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VI

VISHAY INTERTECHNOLOGY INC (VSH)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $762.3M, up ~7% sequentially and roughly in line with consensus ($763.1M*); GAAP diluted EPS was $0.01, while adjusted EPS was a loss of $(0.07), missing the EPS consensus ($0.02*) as non-GAAP adjustments and Newport drag weighed on profitability .
  • Gross margin was 19.5%, including an approximately 160 bps negative impact from the addition of Newport; adjusted EBITDA was $63.5M and EBITDA $74.8M, ahead of consensus EBITDA ($60.9M*), supported by cost actions and SG&A benefit from a favorable contingency .
  • Book-to-bill was 1.02 (semis 0.98, passives 1.06); backlog held at 4.6 months, with management citing broad-based sequential growth across end markets, regions, and channels .
  • Q3 2025 guidance: revenue $775M ± $20M and gross margin 19.7% ± 50 bps, including Newport drag of ~160–185 bps—signaling a modest sequential improvement in margin despite ongoing depreciation and Newport ramp costs .

Values retrieved from S&P Global for consensus marked with an asterisk.

What Went Well and What Went Wrong

  • What Went Well

    • “Promising signals” drove a 7% sequential revenue increase; growth delivered across semis and passives, end markets, regions, and to distributors and EMS customers .
    • Book-to-bill above 1.0 and backlog steady at 4.6 months suggest demand normalization and improved orders, aligning with management’s upturn readiness from capacity investments .
    • EBITDA outperformed consensus* and gross margin modestly exceeded prior-quarter guidance, aided by SG&A benefit from a favorable contingency ($11.3M) .

  • What Went Wrong

    • Adjusted EPS of $(0.07) missed consensus* despite GAAP EPS of $0.01; margin remains pressured by Newport integration (≈160 bps drag) and higher depreciation .
    • Free cash flow remained negative (–$73.2M), with operating cash flow a modest outflow (–$8.8M) and capex elevated as the company continues capacity expansion .
    • Interest expense increased sequentially (to $10.6M), continuing to weigh on net income amid U.S. revolver usage and investment in strategic projects .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$741.2 $715.2 $762.3
GAAP Diluted EPS ($USD)$0.17 $(0.03) $0.01
Adjusted EPS ($USD)n/a$(0.03) $(0.07)
Gross Margin %22.0% 19.0% 19.5%
Operating Margin %5.1% 0.1% 2.9%
EBITDA ($USD Millions)$88.4 $54.5 $74.8
Adjusted EBITDA Margin %n/a7.6% 8.3%

Q2 2025 Actual vs Wall Street Consensus (S&P Global):

MetricQ2 2025 ActualQ2 2025 Consensus*
Revenue ($USD Millions)$762.3 $763.1*
GAAP Diluted EPS ($USD)$0.01 $0.02*
Adjusted EPS ($USD)$(0.07) $0.02*
EBITDA ($USD Millions)$74.8 $60.9*

Values retrieved from S&P Global for consensus marked with an asterisk.

KPIs and Cash Metrics:

KPIQ2 2024Q1 2025Q2 2025
Book-to-Bill (Total)0.86 1.08 1.02
Book-to-Bill (Semis)0.82 1.12 0.98
Book-to-Bill (Passives)0.90 1.04 1.06
Backlog (months)4.6 4.7 4.6
Free Cash Flow ($USD Millions)$(86.8) $(45.2) $(73.2)
Operating Cash Flow ($USD Millions)$(24.7) $16.1 $(8.8)
Capex ($USD Millions)$62.6 $61.6 $64.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q2 2025$760 ± $20 Actual: $762.3 Delivered near midpoint
Gross Margin %Q2 202519.0% ± 50 bps; Newport drag ~175–200 bps Actual: 19.5%; Newport drag ~160 bps Above guide; lower drag than guided
Revenue ($USD Millions)Q3 2025n/a$775 ± $20 Raised vs Q2 guide baseline
Gross Margin %Q3 2025n/a19.7% ± 50 bps; Newport drag ~160–185 bps Sequentially higher margin guide
SG&A ($USD Millions)Q2 2025$136 ± $2 $126.6 (incl. $11.3M contingency benefit) Lower; benefit non-recurring
Depreciation ($USD Millions)Q2 2025~52 $56.0 Higher than expected
Tax RateFY 2025Normalized 30–32% expectation as profitability returns Not meaningful at low pretax levels (ongoing) Maintained framework
Dividend per share ($USD)Q3 2025n/a$0.10 declared, payable Sept 25, 2025 Maintained dividend policy

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
AI/Technology InitiativesInitial AI server shipments in Q4; design wins across MOSFETs, passives; content per tray ~$30–$40; broader design with non-NVIDIA CMs Broader-based sequential growth; capacity positioned to participate in AI demand upturn Improving visibility and preparedness
Supply Chain & DistributionDistribution inventory weeks stable at ~27; SKU expansion >50k to drive share; regional inventory dynamics Growth across distributors and EMS; book-to-bill >1 supports normalization Normalizing; share gains targeted
Tariffs/MacroTariff adders pass-through (~0 GP impact; ~30 bps gross margin math); limited exposure (<4% China-origin to U.S.) Continued readiness; guidance includes anticipated tariff impacts and input cost headwinds Managed impact; limited direct exposure
Newport RampDrag ~175–200 bps; margin-neutral targeted by early 2026; stair-step utilization increases Drag ~160 bps in Q2; guide implies 160–185 bps in Q3 Gradual improvement; drag moderating
Regional TrendsEurope soft in Q4; Asia spot orders for AI; improved book-to-bill in Q1 across regions Growth delivered across each region in Q2 Broad-based sequential recovery
R&D/Capex ExecutionFY24 capex $320M; FY25 plan $300–$350M with majority for fabs (Newport, Itzehoe); external capacity via subcontractors Continued investment to be “ready to participate more fully” in upturn Sustained investment with modulation

Management Commentary

  • “The promising signals we saw emerging at the beginning of the year contributed to a 7% sequential increase in revenue… With market indicators remaining directionally positive, our investments in capacity expansion positions Vishay to be ready to participate more fully in the market upturn.” — Joel Smejkal, President & CEO .
  • On tariffs: “We have procedures and systems in place since 2018 to pass along tariff adders… our exposure to the tariffs… is limited.” — Joel Smejkal .
  • On Newport: “Utilization was very low… we’ll be adding volume quarter-on-quarter… target is for the fab to be gross margin neutral in the first half of ’26.” — Joel Smejkal .
  • On demand normalization: “Distribution customer POS was up in all regions… book-to-bill remains positive for both semis and passives.” — Joel Smejkal .

Q&A Highlights

Note: We attempted to retrieve the Q2 2025 call transcript but the document was unavailable due to a database inconsistency. Below are the most recent Q&A highlights from Q1 2025, many of which remained salient in Q2.

  • Distribution strategy: SKU additions continue; inventory normalized by region; focus on gaining POS and share .
  • Tariff framework: Limited exposure; pass-through mechanics reduce gross margin mathematically by ~30 bps; input cost increases (metals) included in guidance .
  • Newport ramp and margin: Stair-step utilization increases through 2025; margin-neutral target exiting 2025/early 2026 .
  • Cyclical recovery vs pull-ins: Strength in smart grid, defense, AI; automotive schedules showing better first-half volumes .
  • Gross margin dynamics: ASP declines absorbed; cost reductions and volume leverage anticipated; depreciation elevated; tariffs embedded .

Estimates Context

  • Revenue was essentially in line with consensus ($762.3M vs $763.1M*, ~0.1% miss) .
  • EPS: Adjusted EPS of $(0.07) missed consensus* (~$0.02*); GAAP diluted EPS was $0.01, reflecting a divergence between GAAP and Street’s primary EPS basis .
  • EBITDA: $74.8M exceeded consensus* ($60.9M*), aided by cost actions and SG&A benefit; adjusted EBITDA margin 8.3% .

Values retrieved from S&P Global for consensus marked with an asterisk.

Key Takeaways for Investors

  • Sequential demand improvement appears durable: book-to-bill >1, backlog steady, and broad-based growth across end markets and regions—supporting the Q3 revenue and margin guide .
  • Margin trajectory is improving modestly, but Newport remains a headwind (160–185 bps in Q3); watch depreciation and Newport utilization as the primary swing factors for gross margin recovery .
  • Earnings quality matters: GAAP EPS of $0.01 vs adjusted EPS loss reflects non-GAAP adjustments (notably the $11.3M SG&A contingency benefit); Street will likely focus on adjusted EPS miss versus consensus* .
  • Cash generation remains pressured by elevated capex and operating cash volatility; negative free cash flow persists—monitor capex cadence, revolver usage, and operating cash flow trajectory through 2H25 .
  • AI and smart grid are emerging catalysts: design-in breadth across semis and passives, and smart grid wins (including U.S. HVDC project) provide medium-term optionality as projects scale .
  • Near-term trading setup: Inline revenue with an EPS miss (adjusted) may cap immediate upside; however, positive guide and book-to-bill could support sentiment if margin execution and Newport drag moderation materialize in Q3 .
  • Medium-term thesis: Capacity expansions (Newport, outsourced fabs, Mexico passives) and solution-selling strategy position VSH to capture share in an upturn, especially in automotive hybrid, AI power, and grid infrastructure .