Vishay Reports Results for Third Quarter 2020

Rhea-AI Summary

Vishay Intertechnology reported Q3 revenues of $640 million, up from $581.7 million in Q2 and $628.3 million in Q3 2019. The company achieved a gross margin and operating margin of 23.7% and 9.6% respectively. Net earnings rose to $33.5 million or $0.23 per diluted share. Vishay acquired Applied Thin-Film Products for $25.9 million and repurchased $58.9 million of convertible notes. Guidance for Q4 stands at revenues of $620 to $660 million with a gross margin of 23.9%.

Positive

• Revenue increased by 10% quarter-over-quarter and 2% year-over-year.
• Net earnings rose to $33.5 million, indicating improved profitability.
• Successful acquisition of Applied Thin-Film Products expands business capabilities.
• Significant repurchases of convertible notes enhance financial stability.

Negative

• The adjusted EPS of $0.25 showed a decrease from $0.26 a year ago.
• Gross and operating margins remain pressured at 23.7% and 9.6% respectively, indicating cost challenges.

• Revenues Q3 of $640 million
• Gross margin Q3 of 23.7%; adjusted gross margin 23.7%
• Operating margin Q3 of 9.6%; adjusted operating margin 9.6%
• EPS Q3 of $0.23; adjusted EPS $0.25
• Free Cash for the trailing 12 months Q3 of $147 million
• Repurchased in Q3 $58.9 million principal amount of convertible notes due 2025;
  YTD repurchased $134.7 million principal amount for approximately 95% of face value
• Acquired the worldwide business and substantially all of the U.S. assets of Applied Thin-Film Products, a California-based manufacturer of custom, build-to-print thin film substrates for $25.9 million
• Guidance Q4 of revenues $620 to $660 million and gross margins of 23.9% plus/minus 70 basis points at a EUR/USD exchange rate of 0.86

MALVERN, Pa., Nov. 03, 2020 (GLOBE NEWSWIRE) -- Vishay Intertechnology, Inc. (NYSE: VSH), one of the world's largest manufacturers of discrete semiconductors and passive components, today announced its results for the fiscal quarter and nine fiscal months ended October 3, 2020.

Revenues for the fiscal quarter ended October 3, 2020 were $640.2 million, compared to $581.7 million for the fiscal quarter ended July 4, 2020, and $628.3 million for the fiscal quarter ended September 28, 2019. Net earnings attributable to Vishay stockholders for the fiscal quarter ended October 3, 2020 were $33.5 million, or $0.23 per diluted share, compared to $24.7 million, or $0.17 per diluted share for the fiscal quarter ended July 4, 2020, and $30.0 million, or $0.21 per diluted share for the fiscal quarter ended September 28, 2019.

As summarized on the attached reconciliation schedule, all periods presented include items affecting comparability. Adjusted earnings per diluted share, which exclude these items net of tax and the unusual tax items, were $0.25, $0.18, and $0.26 for the fiscal quarters ended October 3, 2020, July 4, 2020, and September 28, 2019, respectively.

Commenting on results for the third quarter 2020, Dr. Gerald Paul, President and Chief Executive Officer stated, “Following an historically unprecedented drop of sales to automotive customers in the second quarter, Vishay experienced a stronger than anticipated rebound of sales to automotive customers in the third quarter, as well as continued strength from Asian markets. Inventories of Vishay products at distribution were reduced by $18 million driven by high demand for consumer related products.”

Dr. Paul continued, “The expected recovery in the third quarter occurred more steeply than anticipated. Having reacted promptly by reducing fixed costs, Vishay is now ready to exploit the next upturn to the full extent. Our focus stays on profitability and cash generation while pursuing our long-term strategies as well as, especially during COVID-19, safeguarding the health and well-being of our employees.”

Commenting on the outlook Dr. Paul stated, “For the fourth quarter 2020 we guide for revenues in the range of $620 to $660 million at a gross margin of 23.9% plus/minus 70 basis points, assuming a EUR/USD exchange rate of 0.86.”

A conference call to discuss Vishay’s third quarter financial results is scheduled for Tuesday, November 3, 2020 at 9:00 a.m. ET. The dial-in number for the conference call is 877 589-6174 (+1 706-643-1406, if calling from outside the United States) and the access code is 7991697.

A live audio webcast of the conference call and a PDF copy of the press release and the quarterly presentation will be accessible directly from the Investor Relations section of the Vishay website at http://ir.vishay.com.

There will be a replay of the conference call from 12:00 p.m. ET on Tuesday, November 3, 2020 through 11:59 p.m. ET on Wednesday, November 18. The telephone number for the replay is +1 855-859-2056 (+1 404-537-3406, if calling from outside the United States or Canada) and the access code is 7991697.

About Vishay
Vishay manufactures one of the world’s largest portfolios of discrete semiconductors and passive electronic components that are essential to innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and medical markets. Serving customers worldwide, Vishay is The DNA of tech.™ Vishay Intertechnology, Inc. is a Fortune 1,000 Company listed on the NYSE (VSH). More on Vishay at www.Vishay.com.

This press release includes certain financial measures which are not recognized in accordance with U.S. generally accepted accounting principles ("GAAP"), including adjusted net earnings; adjusted earnings per share; adjusted gross margin; adjusted operating margin; free cash; earnings before interest, taxes, depreciation and amortization ("EBITDA"); adjusted EBITDA; and adjusted EBITDA margin; which are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission rules. These non-GAAP measures supplement our GAAP measures of performance or liquidity and should not be viewed as an alternative to GAAP measures of performance or liquidity. Non-GAAP measures such as adjusted net earnings, adjusted earnings per share, adjusted gross margin, adjusted operating margin, free cash, EBITDA, adjusted EBITDA, and adjusted EBITDA margin do not have uniform definitions. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies. Management believes that such measures are meaningful to investors because they provide insight with respect to intrinsic operating results of the Company. Although the terms "free cash" and "EBITDA" are not defined in GAAP, the measures are derived using various line items measured in accordance with GAAP. Reconciling items to arrive at adjusted net earnings represent significant charges or credits that are important to understanding the Company's intrinsic operations. Reconciling items to calculate adjusted gross margin, adjusted operating margin and adjusted EBITDA represent those same items used in computing adjusted net earnings, as relevant. Furthermore, the presented calculation of adjusted EBITDA is substantially similar to, but not identical to, a measure used in the calculation of financial ratios required for covenant compliance under Vishay's revolving credit facility. These reconciling items are indicated on the accompanying reconciliation schedules and are more fully described in the Company's financial statements presented in its annual report on Form 10-K and its quarterly reports presented on Forms 10-Q.

Statements contained herein that relate to the Company's future performance, including statements with respect to forecasted revenues, margins, inventories, product demand, anticipated areas of growth, market segment performance, and the performance of the economy in general, are forward-looking statements within the safe harbor provisions of Private Securities Litigation Reform Act of 1995. Words such as "believe," "estimate," "will be," "will," "would," "expect," "anticipate," "plan," "project," "intend," "could," "should," or other similar words or expressions often identify forward-looking statements. Such statements are based on current expectations only, and are subject to certain risks, uncertainties and assumptions, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance, or achievements may vary materially from those anticipated, estimated or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; manufacturing or supply chain interruptions or changes in customer demand because of COVID-19; delays or difficulties in implementing our cost reduction strategies; delays or difficulties in expanding our manufacturing capacities; an inability to attract and retain highly qualified personnel; changes in foreign currency exchange rates; uncertainty related to the effects of changes in foreign currency exchange rates; competition and technological changes in our industries; difficulties in new product development; difficulties in identifying suitable acquisition candidates, consummating a transaction on terms which we consider acceptable, and integration and performance of acquired businesses; changes in U.S. and foreign trade regulations and tariffs, and uncertainty regarding the same; changes in applicable domestic and foreign tax regulations, and uncertainty regarding the same; changes in applicable accounting standards and other factors affecting our operations that are set forth in our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The DNA of tech™ is a trademark of Vishay Intertechnology.

Contact:

Vishay Intertechnology, Inc.
Peter Henrici
Senior Vice President, Corporate Communications
+1-610-644-1300

VISHAY INTERTECHNOLOGY, INC. Summary of Operations (Unaudited - In thousands, except per share amounts)
	Fiscal quarters ended
	October 3, 2020				July 4, 2020				September 28, 2019
Net revenues	$	640,160			$	581,717			$	628,329
Costs of products sold*		488,451				451,047				478,250
Gross profit		151,709				130,670				150,079
Gross margin		23.7	%			22.5	%			23.9	%
Selling, general, and administrative expenses**		90,219				89,127				91,796
Restructuring and severance costs		-				743				7,255
Operating income		61,490				40,800				51,028
Operating margin		9.6	%			7.0	%			8.1	%
Other income (expense):
Interest expense		(7,414	)			(8,430	)			(8,564	)
Other		(4,898	)			(1,484	)			1,718
Loss on early extinguishment of debt		(3,454	)			(1,146	)			-
Total other income (expense) - net		(15,766	)			(11,060	)			(6,846	)
Income before taxes		45,724				29,740				44,182
Income tax expense		12,063				4,845				13,917
Net earnings		33,661				24,895				30,265
Less: net earnings attributable to noncontrolling interests		177				242				227
Net earnings attributable to Vishay stockholders	$	33,484			$	24,653			$	30,038
Basic earnings per share attributable to Vishay stockholders	$	0.23			$	0.17			$	0.21
Diluted earnings per share attributable to Vishay stockholders	$	0.23			$	0.17			$	0.21
Weighted average shares outstanding - basic		144,854				144,846				144,628
Weighted average shares outstanding - diluted		145,197				145,170				145,027
Cash dividends per share	$	0.095			$	0.095			$	0.095

* Includes incremental costs of products sold separable from normal operations directly attributable to the COVID-19 outbreak of $242 and $923 for the fiscal quarters ended October 3, 2020 and July 4, 2020, respectively.
** Includes incremental selling, general, and administrative expenses (benefits) separable from normal operations directly attributable to the COVID-19 outbreak of $(441) and $(747), for the fiscal quarters ended October 3, 2020 and July 4, 2020, respectively.

VISHAY INTERTECHNOLOGY, INC. Summary of Operations (Unaudited - In thousands, except per share amounts)
	Nine fiscal months ended
	October 3, 2020				September 28, 2019
Net revenues	$	1,834,718			$	2,058,728
Costs of products sold*		1,405,099				1,522,889
Gross profit		429,619				535,839
Gross margin		23.4	%			26.0	%
Selling, general, and administrative expenses*		279,178				290,332
Restructuring and severance costs		743				7,255
Operating income		149,698				238,252
Operating margin		8.2	%			11.6	%
Other income (expense):
Interest expense		(24,396	)			(25,160	)
Other		(6,184	)			3,233
Loss on early extinguishment of debt		(7,520	)			(1,307	)
Total other income (expense) - net		(38,100	)			(23,234	)
Income before taxes		111,598				215,018
Income tax expense		25,658				64,377
Net earnings		85,940				150,641
Less: net earnings attributable to noncontrolling interests		584				667
Net earnings attributable to Vishay stockholders	$	85,356			$	149,974
Basic earnings per share attributable to Vishay stockholders	$	0.59			$	1.04
Diluted earnings per share attributable to Vishay stockholders	$	0.59			$	1.03
Weighted average shares outstanding - basic		144,831				144,602
Weighted average shares outstanding - diluted		145,221				145,114
Cash dividends per share	$	0.285			$	0.275

* Includes incremental costs of products sold and selling, general, and administrative expenses (benefits) separable from normal operations directly attributable to the COVID-19 outbreak of $4,295 and $(871), respectively.

VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (In thousands)
	October 3, 2020				December 31, 2019
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	682,422			$	694,133
Short-term investments		29,538				108,822
Accounts receivable, net		342,691				328,187
Inventories:
Finished goods		119,221				122,466
Work in process		197,806				187,354
Raw materials		123,176				121,860
Total inventories		440,203				431,680
Prepaid expenses and other current assets		120,490				141,294
Total current assets		1,615,344				1,704,116
Property and equipment, at cost:
Land		75,335				75,011
Buildings and improvements		619,228				585,064
Machinery and equipment		2,678,629				2,606,355
Construction in progress		78,059				110,722
Allowance for depreciation		(2,534,027	)			(2,425,627	)
		917,224				951,525
Right of use assets		103,235				93,162
Goodwill		157,406				150,642
Other intangible assets, net		67,839				60,659
Other assets		172,785				160,671
Total assets	$	3,033,833			$	3,120,775

VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (continued) (In thousands)
	October 3, 2020				December 31, 2019
	(Unaudited)
Liabilities and equity
Current liabilities:
Notes payable to banks	$	4			$	2
Trade accounts payable		159,016				173,915
Payroll and related expenses		130,252				122,100
Lease liabilities		21,924				20,217
Other accrued expenses		169,379				186,463
Income taxes		22,699				17,731
Total current liabilities		503,274				520,428
Long-term debt less current portion		392,290				499,147
U.S. transition tax payable		125,438				140,196
Deferred income taxes		8,670				22,021
Long-term lease liabilities		86,043				78,511
Other liabilities		101,191				100,207
Accrued pension and other postretirement costs		277,758				272,402
Total liabilities		1,494,664				1,632,912
Redeemable convertible debentures		-				174
Equity:
Vishay stockholders' equity
Common stock		13,256				13,235
Class B convertible common stock		1,210				1,210
Capital in excess of par value		1,410,335				1,425,170
Retained earnings		115,184				72,180
Accumulated other comprehensive income (loss)		(3,340	)			(26,646	)
Total Vishay stockholders' equity		1,536,645				1,485,149
Noncontrolling interests		2,524				2,540
Total equity		1,539,169				1,487,689
Total liabilities, temporary equity, and equity	$	3,033,833			$	3,120,775

VISHAY INTERTECHNOLOGY,  INC. Consolidated Condensed Statements of Cash Flows (Unaudited – In thousands)
	Nine fiscal months ended
	October 3, 2020				September 28, 2019
Operating activities
Net earnings	$	85,940			$	150,641
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		123,776				122,302
(Gain) loss on disposal of property and equipment		257				(168	)
Accretion of interest on convertible debt instruments		10,232				10,558
Inventory write-offs for obsolescence		17,891				19,214
Loss on early extinguishment of debt		7,520				1,307
Deferred income taxes		(1,142	)			(4,481	)
Other		3,188				9,029
Change in U.S. transition tax liability		(14,757	)			(14,757	)
Change in repatriation tax liability		(16,258	)			(38,814	)
Changes in operating assets and liabilities, net of effects of businesses acquired		(27,408	)			(42,810	)
Net cash provided by operating activities		189,239				212,021
Investing activities
Purchase of property and equipment		(70,801	)			(100,267	)
Proceeds from sale of property and equipment		293				486
Purchase of businesses, net of cash acquired		(25,852	)			(11,862	)
Purchase of short-term investments		(157,177	)			(59,440	)
Maturity of short-term investments		241,016				79,765
Other investing activities		(529	)			4,021
Net cash used in investing activities		(13,050	)			(87,297	)
Financing activities
Issuance costs		-				(5,394	)
Repurchase of convertible debt instruments		(148,177	)			(22,695	)
Net changes in short-term borrowings		(110	)			(12	)
Dividends paid to common stockholders		(37,779	)			(36,396	)
Dividends paid to Class B common stockholders		(3,448	)			(3,327	)
Distributions to noncontrolling interests		(600	)			(600	)
Cash withholding taxes paid when shares withheld for vested equity awards		(2,016	)			(2,708	)
Net cash used in financing activities		(192,130	)			(71,132	)
Effect of exchange rate changes on cash and cash equivalents		4,230				(8,141	)
Net increase (decrease) in cash and cash equivalents		(11,711	)			45,451
Cash and cash equivalents at beginning of period		694,133				686,032
Cash and cash equivalents at end of period	$	682,422			$	731,483

VISHAY INTERTECHNOLOGY,  INC. Reconciliation of Adjusted Earnings Per Share (Unaudited - In thousands, except per share amounts) 
	Fiscal quarters ended												Nine fiscal months ended
	October 3, 2020				July 4, 2020				September 28, 2019				October 3, 2020				September 28, 2019
GAAP net earnings attributable to Vishay stockholders	$	33,484			$	24,653			$	30,038			$	85,356			$	149,974
Reconciling items affecting gross profit:
Impact of the COVID-19 outbreak	$	242			$	923			$	-			$	4,295			$	-
Other reconciling items affecting operating income:
Restructuring and severance costs	$	-			$	743			$	7,255			$	743			$	7,255
Impact of the COVID-19 outbreak		(441	)			(747	)			-				(871	)			-
Reconciling items affecting other income (expense):
Loss on early extinguishment of debt	$	3,454			$	1,146			$	-			$	7,520			$	1,307
Reconciling items affecting tax expense (benefit):
Change in deferred taxes due to early extinguishment of debt	$	-			$	-			$	-			$	(1,346	)		$	(1,312	)
Effects of tax-basis foreign exchange gain		-				-				-				-				7,554
Effects of cash repatriation program		-				(190	)			2,604				(190	)			1,971
Tax effects of pre-tax items above		(716	)			(589	)			(1,644	)			(2,787	)			(1,934	)
Adjusted net earnings	$	36,023			$	25,939			$	38,253			$	92,720			$	164,815
Adjusted weighted average diluted shares outstanding		145,197				145,170				145,027				145,221				145,114
Adjusted earnings per diluted share	$	0.25			$	0.18			$	0.26			$	0.64			$	1.14

VISHAY INTERTECHNOLOGY,  INC. Reconciliation of Free Cash (Unaudited - In thousands)
	Fiscal quarters ended												Nine fiscal months ended
	October 3, 2020				July 4, 2020				September 28, 2019				October 3, 2020				September 28, 2019
Net cash provided by operating activities	$	64,330			$	90,431				76,202			$	189,239			$	212,021
Proceeds from sale of property and equipment		63				177				22				293				486
Less: Capital expenditures		(21,969	)			(24,504	)			(30,119	)			(70,801	)			(100,267	)
Free cash	$	42,424			$	66,104			$	46,105			$	118,731			$	112,240

VISHAY INTERTECHNOLOGY,  INC. Reconciliation of EBITDA and Adjusted EBITDA (Unaudited - In thousands)
	Fiscal quarters ended												Nine fiscal months ended
	October 3, 2020				July 4, 2020				September 28, 2019				October 3, 2020				September 28, 2019
GAAP net earnings attributable to Vishay stockholders	$	33,484			$	24,653			$	30,038			$	85,356			$	149,974
Net earnings attributable to noncontrolling interests		177				242				227				584				667
Net earnings	$	33,661			$	24,895			$	30,265			$	85,940			$	150,641
Interest expense	$	7,414			$	8,430			$	8,564			$	24,396			$	25,160
Interest income		(514	)			(956	)			(2,365	)			(3,324	)			(6,711	)
Income taxes		12,063				4,845				13,917				25,658				64,377
Depreciation and amortization		41,618				40,638				40,956				123,776				122,302
EBITDA	$	94,242			$	77,852			$	91,337			$	256,446			$	355,769
Reconciling items
Impact of the COVID-19 outbreak	$	(199	)		$	176			$	-			$	3,424			$	-
Restructuring and severance costs		-				743				7,255				743				7,255
Loss on early extinguishment of debt		3,454				1,146				-				7,520				1,307
Adjusted EBITDA	$	97,497			$	79,917			$	98,592			$	268,133			$	364,331
Adjusted EBITDA margin**		15.2	%			13.7	%			15.7	%			14.6	%			17.7	%
** Adjusted EBITDA as a percentage of net revenues

FAQ

What were Vishay's Q3 revenues for 2020?

Vishay reported Q3 revenues of $640 million.

What is Vishay's guidance for Q4 2020?

Vishay's guidance for Q4 2020 is revenues between $620 to $660 million.

How much did Vishay repurchase in convertible notes in Q3 2020?

Vishay repurchased $58.9 million in convertible notes in Q3 2020.

What was the adjusted EPS for Vishay in Q3 2020?

The adjusted EPS for Vishay in Q3 2020 was $0.25.

What acquisition did Vishay announce in Q3 2020?

Vishay announced the acquisition of Applied Thin-Film Products for $25.9 million.