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Vishay Intertechnology(VSH) - 2024 Q4 - Earnings Call Transcript
VSHVishay Intertechnology(VSH)2025-02-05 20:04
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Financial Data and Key Metrics Changes - Revenue for Q4 2024 was 714.7million,downslightlyfromQ3,withfull−yearrevenueat714.7 million, down slightly from Q3, with full-year revenue at 2.9 billion, below 2023 levels [6][31] - Book to bill ratio improved to 1.01% from 0.88% in Q3, with semiconductors at 0.99% and passives at 1.03% [7][33] - Gross profit was 142million,resultinginagrossmarginof19.9142 million, resulting in a gross margin of 19.9%, impacted by lower average selling prices and a negative effect from Newport [34][39] - GAAP loss per share was 0.49 compared to a loss of 0.14inQ3[40]BusinessLineDataandKeyMetricsChanges−Automotiverevenuedecreasedby60.14 in Q3 [40] Business Line Data and Key Metrics Changes - Automotive revenue decreased by 6% compared to Q3, with demand affected by production volume decreases in Europe [11][12] - Industrial revenue decreased by 5 million or 2%, but order intake for smart grid projects remained positive [15] - Revenue from computing, consumer, and telecom markets increased by 3% quarter-over-quarter, driven by AI server demand [22] Market Data and Key Metrics Changes - Europe experienced an 8% revenue decline due to weak macroeconomic conditions, while Asia showed growth from smart grid and AI server projects [28][30] - Inventory levels in distribution remained stable at 27 weeks, with Asia showing 18.5 weeks and the Americas at 51.5 weeks [106] Company Strategy and Development Direction - The company is focused on a five-year strategic plan, emphasizing e-mobility and sustainability, and aims to increase capacity significantly by 2028 [9][72] - Plans to invest 2.6billioninCapExfrom2023to2028,with2.6 billion in CapEx from 2023 to 2028, with 300 million to 350millionexpectedin2025[73]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedaprolongedinventorydigestionperiodandweakmacroeconomicconditions,particularlyinEurope,butexpressedoptimismaboutimprovingdemandin2025[6][72]−Thecompanyispreparingforapotentialmarketupturn,withpositivesignalsfromorderintakeandafavorablebooktobillratio[72][79]OtherImportantInformation−Anon−cashgoodwillimpairmentchargeof350 million expected in 2025 [73] Management's Comments on Operating Environment and Future Outlook - Management noted a prolonged inventory digestion period and weak macroeconomic conditions, particularly in Europe, but expressed optimism about improving demand in 2025 [6][72] - The company is preparing for a potential market upturn, with positive signals from order intake and a favorable book to bill ratio [72][79] Other Important Information - A non-cash goodwill impairment charge of 66 million was recorded, affecting GAAP operating margin [36][38] - The company plans to maintain its dividend and opportunistically repurchase shares despite expected negative free cash flow in 2025 [53][126] Q&A Session Summary Question: AI server power revenue outlook - Management indicated initial volumes for AI were small in Q4, but they expect better performance in 2025 as demand increases [87][90] Question: Distributor inventory levels and pricing - Management stated that inventory levels are stable, with minimal idle stock, and pricing adjustments have been made to remain competitive [105][110] Question: CapEx and capacity coming online - The majority of the 300millionto300 million to 350 million CapEx will be allocated to fabs, including Newport and Itseo, with a focus on increasing capacity [115][120] Question: Capital allocation priorities - The company is committed to returning at least 70% of free cash flow to shareholders, maintaining dividends, and making opportunistic share repurchases [122][126] Question: Regional market dynamics - Management emphasized a focus on Asia due to strong performance, while also adjusting strategies in Europe to regain market share [130][135]