Vishay Intertechnology, Inc. Q4 FY2025 earnings call

Joel started by reviewing Q4 revenue and business performance. Fourth quarter revenue was $801 million, slightly above guidance midpoint and up 1.3% sequentially. A growing broad-based business in industrial power and AI-related power applications drove the increase. Revenue in all channels grew, led by distribution, with Asia dominating growth. Backlog grew nearly 14% with semis and passives contributing. Vishay 3.0 was executing well, with work visible in revenue generation. Orders across main product technologies (except capacitors which had a three-year high in '25) and channels were at three-year highs. Strategic levers under the five-year plan included CapEx of $400 - $440 million in 2026, with over half allocated to 12-inch fab investments. Newport facility was ramping up wafer production, with automotive customers auditing the site. Continued ramping up at Taiwan and Turin, Italy facilities, and subcontractor initiative freeing up capacity and broadening product portfolio. Innovation in silicon carbide strategy with release of new MOSFETs and reference designs.

For the fourth quarter, Vishay generated revenue of $801 million, slightly above the midpoint of the guidance of $790 million and 1.3% higher than the third quarter. A growing broad-based business in industrial power and AI-related power applications drove this sequential increase. Revenue in all channels grew, led by distribution. Asia dominated the revenue growth. Backlog grew nearly 14% with both semis and passives contributing. Automotive revenue decreased 3.4% vs Q3, but orders grew in each region; industrial power revenue increased 3.2% driven by high voltage DC power capacitors, multiproduct inventory replenishment, etc.; aerospace defense end markets revenue was slightly down 1.2% due to US government shutdown and project delays; healthcare revenue was flat vs Q3 with Europe having its strongest quarter in three years; other category revenue grew 10.6% due to AI power management applications. In terms of channels, OEM, EMS, and distribution each grew quarter over quarter, led by distribution. Geographically, revenue growth for the quarter came entirely from Asia, which grew 3.6%, while The Americas and Europe were essentially flat compared to Q3.

For 2026, revenues are expected to be between $800 million and $830 million. Asia revenue is expected to be lower than Q4 due to Lunar New Year impact, with The Americas and Europe making up the difference. Sequential revenue increases in five key growth segments. Gross margin is expected to be in the range of 19.9% ± 50 basis points, including tariff impacts and expected higher input costs. Newport drag is expected to be between 50 - 75 basis points, and expected to exit Q1 with Newport gross profit neutral and accretive thereafter. Depreciation expense is expected to be approximately $55 million for Q1 and $218 million for full year 2026. SG&A expenses are expected to be $153 million ± $2 million. GAAP effective tax rate is not meaningful at low pretax income/loss, with tax expense expected to be between $2 and $4 million in Q1. 2026 is expected to have negative free cash flow due to capacity expansion plans, and stockholder return policy calls for returning at least 70% of free cash flow to stockholders in the form of dividends and stock repurchases.

Potential risks include elevated metals and material costs affecting margins, foreign currency fluctuations impacting financial results, and market demand changes potentially leading to order shortfalls. Also, risks related to Newport fab operations such as continued ramp-up challenges and automotive customer audits not proceeding as expected.

Q: Peter Peng asked about the view on industry growth now vs ninety days ago.

A: Joel said the view is still mid to high single digits, dividing by market segments with industrial power mid to high single digit growth, automotive flat to mid single digit, aerospace defense mid to high single digit, AI mid to high single digit, and healthcare mid single digits, and pushing to outperform market growth rate.

Q: Peter Peng followed up on gross margins.

A: Joel mentioned less than historical ASP decline in annual contractual negotiations due to gaining volume, and had increased prices on some products in Q4 starting to be effective in early Q1; Dave added that Newport drag lessened, ASP declines mostly front-loaded with annual contracts, and volume efficiencies expected to improve margin as year progresses.

Q: Shadi Mottwali asked about the overall automotive demand environment.

A: Joel said Vishay gained share, with automotive having four technology drivers (battery management, infotainment, electrification, ADAS), and automotive as mid flat to mid single digit depending on program start.

Q: Shadi Mottwali followed up on customer conversations due to memory price increases.

A: Joel said memory supply is a concern, but the segments Vishay serves (AI, automotive, industrial power) are less impacted by memory consumption issues, and no negative revenue impact forecasted.

Q: Ruplu Bhattacharya asked about automotive segment share gains and revenue impact.

A: Joel said share gains are starting small, with audits in Q1 needed for site qualification before continued ramp-up; Dave talked about capital allocation with 70% of free cash flow returned to shareholders and M&A being on the table for select technology and footprint optimization.