Vishay Intertechnology(VSH)2023-11-08 20:46Financial Data and Key Metrics Changes - Revenue for Q3 2023 was reported at 840 million to 237.6 million, resulting in a gross margin of 27.8%, down from 28.9% in the previous quarter [16] - Operating income decreased by 68.0 million year-over-year, with an operating margin of 13.5% [16] - Adjusted EBITDA was 0.47, while adjusted EPS was 0.68 in the previous quarter [17] Business Line Data and Key Metrics Changes - Automotive revenue, accounting for 37% of total revenue, increased by 2% quarter-over-quarter and grew 10% year-over-year [7] - Industrial revenue, representing 35% of total revenue, declined by 9% from the second quarter and 18% year-over-year [7] - Aerospace and Defense revenue was slightly below the second quarter but grew 19% year-over-year due to strong demand [8] - Medical revenue fell 14% compared to both the second quarter and the same quarter last year due to order timing and product mix [9] - Distribution revenue decreased by 10% quarter-over-quarter and 18% year-over-year, attributed to inventory adjustments [10] Market Data and Key Metrics Changes - Channel sales showed a decrease in POS by 7%, reflecting weakened industrial demand across all regions [11] - OEM revenue grew by 4% quarter-over-quarter and 11% year-over-year, driven by automotive demand [11] - EMS revenue declined by 6% quarter-over-quarter and 14% year-over-year due to inventory adjustments [11] Company Strategy and Development Direction - The company is focused on expanding capacity to support high-growth product lines and is investing approximately 385 million [23][24] - New facilities in Mexico are being opened to support mass production for power inductors and other products [24] - The acquisition of the Newport wafer fab is aimed at enhancing silicon carbide capabilities, which is critical for automotive applications [26][27] - The company is committed to increasing participation in the distribution channel by broadening the SKU mix and engaging with distributors [39][40] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainties and higher interest rates affecting demand, particularly in China [8] - The company is optimistic about design activities in industrial automation and electric vehicles, despite current inventory levels [8] - Management expressed confidence in the company's ability to navigate through the current challenges and emphasized the importance of investments in capacity and innovation [51] Other Important Information - The company returned 1.9 billion, including cash and short-term investments of 1.2 billion [19] Q&A Session Summary Question: Details on the Newport Fab transaction - Management stated that historical capacity details of the fab cannot be shared until the closing process is complete [34] Question: Pricing pressures on non-commodity products - Pricing pressures remain contained to commodity product lines [36] Question: Details on the Newport wafer fab acquisition - The Newport fab acquisition is in addition to the previously announced 1.2 billion investment over three years, aimed at enhancing silicon carbide capabilities [37] Question: Increasing inventory with distribution partners - The company is intentionally increasing inventory to broaden participation in the distribution channel and has added 8,000 part numbers this year [38][40] Question: Filling gaps in technology and market coverage - The company is looking to fill technology gaps in silicon carbide and GaN, considering both internal investment and M&A opportunities [42] Question: Near-term modeling questions on margins - Management indicated that while margins are currently under pressure, they are working diligently to manage costs and improve margins moving forward [44][45]