Vishay Intertechnology, Inc. Q3 FY2025 earnings call

• Revenue grew sequentially 4% to $791 million, 2% above the midpoint of guidance. Many market segments like automotive, industrial, computer and medical were positive. Asia achieved the greatest growth.
• Book-to-bill in the quarter was slightly below parity, but October run rate was at 1.15. Backlog continued to build gradually.
• Automotive: revenue up 7% vs Q2, increased engagements with OEMs and Tier 1s, site approvals in UK and Mexico.
• Industrial: revenue up 2% driven by capacitors to smart grid projects, orders for high-voltage DC power transmission, focus on AI power structures.
• Aerospace Defense: revenue down 2% q-o-q due to slow DoD funding, but orders beginning to pick up.
• Medical: revenue up 2% from increased activity, strategy to cross-sell technologies.
• Other market: revenue up 4% due to AI servers, industrial and smart grid projects in Asia.
• Channel performance: OEM revenue up 6%, EMS sales down 7% but order intake increased, Distribution revenue up 4% with Asia growth.

Revenue grew sequentially 4% to $791 million. Automotive revenue increased 7% versus the second quarter. Industrial segment revenue increased 2%. Aerospace Defense revenue decreased 2% quarter-over-quarter. Medical segment revenue grew 2%. Revenue from the other market segment (including computing, consumer and telecom) was up 4% quarter-over-quarter. Revenue growth for the quarter came predominantly from Asia with a 7% increase in sales. Americas revenue was up slightly and Europe was essentially flat due to seasonal impacts mostly in August.

• Fourth quarter 2025 revenues expected to be $790 million, ±$20 million.
• Gross margin expected in the range of 19.5%, ±50 basis points, inclusive of tariff impacts and expected continuing higher input costs; Newport to have approx 150 to 175 basis point drag in Q4.
• Depreciation expense expected ~$55 million for Q4, $212 million for full year 2025.
• SG&A expenses expected $138 million, ±$2 million for Q4.
• GAAP effective tax rate not meaningful at low pretax income, expecting normalized rate closer to 30%-32% as profitability returns.
• Stockholder return policy: return 70% of free cash flow to stockholders via dividends and repurchases, but expect negative free cash flow in 2025 due to capacity expansion.

• Metals prices (e.g., gold, palladium) and copper tariffs impacting gross margin.
• Exchange rate fluctuations, particularly with the Shekel and new Taiwan dollar.
• Geopolitical factors like export restrictions on Nexperia and tariffs, which could impact business.

Q: In the Automotive segment, did Vishay see any benefit or impact from the export restrictions that were put on Nexperia?

A: Joel Smejkal said they are in discussions with many OEMs and Tier 1s, seeing opportunity developing but Q4 revenue guide didn't account for it yet as it's about keeping factories moving with shortage quantities.

Q: On margins, Newport was not as big a negative impact as expected on 3Q margins. What else impacted gross margin? Metals prices, pricing, and prebuying metals?

A: Joel said metals (gold, palladium, etc.) and copper tariff were factors, managing metals and preparing to pass costs on to customers; David McConnell said they have a pipeline on manufacturing times and place purchase orders but don't stockpile metals now as it's expensive.

Q: Book-to-bill fell below 1 in Q3, revenue guide for 4Q implies 4% y-o-y growth in 2025, consensus expects 7% y-o-y growth and margin expansion for 2026. Thoughts?

A: Joel said October run rate book-to-bill is 1.15, seeing 5 market segments showing positive signs, consensus growth in line with what they're seeing for 2026, Newport headwind to roll off in Q1, and working on cost improvement projects and negotiations.

Q: About seasonal trends, especially in Q1, and gross margin dynamics for Q1?

A: Joel said Q1 has Chinese New Year effect, but industrial, aerospace, defense, automotive, medical are not seasonal; on Q1 gross margin, too early to guide far ahead as it's negotiation season.

Q: Update on progress with large compute customer?

A: Joel said they are connected to AI design centers, branching out to AI companies, promoting broad portfolio of Vishay products and gaining good traction.

Q: Impact of Nexperia situation on business?

A: Joel said they are crossing part numbers, helping automotives avoid line downs, having conversations with OEMs and Tier 1s, but it's dynamic and hard to put a number on it as geopolitical factors can change quickly.