Vishay Intertechnology(US:VSH)2023-05-10 17:12Financial Data and Key Metrics Changes - Revenue for Q1 2023 was $871 million, exceeding the high end of guidance, with a 1.8% increase from Q4 2022 and a 2.0% increase year-over-year [8][22][23] - Gross profit was $278.7 million, resulting in a gross margin of 32.0%, significantly above the forecast of 28% [25][28] - Operating income increased by $23.3 million from Q4 2022, with an operating margin of 18.2% [27][28] - EPS was $0.79, up from $0.69 in Q4 2022 [28] Business Line Data and Key Metrics Changes - Automotive segment, representing 33% of total revenue, grew 6.2% quarter-over-quarter and 9.6% year-over-year [9] - Industrial segment, the largest at 37% of total revenue, remained flat compared to Q4 2022 and decreased year-over-year [10] - Medical segment grew 21.4% quarter-over-quarter and 29.6% year-over-year, reaching an all-time high [11] - Aerospace and defense segment also reached an all-time high, growing 10.9% quarter-over-quarter and 33.6% year-over-year [12] Market Data and Key Metrics Changes - OEM revenues increased by 6.1%, driven by automotive and industrial strategic accounts, while distribution revenues were flat [13] - Distributor inventory remained at 19 weeks, with a slight increase in value [14] - EMS revenues declined by 7.4% due to inventory rebalancing, although demand in automotive, industrial, aerospace defense, and medical remained strong [14] Company Strategy and Development Direction - The company is focusing on customer engagement and operational improvements to capitalize on trends in connectivity, mobility, and sustainability [15][16] - A three-year plan is in place to drive growth and returns, with 2023 being a staging year for foundational initiatives [21][52] - The company is investing approximately $385 million in capital expansion, with a focus on projects outside of China [38][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the backlog of 7.5 months and noted that automotive and medical segments continue to show strength [57][80] - The company anticipates a stable to slightly decreasing inventory in the channel, with healthy product levels [58][78] - Management expects gross margins to hold around 29% for the year, supported by strong market segments [60][74] Other Important Information - The company returned $34.2 million to stockholders through dividends and stock repurchases [24][32] - Total liquidity at quarter-end was $1.7 billion, providing ample financial flexibility [32][33] Q&A Session Summary Question: Why is the sequential growth just 1% despite a high backlog? - Management indicated that automotive contracts are expected to be flat, while medical and military segments remain strong [57] Question: What drove the outperformance in gross margins? - Management noted lower-than-expected pricing pressure and reduced energy costs contributed to the higher gross margin [60][61] Question: What initiatives are being taken to fill technology gaps? - The focus is on advancing silicon carbide technology and exploring circuit protection and sensor technologies [62][64] Question: Can you provide book-to-bill metrics by channel? - Book-to-bill ratios were provided for various segments, with MOSFET at 0.95 and diodes at 0.71 [76] Question: How does the company view the current market cycle? - Management believes the blending of markets and strong demand in automotive, industrial, medical, and military segments will support stability [68][72]