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VI

VISHAY INTERTECHNOLOGY INC (VSH)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $714.7M, down 2.8% q/q and 9.0% y/y; GAAP diluted EPS was -$0.49 largely due to a $66.5M non-cash goodwill impairment in MOSFETs; adjusted EPS was $0.00 .
  • Gross margin fell to 19.9% (from 20.5% in Q3) with a ~175–200 bps drag from Newport; book-to-bill turned positive at 1.01 for the first time in nine quarters, and backlog held at 4.4 months .
  • Management guided Q1 2025 revenue to $710M ± $20M and gross margin to 19.0% ± 50 bps, expecting Newport’s drag to trend toward neutral by year-end 2025; SG&A guided to $137M ± $2M in Q1 .
  • Strategic demand signals improved: strong smart grid orders and initial AI server shipments; however, Europe remained weak and ASP pressure persisted in semis, impacting margins and profitability .

What Went Well and What Went Wrong

What Went Well

  • Positive book-to-bill (1.01 overall; 0.99 semis and 1.03 passives) after nine quarters; “initial shipments for A.I. servers” and strong smart grid orders highlight improving demand quality .
  • Capacity expansion and externalization progressing: SK Key Foundry adds MOSFET wafer capacity (+12% in 2025) and split-gate MOSFET capacity (+25%); subcontractor qualifications added >10,400 SKUs in 2024 .
  • Clear execution roadmap for Newport and SiC: multiple MOSFET structure transfers on schedule; SiC releases (650V/1200V) advancing; plan to reach margin-neutral at Newport by year-end 2025 .
    • CEO: “we saw many promising indicators including a positive book-to-bill… strong order intake for smart grid… and initial shipments for A.I. servers” .

What Went Wrong

  • Gross margin compression and operating loss: GM 19.9% (down 60 bps q/q); GAAP operating margin -7.9% driven by goodwill impairment and higher SG&A (R&D/legal), plus ASP declines and Newport drag .
  • Free cash flow negative amid capacity investments: Q4 operating cash $67.7M, CapEx $144.9M, FCF -$75.6M; FY 2024 FCF -$143.4M as CapEx and Newport expansion weighed on cash generation .
  • Europe weakness and pricing pressure: distributors reduced POS; semis ASPs declined amid competitor underutilization; management cited “weak business conditions” in Europe and price alignments in distribution .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$785.2 $741.2 $735.4 $714.7
GAAP Diluted EPS ($)$0.37 $0.17 -$0.14 -$0.49
Gross Margin (%)25.6% 22.0% 20.5% 19.9%
Operating Margin (%)9.9% 5.1% -2.5% -7.9%
Adjusted EPS ($)Q4 2023Q3 2024Q4 2024
Adjusted EPS$0.48 $0.08 $0.00
Book-to-Bill & BacklogQ2 2024Q3 2024Q4 2024
Book-to-Bill (Total / Semis / Passives)0.86 / 0.82 / 0.90 0.88 / 0.79 / 0.97 1.01 / 0.99 / 1.03
Backlog (months)4.6 4.4 4.4
KPIsQ2 2024Q3 2024Q4 2024
DSO (days)51 53 53
DPO (days)31 32 34
Inventory ($M) / Days$671 / 105 $687 / 106 $689 / 109
Operating Cash Flow ($M)-$24.7 (Q2 cash used) $50.6 $67.7
CapEx ($M)$62.6 $59.5 $144.9
Free Cash Flow ($M)-$86.8 -$8.8 -$75.6
Cash & ST Investments ($M)$688 (Q2-end) $657 (Q3-end) $606 (Cash $590 + STI $16)
Segment Movements (Q4 vs Q3)Change ($M)Notes
Opto-$16Largest q/q decline
Inductors-$7q/q decline
Capacitors+$11q/q increase
MOSFETs/Diodes/ResistorsModest declinesNewport substantially in MOSFETs; ~900 bps MOSFET GM drag

Note: Estimate comparisons to Wall Street consensus were unavailable; S&P Global data could not be retrieved due to a system limit. Values retrieved from S&P Global would be presented here if accessible.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2024$720M ± $20M Actual: $714.7M In range, slight miss to prior midpoint
Gross MarginQ4 202420.0% ± 50 bps; Newport drag ~175–200 bps Actual: 19.9%; Newport ~190 bps Near prior range
RevenueQ1 2025—$710M ± $20M New guidance
Gross MarginQ1 2025—19.0% ± 50 bps; Newport drag ~175–200 bps New guidance
DepreciationQ1 2025 / FY25—~$53M Q1; ~$214M FY25 New guidance
SG&AQ1 2025 / FY25—$137M ± $2M Q1; $530–$560M FY25 New guidance
Normalized ETRFY25—30–32% New guidance
Newport ProfitabilityFY25 Exit—Target margin-neutral by YE 2025 New milestone
DividendQ4 2024$0.10 declared (Dec 12, 2024) Maintained dividend policy; expect returns despite negative FCF Maintained

Earnings Call Themes & Trends

TopicQ-2 (Q2’24)Q-1 (Q3’24)Current (Q4’24)Trend
AI server powerInitial design-ins; ~$50 BOM content per server; early sparks in Asia Increasing spot orders, Asia pickup; distributor slots insufficient Initial shipments; content ~$30–$40 per tray; visibility improving post-CNY Accelerating, still lumpy
Smart grid infrastructure$113M follow-on orders; key growth driver Large orders in Saudi/Europe; strategic Birkelbach acquisition Strong order intake; continued wins in China Structural growth
Regional mixEurope weak; Asia/Americas mixed Europe softness, Asia slight pickup Europe lagging; Asia bright spot with AI and grid Europe headwinds persist
Pricing/ASPsDistribution price alignments; stable passives, pressure in MOSFETs ASP decline, Newport drag ↑; semis pricing pressure ASP down ~0.6% q/q; semis aggressive competition; distribution alignment continues Ongoing pressure
Distribution inventory/SKUs+10k SKUs; 26 weeks inv; Asia improving POS 27 weeks inv; Europe POS weak 27 weeks inv; by region Asia 18.5w, Europe 23.4w, Americas 51.5w; nearly 50k SKUs added over 2 years Better positioned to capture turns
Newport integrationFull-quarter drag ~170 bps; transfers underway Drag ~150 bps; more transfers Drag ~175–200 bps; aim neutral exit-2025 Improving utilization
CapEx planFY24 $360–$390M (down from prior) Continuing; restructuring savings plan FY24 actual $320M; FY25 plan $300–$350M, 70%+ for capacity Modulated, focused

Management Commentary

  • CEO: “we saw many promising indicators including a positive book-to-bill for the first time in nine quarters, strong order intake for smart grid infrastructure projects, and initial shipments for A.I. servers” .
  • CFO: “Adjusted EBITDA for the quarter was $66 million for an adjusted EBITDA margin of 9.3%, down from 9.7%… SG&A… reflects higher R&D expenses incurred in Newport and some unanticipated legal and professional fees” .
  • CEO on capacity externalization: “Through [SK Key Foundry] we will be able to increase annualized capacity for MOSFETs by 12% in 2025… and… split gate MOSFET by 25%” .
  • CFO on margin path: “We hope to be margin neutral [at Newport] towards the end of the year… when we enter ’26, we’re profitable” .

Q&A Highlights

  • AI revenue content and visibility: Content ~$30–$40 per tray; uncertain GPU delivery timing; visibility expected to improve post-CNY; active design activity beyond NVIDIA into custom ASICs .
  • Margin trajectory: Newport drag to step down through 2025; higher depreciation and ASP declines factored into guidance; margin path is volume-driven .
  • Distribution inventory/pricing: ~27 weeks global inventory; Europe elevated; pricing aligned via published pricing adjustments (VPA); competitive on screen pricing; large-volume deals require aggressiveness .
  • CapEx and capacity: FY25 CapEx $300–$350M, majority for fabs (Newport, Itzehoe); capacity modulation via subcontractors and order flow; +23% capacity since Vishay 3.0 began .
  • Capital returns: Policy to return at least 70% of free cash; despite negative FCF in 2024 returned ~$105M; maintain dividend; opportunistic buybacks in 2025 .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (EPS, revenue, EBITDA) and forward periods were unavailable due to system retrieval limits. As a result, explicit beat/miss versus consensus cannot be determined here. Values retrieved from S&P Global would be presented if accessible.
  • Directionally, results tracked near internal guidance (Q4 revenue near $720M ± $20M guided range; GM near 20% guided), but GAAP EPS was negative due to a $66.5M goodwill impairment in MOSFETs (non-cash) .

Key Takeaways for Investors

  • Demand quality is improving (book-to-bill >1; smart grid and AI orders), but margins remain pressured by Newport drag, ASP declines, and Europe demand softness—watch the volume trajectory and margin step-up through 2025 .
  • Newport integration is the pivotal margin lever; management targets margin-neutral exit-2025—progress on technology transfers, customer qualifications, and utilization ramps are near-term catalysts .
  • Smart grid remains a secular growth driver, with vertical integration (Birkelbach) and strong backlog; this should support capacitor segment strength and mix improvement .
  • AI content opportunity is expanding across GPU and custom ASIC ecosystems; design-in breadth (MOSFETs, inductors, polymer tantalum, diodes, ICs) positions Vishay to capture higher BOM share—expect uneven but improving orders .
  • FCF likely negative again in 2025 given capacity investments; management intends to maintain dividends and opportunistic buybacks—balance sheet monitoring (cash, revolver use) is important for return durability .
  • Pricing pressure in semis may persist until industry utilization normalizes; distribution SKU expansion enhances turns capture, helping offset ASP headwinds over time .
  • Near-term trading: stock likely sensitive to Q1 margin execution and Newport utilization updates; medium-term thesis centers on Vishay 3.0 execution (capacity, externalization, SiC) and secular tailwinds in smart grid, AI, and automotive .