38] - The Newport facility is expected to reach gross margin neutrality by the first half of 2026 as production ramps up [68] Q&A Session Summary Question: Distribution inventory and demand pull - Management noted ongoing efforts to increase product SKUs with distributors, with improvements in POS observed in Europe and The Americas [55][56] Question: Tariff impact on revenue - Management explained that less than 4% of sales are from China, and they are providing customers with alternative manufacturing options to mitigate tariff impacts [62][63] Question: Newport Fab utilization and gross margin impact - Management indicated that Newport Fab utilization is expected to increase quarter on quarter, targeting gross margin neutrality by early 2026 [68][69] Question: Cyclical recovery trends - Management highlighted positive signals in smart grid, aerospace, and AI sectors, with no significant pull-ins observed [75][78] Question: AI business size and market share - The AI business saw more than double the volume in Q1 compared to Q4, with a strong design position across various components [82][83] Question: Outlook for the second half of the year - Management expressed optimism for the second half of 2025, with backlogs building and no negative adjustments in automotive scheduling agreements [85][86] Question: Gross margin outlook despite higher revenue - Management explained that while revenue is expected to increase, tariff impacts and ASP adjustments will keep gross margins relatively stable [88][89]

Financial Data and Key Metrics Changes - Revenue for the first quarter was $715 million, flat compared to the fourth quarter, with a 2% increase in volume offset by a 1% decrease in average selling prices [8][28] - Gross profit was $136 million, resulting in a gross margin of 19%, which includes a negative impact from Newport of approximately 200 basis points [30] - GAAP loss per share was minus $0.03 compared to a loss of minus $0.49 in the fourth quarter [32] Business Line Data and Key Metrics Changes - Automotive revenue decreased by 2% versus the fourth quarter, reflecting lower average selling prices associated with new OEM contracts [13] - Industrial market revenue increased by 3% from the fourth quarter, led by Europe, with strong demand for smart grid infrastructure projects [15] - Aerospace and defense revenue declined by 5% quarter over quarter due to inventory management by distributor partners [16] Market Data and Key Metrics Changes - Book to bill ratio improved for semiconductors to 1.12 and held at 1.04 for passives, indicating positive order intake [10][29] - Distribution revenue grew by 3%, while OEM and EMS revenue decreased due to market softness [22][23] - Revenue in Europe increased by 8% sequentially, while The Americas saw a 6% decline in industrial sales [25] Company Strategy and Development Direction - The company is executing its five-year strategic plan, focusing on capacity expansion and leveraging growth levers to participate in the next industry upcycle [43][44] - Plans to invest between $300 million to $350 million in 2025, with at least 70% allocated to capacity expansion projects [45] - The company aims to enhance its product portfolio through innovation and expand its market participation by working with subcontractors [49][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for a 6% revenue increase in Q2 despite global economic uncertainties, supported by improving market signals [11][54] - The company is closely monitoring customer demand and production timing to adapt to potential market changes [54] - Positive signals during the first quarter support optimism for sequential growth, with demand aligning more closely with end market consumption [53] Other Important Information - The company has been charging tariff adders to customers since 2018 to offset increased tariff costs, with minimal impact on gross profit [29][38] - The Newport facility is expected to reach gross margin neutrality by the first half of 2026, with increasing volume quarter on quarter [70] Q&A Session Summary Question: Distribution and SKU Increase - Management noted ongoing efforts to increase SKUs with distributors, with improvements in POS observed in Europe and The Americas, while Asia remained flat [57][59] Question: Tariff Impact - Management explained that less than 4% of sales are from China to the US, and the tariffs have a minimal long-term impact due to alternative sourcing options [63][64] Question: Newport Fab Utilization - The Newport fab is expected to see increasing volume quarter on quarter, targeting gross margin neutrality by early 2026 [68][70] Question: Cyclical Recovery Trends - Management highlighted positive trends in smart grid and aerospace defense markets, with ongoing demand for AI-related projects [75][78] Question: AI Business Size and Market Share - The AI business saw more than double the volume in Q1 compared to Q4, with a strong design position across various components [83][84] Question: Second Half Outlook - Management expressed optimism for the second half of the year, with backlogs building and expectations for growth compared to the previous year [86][88]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $715 million, flat compared to Q4 2024, with a 2% increase in volume offset by a 1% decrease in average selling prices [7][25] - Gross profit was $136 million, resulting in a gross margin of 19%, which includes a negative impact from Newport of approximately 200 basis points [28] - Book to bill ratio improved to 1.08, with semiconductors at 1.12 and passives at 1.04, marking the second consecutive quarter with a book to bill greater than one [27] Business Line Data and Key Metrics Changes - Automotive revenue decreased by 2% compared to Q4 2024, reflecting lower average selling prices due to new OEM contracts [11] - Industrial market revenue increased by 3% from Q4 2024, driven by strong demand for smart grid infrastructure projects [13] - Aerospace and defense revenue declined by 5% quarter over quarter, while medical market results were mixed, with improved orders in The Americas but mixed results in Europe and Asia [15][16] Market Data and Key Metrics Changes - Distribution customer point of sale (POS) was up in all regions, with a 4% increase worldwide, reflecting a normalization of inventory levels [8][22] - Revenue in Europe increased by 8% sequentially, while The Americas saw a 6% decline in industrial sales [23] - AI-related shipments increased significantly, more than doubling compared to Q4 2024, indicating strong demand for AI servers and related products [80] Company Strategy and Development Direction - The company is executing its five-year strategic plan, focusing on capacity expansion and leveraging growth levers to participate in market upturns [40][41] - Plans to invest between $300 million to $350 million in 2025, with at least 70% allocated to capacity expansion projects [42] - The company aims to enhance its product portfolio and customer engagement through innovation and strategic partnerships [50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for a 6% revenue increase in Q2 2025 despite global economic uncertainties, citing improved order intake and inventory normalization [9][51] - The second half of 2025 is expected to show better performance than the first half, with positive signals from various markets [84] - Management remains cautious about macroeconomic uncertainties but is prepared to adjust spending plans as necessary [51] Other Important Information - The company has implemented procedures to pass along tariff costs to customers, with minimal direct impact on Q2 results from recent tariff changes [9][35] - Free cash flow for Q1 2025 was negative $45 million, with expectations of continued negative free cash flow in 2025 due to capacity expansion plans [33][38] Q&A Session Summary Question: Distribution inventory and demand pull - Management noted ongoing efforts to increase product SKUs with distributors, with improvements in POS observed in Europe and The Americas, while inventory levels have normalized [54][56] Question: Tariff impact on revenue - Management explained that less than 4% of sales are from China, and the impact of tariffs is expected to contribute 1% to 2% to revenue, with a minimal effect on gross profit [59][60] Question: Newport Fab utilization and gross margin impact - Management indicated that Newport Fab utilization is expected to increase gradually, targeting gross margin neutrality by early 2026 [65][66] Question: Cyclical recovery trends - Management highlighted positive signals in smart grid and aerospace defense markets, with expectations for continued growth in AI and industrial sectors [72][78] Question: AI business size and market share - Management reported that AI-related shipments in Q1 were more than double those in Q4, with a strong design position across various components [80][81] Question: Outlook for the second half of the year - Management expressed optimism for the second half of 2025, with backlogs building and no negative adjustments in automotive scheduling agreements [83][84]

Financial Performance - 1Q 2025 revenues reached $715.2 million[25], slightly above 4Q 2024's $714.7 million[26] but lower than 1Q 2024's $746.3 million[26] - Gross margin was 19.0%[25], including a negative impact of approximately 200 bps related to Newport[25] - The company reported a loss per share (EPS) of $(0.03)[25] and an adjusted EPS of $(0.03)[25] - Adjusted EBITDA margin was 7.6%[27] Book-to-Bill Ratio - Overall book-to-bill ratio was 1.08[25] - Semiconductors had a book-to-bill ratio of 1.12[25] - Passive components had a book-to-bill ratio of 1.04[25] Revenue Mix by End Market - Industrial sector accounted for 34% of revenue in 1Q25[17], showing a 3% QoQ increase and a 1% YoY decrease[16] - Automotive sector represented 33% of revenue in 1Q25[17], with a 2% QoQ increase and an 11% YoY increase[16] - Other sectors contributed 14% of revenue in 1Q25[17], showing a 4% QoQ increase and an 8% YoY increase[16] - Aero/Defense sector accounted for 11% of revenue in 1Q25[17], with a -5% QoQ decrease and an 8% YoY increase[16] - Medical sector accounted for 5% of revenue in 1Q25[17], with a -1% QoQ decrease and a +6% YoY increase[16] Revenue Mix by Region - Europe accounted for 36% of revenue in 1Q25[23], showing an 8% QoQ increase and a -6% YoY decrease[22] - Asia accounted for 40% of revenue in 1Q25[23], with a -3% QoQ decrease and a 0% YoY change[22] - Americas accounted for 24% of revenue in 1Q25[23], with a -6% QoQ decrease and a -8% YoY decrease[22] Guidance for 2Q 2025 - Revenue is expected to be $760 million, with a +/- $20 million range[48], representing an approximate 1% to 2% increase versus 1Q[46] - Gross margin is projected at 19.0% +/- 50 bps[48], with a negative impact of 175-200 bps from Newport[48]