Vishay Intertechnology, Inc. Q1 FY2026 earnings call

Strategic Transformation (Vishay 3.0)

• Five-year strategic plan is delivering results, with broad-based revenue growth across all regions, channels, and end markets driven by market share gains, inventory replenishment, and increased end customer consumption • New business model prioritizes expanded capacity, faster backlog conversion, competitive lead times, and closer customer engagement, avoiding the allocation and extended lead time issues of the legacy Vishay 2.0 model • Management emphasizes they will not revert to prior practices during the current market upcycle

Operational Highlights

• Total company book-to-bill of 1.34 (1.47 for semiconductors, 1.23 for passives), up from 1.2 at the end of Q4 2025 • Backlog increased 21% QoQ to $1.6 billion (5.7 months of revenue), driven by proactive longer-term ordering and safety stock building by customers across all regions • Gross profit of $177 million (21.0% gross margin), above guidance and prior quarter levels, with higher volume driving margin expansion that offset ongoing metals and materials cost pressures • The Newport fab reached gross profit neutrality by the end of Q1 2026 • Operating cash flow of $64 million (including $63 million from accounts receivable securitization); total CapEx of $111 million, with $87 million allocated to the new 12-inch fab in Germany; free cash flow of -$47 million • Cash conversion cycle improved to 116 days from 125 days in Q4, driven by disciplined working capital management

Capacity and Product Strategy

• Full-year 2026 CapEx is maintained at $400-$440 million, with half allocated to the 12-inch German fab; the peak of 5-year capacity expansion spending will occur in H1 2026 • Semiconductor updates: Newport MOSFET production is ramping, 4 Tier 1 automotive customer audits completed in Q1 with 2 more planned for Q2; German 12-inch fab equipment installation completed in Q1, non-automotive production targeted for mid-2027; two new subcontractors qualified to supplement capacity and expand SKU availability • Silicon carbide updates: 750V Gen 2 planar MOSFETs (automotive and industrial platforms) released to production; 1700V platforms planned for release in the next two quarters; 8-inch silicon carbide production line being set up at Newport

Vishay reports aggregate Q1 2026 total revenue of $839 million, with all reportable product segments delivering quarter-over-quarter revenue growth except inductors, which was flat. By end market:

• Automotive: Revenue increased 2.7% QoQ, 17.3% YoY (contribution ~20% of total revenue)
• Industrial: Revenue increased 6.5% QoQ for the fifth consecutive sequential gain (contribution ~28% of total revenue)
• Aerospace Defense: Revenue increased 14.1% QoQ and 16.8% YoY (contribution ~12% of total revenue)
• Healthcare: Revenue increased 4.5% QoQ and 11.1% YoY (contribution ~10% of total revenue)
• Other (telecom, computing, consumer): Revenue was flat QoQ, up 25.8% YoY (contribution ~30% of total revenue) By channel:
• OEM: Revenue increased 7.1% QoQ and 14.4% YoY (contribution ~50% of total revenue)
• EMS: Revenue increased 14% QoQ and 21.6% YoY (contribution ~25% of total revenue)
• Distribution: Revenue increased 2.2% QoQ and 18.9% YoY (contribution ~25% of total revenue) By geography:
• Europe: Revenue increased 15.3% QoQ
• Americas: Revenue increased 8.6% QoQ
• Asia: Revenue decreased 4.9% QoQ (impacted by Lunar New Year)

• Q2 2026 revenue guidance: $875 million to $905 million, representing continued sequential growth
• Q2 2026 gross margin guidance: 22.0% ± 50 basis points, which accounts for higher logistics costs, elevated input/metal costs, and inefficiencies from ramping new direct labor
• Full-year 2026 depreciation guidance: $216 million, with Q2 depreciation expected to be approximately $54 million
• Q2 2026 SG&A guidance: $155 million ± $3 million, reflecting continued investment in R&D and customer-facing activities
• Q2 2026 effective tax rate expected between 40% and 50%, remaining elevated due to low pre-tax income levels
• Full-year 2026 negative free cash flow is expected due to ongoing capacity expansion plans
• Original 2023-2028 five-year targets (10% revenue CAGR, 31% gross margin, 20% operating margin, ~$5+ EPS, $5.5 billion total revenue) remain valid, with timing only slightly delayed by longer-than-expected inventory digestion and US tariff impacts

• Ongoing upward pressure on metals and raw material costs, which partially offset margin expansion in Q1 and are factored into Q2 guidance
• Geopolitical uncertainties require buffer stock building to ensure customer supply, increasing working capital requirements
• Automotive customer program approval of Newport-sourced MOSFETs is still in process, creating near-term uncertainty for the pace of additional automotive share gains
• The company remains in a net borrowing position in the US, with limited near-term capacity for large-scale discretionary shareholder returns (share repurchases or dividend increases) until planned capex and restructuring is completed
• Forward-looking results are subject to general market and macroeconomic uncertainties that could cause actual performance to differ from guidance, as detailed in SEC filings

Q: Did Vishay gain automotive share against Nexperia in Q1, what was the revenue impact, and what was Newport Fab's impact on Q1 gross margins, with any expected negative impact in Q2? / A: Management confirmed that Vishay is gaining automotive share as it adds additional sourcing capacity for OEM programs previously supplied by a single source. The ongoing site audits at Newport, including four completed in Q1 and two planned for Q2, directly support this share gain effort. Newport reached gross profit neutrality by the end of Q1, though it still incurred some costs in January and February that affected full-quarter results. Going forward, Newport costs are now commingled with the rest of Vishay's operations, so the company will stop providing separate specific guidance on Newport's margin impact, with no expected material negative margin impact starting in Q2.

Q: Are the original 2023-2028 five-year targets for 10% CAGR revenue growth, 31% gross margin, 20% operating margin, and $5+ EPS still valid with the current market and capacity footprint? / A: Management reaffirmed that all original five-year financial targets remain in place. Timing of the targets was only slightly delayed by an extended inventory digestion period that stretched into early 2025, followed by new US tariffs, with the stronger-than-expected 1.34 book-to-bill now matching the growth levels management originally expected to see in early 2025. Management confirmed they have the required capacity in place and in approval to hit the revenue targets, and margin targets will be achieved via a restructuring program that will be implemented after the current high-capEx expansion phase is completed.

Q: How is management approaching capital allocation over the next 12 months, including dividend increases, share buybacks, M&A, and ongoing CapEx? / A: Management noted that the company still needs to complete the planned capex for capacity expansion and fund upcoming restructuring, so current cash levels are limited after this spending. The existing quarterly dividend will be maintained, but a decision on a dividend increase has not yet been made by the board. Large-scale share repurchases are not a near-term priority given current cash levels. Management added that after several quiet years, the company is planning to revisit M&A opportunities as part of its future capital allocation strategy.

Q: What is Vishay's current exposure to AI data center end markets, and what is the expected revenue growth for this segment in 2026? / A: Management stated that 2025 AI-related revenue was under $100 million, and 2026 revenue will be well above that level, with strong share gain opportunities from competitor supply constraints. Vishay participates in AI data centers with semiconductors (MOSFETs, diodes) and passives (polymer capacitors, current sense resistors, magnetics), and is actively working to add more components to customer bills of material for upcoming AI programs. Management expects the AI semiconductor and components market to grow at high double-digit (roughly 20%) rates in 2026.