Vishay Intertechnology(US:VSH)2025-05-07 14:02Financial 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]