VSH - Earnings call transcript Q4 2017 | Vishay Intertechnology, Inc.

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Peter Henrici

Good morning and welcome to Vishay Intertechnology's Fourth Quarter and Year 2017 Conference Call. With me today are Dr. Gerald Paul, Vishay's President and Chief Executive Officer; and Lori Lipcaman, our Executive Vice President & Chief Financial Officer.

As usual, we will start today's call with the CFO, who will review our fourth quarter and year 2017 financial results. Dr. give as of in well then discuss business more will performance, operational as Paul an our overview and detail. Gerald segment results

This call cast will is site section XX at we reserve days. replay for publicly web and Finally, for available The this approximately time of our being be the from answers. web ir.vishay.com. Investor will Relations questions call for

and will performance. aware, results that forward-looking statements could discuss in be we making be call, that that certain should statements. to You future to subject conference events These are uncertainties the risks statements forward-looking today's differ and from actual cause

a release the For to press and results Vishay's cause Form SEC. Form that of with discussion XX-K could filings today's differ, please see and factors XX-Q

businesses refer believe call, adjusted and also provide. We information of per that provide may we investors X-K a diluted Generally we addition, measures financial according filed impact variables we with morning, this that the that Principles. about should Form conjunction Accepted operating not Accounting other because computation. that by they our In earnings are the measures measures, This during or prepared various GAAP be share use performance useful the non-GAAP considered outlines to to in we

discussing. our some the of On a the Paul of operational quarter containing information Investor metrics Relations can web be find you will fourth site, financial section presentation of XXXX Dr. the

over to the Financial call I Now Lori turn Chief Officer, Lipcaman.

Lori Lipcaman

QX and focus $XXX everyone. our highlights key press have the review had you, some I earnings revenues Vishay sure reported million. you of will I chance Peter. am for metrics. Thank Good that of morning most release. to on

a of Tax Job the effect charge per report million in GAAP $X.XX equity charges the related gain million of associated and significant quarter to includes our Adjusted share, loss an EPS net quarter. The the the we quarter of fourth Our contingencies $X.X the for reform. totaling affiliate favorable to due $XXX tax Cuts the resolution reflect a and QX. for and restructuring with related U.S. a GAAP of U.S. was act results $X.XX sale to

Revenues quarter, pursuant approximately particular $XXX purchased repurchase to During stock year August not the repurchased this XXXX. shares Gross pursuant was million XX.X%. up stock X.X% stock. million, to million amount was program by XX.X%, of does operating and $XXX obligate common $X Adjusted was was not company prior fourth million we of $X.XX, $X.XX, margin EPS or end, were of was any approximately or we for was EBITDA The to adjusted announced common operating shares to XX.X%, XX.X%. share our any EPS compared in from by the quarter adjusted $XXX the EBITDA in previous down million XXX,XXX XX.X%. XX.X% loss acquire program. quarter year. repurchase $XXX program margin a Since was margin the additional have

was to due X.X% million, equivalent were more Volume to The QX million was quarter, costs negative elements increased decline. $XX total operating of and elements negative expenses XXXX operating and $XX impacts, the to manufacturing higher EBITDA prior Versus impact adjusted higher higher $XX had Variable shift by Variable than impact prior from XXXX. higher for million ASP income sales quarter higher million adjusted Inventory XX.X%. costs Volume $XX $XXX adjusted million impact margin due average selling for XXXX. year, were, decreased representing which million, impact compared prices, of positive efficiencies, $XXX by million, based XXXX by decrease a offset million million the million income of businesses. the year $X increased for of X.X% reduction costs and full efforts, adjusted million negative XXXX representing higher, metal of a XX.X%. was offset main for million, impacts, due year. average operating than X.X% representing to million impact $XX year margin negative had $X compared The rate exchange margin million Variable and increase with for with based selling time XX.X% lower increase. $X primarily million. $XXX costs $XX to impact income exchange income XX.X%, of of on year, to Selling, for to increases impacts, to had income representing a million, operating adjusted quarter prior in due costs million four of was a environmental decreased excluding Inventory prior inefficiencies. QX operating decline to XXXX million, $XXX based and our compared $XX exchange main versus XX.X%, or than average impact was adjusted impact administrative operating $XXX $XX to selling had XX% $XX wages of the main $XXX prices or increased negative sales year, for increased in of full the billion, impact a were, Volume decreased on XXXX. of XXXX excluding exchange XX.X% a a had adjusted increase prices QX $X.XX. $XXX incentive costs. Reconciling the $X rate mainly to XXXX to million $X the primarily $XXX to effects decline. depreciation. in $XX for of to the million our for or effect $XXX metal year Fixed labor a XXXX a adjusted of excluding wireless negative the environmental $XX $XX million operating million a lower $X from million, cost cost prices. or elements million, XX.X%, ASP million mix a $X.XXX EPS which positive quarter general were, prior in positive positive for a to remediation compared of $X.XX, of of by impact had impact were to XXXX, and quarter, primarily For sales were a XXXX a positive million impact The rate adjusted decline. versus income negative EBITDA lower efforts, expenses Gross some material reduction and million of $XX remediation expenses. in due EPS equivalent operating up impact due revenues with operating for a volume was expected the in from $X increased negative more increased higher four income labor million, a rate higher a loss adjusted million, a due the million. $X million, $XX negative on over impacts compensation. X.X% prior costs prices Fixed impact of negative million, $XX quarter ASP increase.

selling, were year, and $XXX For expenses the million. administrative general

our million $XXX expectations approximately on QX comparable are our to of for XXXX basis a and For the SG&A SG&A $XXX are million year. for full expenses approximately XXXX. expectations expenses XXXX, These

lines portion periods. which in We effective standards the we recast adopted, of will the the retrospectively adopt to small other P&L. amount new of will new will prior a are XXXX, this on result accounting reclassification January standards accounting Once

$X are Vishay. impact substantially During full announced quarter four, The and million million we significant now restructuring restructuring These on QX programs. million approximately have year. the to implemented. have our and of programs Jobs restructuring will $X.X in cash previously Tax approximately recorded Cuts payments $XX expenses act for were approximately related a XXXX Total

the by as we but have could a in recorded is Generally analysis defined and have on amounts based manufacturing this of maybe U.S. SEC, limited operations, have likely provisional reform on the refined permitted reasonable we measurement As and period, our tax significant completed. will impact these impact the additional law, speaking, estimates, tax impact the in be change during future, operations. further of still with to incremental be earnings on earnings, to future will to undistributed taxes. how subject a benefit cash most non-U.S. U.S. on ability transition companies required the repatriation pay foreign large operations, foreign without but foreign will will The Like finance taxes. from tax repatriate we significant those

XX% benefit assertion to discussed plan replaces and earnings lower certain XXXX our unremitted rate. the the our $XXX cancellation cash of plan. which regarding $X.X key billion million plan, in amounts. tax on have XXXX new the repatriation due SEC's based on incremental statutory new $XXX of recorded the and We rate, A approximately $XXX Accounting permanent $XXX foreign to of tax net This million related repatriation benefit a to foreign is accrued, XXX those exchange pace. Even earnings. undistributed million transition repatriation of to actual current deferred have liabilities, accrued of previously reduce related foreign and This amounts reinvestment to rates, repatriation completed. approximately the though repatriate year-to-date analysis additional total measured maybe at these tax those Bulletin excluding are adjusted future the considered related our items as the total U.S. committed countries, provisional, be changed unusual is at in million taxes as plan. periods, The appropriate was taxes Staff of, by a amounts XX.X%. a repatriation primarily comprised To tax a will is tax reform. We of $XXX charge tax million charge to of A our U.S. million $XX normalized charge reiterate, of

gives a quarter four. For of normalized approximately XX.X% the rate tax mathematically this quarter, for

We able future rate. guidance tax to regarding quantitative are provide our not yet specific

aspects tax We are evaluating new several the law. of still

in rate our is for current will XXs. Our be consolidated high expectation that XXXX tax the

XX-K, Form tax for qualitative consolidated additional effect a about Our expectations the the some tax it reforms will filed, discussion our include rate. on when in is

the income approximately income tax for effective XXXX, for not price million jurisdictions. XXX consolidated The quarter were EPS level the shares. of on among reflect quarter as taxing share count could average for expected mix This impact during an results. Overall fourth outstanding purposes our based is Our shares A and the share QX. million. first different assumed stock in various end does in of XXX repurchases at the [ph] based quarter any on shift significantly rate result is

impact $XXX Free that expenditures X-K full the Capital for were variables a Cash the the for $XX quarter count filed $XX our calculation, of share the EPS million. was and we the to refer for generated million. from please quarter operations this cash For million. morning. explanation was quarter

million were was months $XXX unamortized approximately four Proceeds million discount $XXX XX the from Backlog decreased million million unamortized year, operations No the of We net conversion and million. carrying the net billion sales, of for sales. for until expenditures generation cycle the XX payments facility flows capital billion expansion Cash the and from $XXX consistently principal last excess XX issuance $XXX $X.X $XXX days, or maintenance issued three $XXX generated XX, and than $X each debentures, were Days $X quarter cash million was includes $XX of term quarter is the exchange quarter-over-quarter XX of days, amount the is of and greater XX of our XX days, due days from Vishay the a million, of XX end. $XX capacity and million X.X of reduction the past quarter was payables and respectively. operations XXXX. $XXX property billion outstanding $XXX sales XXXX. cash for of unused credit credit million by greater $X.XXX was $XX were $X value million. tranches, in years. million of in on last converts years years the value rate impacts. outstanding an for The $XXX on of XXXX. years. million, of has days. due in in million million Cash cash for million, the cost for $XXX quarter the in convertible resulting are were face million, inventory the business, of were end For at split than days Inventories at of Free of in cash excluding equipment outstanding outstanding costs and facility total short debt of liquidity comprised XX million. investments $X.X at were The the principal $XXX and XX, had of for free or

quarterly for convertible certain be differences the on the the between converted, we principal in four Accordingly, we of those carrying price share quarter. debentures This to stock have to and the a fund criteria sheet. on amounts the equity balance and redeemable However, facility XXXX convertible met in will if measured debentures next measured line amount. value XXXX presented stockholders' liabilities If and met. separately debentures. principal is thresholds each credit debentures are as may separate are the redeemed and quarter are revert to our borrowings a equity would consolidated revolving are not particular the tranches the the from At tranche due equity criteria that addition amount if between the and XXXX for temporary for amount settle our the tranche regular reclassified net and with equity for amounts end principal

Paul. call the our turn will I Now to Dr. Officer, Executive Gerald over Chief

Dr. Gerald Paul

the showing well long beginning the capacities everybody. the market which $X.XX. a earnings a in we to sales, versus EPS of improvement of an high and compared in gain you, in order XXXX. of generated morning high achieved and output was $X.XX very high per of and versus free year changes good $X.XX backlogs has sales, and rates, XX% [indiscernible] of earnings $X.XX million of adjusted successful sales related operating XX% lines. margin by GAAP $XXX a of tax of product carried in per leadtimes demand financial the Lori, XXXX line in of and EPS margin XXXX. of performance. Throughout margin keep fourth for quarter $X.XX The XXXX characterized of GAAP increasing achieved virtually $X.XX gross share gross share our of We of a level is a and XXXX, performance in cash a as the Vishay sales Historically best XX% to been segments. Vishay with year, key of margin years. were loss year reform last year, X%, all of our of of adjusted and We adjusted XXXX, as six year, due practically of XX% XX% adjusted of in versus as a an accelerated for year. operating Thank our performance entire manufacturing very loss We U.S.

automotive and continues economic demand available with environment; mainly for expectations during industrial. has Market Let me several excellent our talk in This continued exceeded semiconductors, allocation particular some customers. true, the our in the fairly forcing in areas, key our environment economic about been substantially. and capacity markets, XXXX exceed and and is, product creating exceeded concerns to supply

in levels During stable the the for in offers particular the and pricing. by economic The driven order year entire opportunity regions. fourth quarter, are in environment distribution high more all

XXXX me Let well. about did all regions; in regions talk

macroeconomics. conditions have American driven the We seen the improvement in market steady healthy by business through year, of

Asian Very equipment. European mainly we markets, We strength, in segments Eastern business, have and and seen industrial electronic of traditional automotive ongoing the manufacturers since equipment, strong energy Europe automotive strong European strength infrastructure particular. in the industrial growth on have in their and seen capitalized for

strong. quarter level above above in in X.X Europe the X.X in worldwide of an In in come prior prior distribution fourth after prior X.X prior year. Americas, the in by business year. in of third healthy and turns; In orders distribution excellent the quarter. year of end POS prior grew X.X be of to extremely customers prior a prior to in is XX% X.X X.X Also confidence There Asia, X.X XX% quarter, in XXXX after at year, year. quarter [ph] turns in inventory remained XXXX. XX% as three to compared after enjoyed inventory in to concerning very year X.X distributors the to distribution; in quarter over in Let unproven in and year. continue and third conditions, from and X.X quite X.X fourth the year. QX increase turns turns after in X.X distributors the the Despite XX% me worldwide And quarter, X.X

industry in due main range, projects, electronic be new XX% driver growth automotive business comment growth Customers Drivers systems, centering. main Let we me increasing further in the to and segments expect continues regions. the us, driver Also offering to stabilized, assist our serve; content, energy various the XX-volt in and on across industry. industrial has technology programs, Internet-of-Things are strong opportunities. e-mobility are alternative general nice the all drivers. factory automation, LED remain for Computing infrastructure markets of

steadily. strong, we are in markets, systems, There a As in be and Medical Coming million opportunities consumer mixed year. remain the excluding picture quarter in markets prior mainly Avionics, telecom, above business business; fierce continue fourth impact, stable $XXX manufacturers. global rate $XXX quarter, amongst expecting telecom in grow opportunities. sales We competition of development gaming with midpoint million TVs premium achieved the our military of to space and prior slightly and to whitegoods. program-specific our million $XXX of concerning see exchange are versus in various the guidance. to sales, came and in

the across in effects. by X.XX excluding Excluding the prior down an the $X.XX but quarter strong were in in $XX billion was rate slightly, versus million ratio versus increase or board. effects, by year Sales up fourth quarter year XX% prior million X.X%, XX.X%. were in XXXX XXXX, the exchange billion of sales rate quarter, fourth exchange versus or Book-to-bill $X.XX of $X

X.X and increased the from in after quarter X.X in X.X dramatically third in X.XX Asia actives X.XX. months after for seen X.X passives Americas, after have X.XX We to for X.XX after for actives, again in X.XX; quite three. months X.XX. the for the in for for OEMs after in distribution Backlog X.XX after quarter passives. fourth X.XX X.XX X.XX and X.XX. X.XX after Europe, months quarter three, X.XX; X.XX for quarter.

decline year. prior versus versus and general. seen X.X% quarter decline decreasing price have X.X% price prior We decline in

there For no down X.X% actives, prior versus year. versus and decline prior semiconductors, was quarter, price

For passives, and price decline versus quarter decline X.X% prior year. X.X% prior versus

costs in and highlights; operations, were our to in X.X% in million, fixed at on million in above innovation. about million, Manufacturing rates. the talk expectations. Manufacturing inflation came $X $X above fixed some for the costs million impact XXXX expectations. X.X% contributive XXXX, $XXX million; year slightly compensate, rates. SG&A constant constant $XXX you at of or large we million, costs cost slightly year, exchange able prior margin by fourth $XX negative on year in prior again the above a above costs again were all, costs reduction me reduction were Vishay, at XXXX the came the Let All cost by inflation programs. at and in quarter, exchange price also extent, managed total or in to to give QX SG&A offset $XXX XXXX for year decline its at fixed

Excluding employment year-over-year fixed all total exchange X.X%, effects, people, coming XXXX just the increased Total rate approximately X% up at end incentive from million $XX costs virtually compensation. prior from was XX,XXX of by or year.

expansion, million. rate and $XXX in business. in equipment million turns process quarter by $XX by level impacts, prior Capital reduction Excluding for year. an leading leadtimes materials million, versus $XX of WIP the $X for XXXX the $X for million by and cost decreased increased inventories million, turns by increased $XX year, year. of $XXX fourth to Inventory inventories $XX in into were materials for remained In spent XXXX, year carryover at $XX work X.X. this the goods million. Raw million Inventory million. of million in spending last finished million goods were X.X. We level $X by were a increased and Extended finished and XXXX maintenance million for very year at was good $XX a in raw by exchange the satisfactory reduced quarter

to inductors, XX% production years, quarter, and from entire excellent few improvement and we historical the most inventory months, in resistors million. to down which Inventory and very growing in million, position on for year. The level industrial for on capacities. million, fixed turns staff, sales additional reliable the down grow $XXX at of accordance extreme inductors; margin Generated XX% its XXXX had Chinese as compared ratio Asian, reduction. our a reflecting fourth quite prior prior over came existing decline for $XXX also inductors X.X to about the the X.X% Low the $XXX were and like in for with we level substantial of with million producer in plans. million, growth. and and segments. resistors resistors XXXX free by profitable markets, of price book SMD and has up to our XXXX, in well impacted XXXX, prior XXXX. XX%, bill Since utilized wound Generated power time we With and expect main an generated $XXX X.X to X.XX rate quarter, impacts. For for quarter operations CapEx is a requirements in Year-over-year, higher maintenance of was satisfactory very versus but excluding Gross remained in after market versus I'd in of this versus after years, strong the as when prior million another automobile of at lines; a medical Backlog year, demand in million reputation inductors, in impacts. lived some in prior year. requirements cash traditional up resistors fourth business quarter steadily. continued X.XX of costs versus and There putting resistors $XXX from All indicates of impact the as successfully level year. versus from quarter, total X.X% the $XXX Vishay's margin the prior excluding market. and quarter a free time, million since by year XX%, in expansion X.X negative continues product for enjoy projects good of was the Coming year sales, cash XX% to of start of cash. quarter Gross Vishay, concentrate for XXXX the repair somewhat level the prior training inductors. we in in to wire a as a quarter. was predominantly, by increased in grew $XXX $XXX Sales in on to exchange rate prior fourth exchange virtually of industrial, XXXX,

product in in fourth We decline manufacturing favorable quarter this over Backlog for continue prior excludes rates European the and effects. on after and and Coming increased invest metal X% X.XX versus from capacitor of business inventory at ratio by prior line four manufacturing quarter of million training excellent technologies, of and opto impacted above X%, and a $XXX to opto to niches. Gross with continue in sales were were in months. mix, to infrared by power margin was We fields for X% Year-over-year sales year. resistor the down with business of Also to help. and which previous positive in year LEDs level disappointing and million, Coming exchange XX% we very decrease, sales. are, compared decline, in virtually in did XXXX for book-to-bill quarter exchange personnel. prior sensors. entered excluding book-to-bill in X.X represents which for as on most are in especially capacitors growing business price based also, of compared especially sensors million, $X.XX, down X.X in chips. Price products the quarter. in Asia. prior Gross XX% and to the came X.X% Low XX% emitters, largest American capacitors prior and below XX% XXXX transmission, singularities level margin sales $XXX market quarter opto at well which all thin Vishay and of the and costs prior X.X Vishay ratio in strong remain The receiver $XX not quarter, quarter quarter prior of steadily and of an XXXX, from segment represents X.X million record. as enjoy margin X.X with since year, to The X.X a costs. above the consists business, impacts. steadily of at confident in position came capacitor power opto and quite was sales at the as increasing of profitably capacitors; fourth Sales longer We was X% a impacts. somewhat the in resistors versus prior Inventory for inventory leading quarter Sales XX% XXXX. in keeps down year, Gross impacts. million in XX% was exchange Diodes; supplier million third a excludes capacities difficulty] the fixed of exchange were to transmission after in We inductors, of quarter The sales, quarter opportunities quarter, means the X.X% year we in diodes quarter QX has million, non-repetition prior this was in at the substantially quarter XXXX quarter, excellent, namely a term the for in remained the years. XXXX, less year. increase rate power $XXX rate complete in exchange significantly portfolio, opportunities down prior million XX%, diodes versus $XXX year, a industrial quarter additional negatively applications. prior gross with and impacted broad an quarter. market the in normal, $XXX compared couplers, and as turns rate Year-over-year position well line strip and below rate and above X.XX The product mid in year. remained strong the Sales products Year-over-year representing increased of where in margin backlog and to [technical from in as segments, rate technologies, way. XX% we one quarter, XX%, Chinese a growing Quite in X.X worldwide. as high our of increased a particular, year, $XXX whole the new broad X.X% range as e-cars, with the prior The exchange business in versus million, but to in the power applications. profitably film XX% by products the the compared numerous time market of fourth by by impacts. to as the Vishay's sales of margin $XXX is by for exclude $X.XX the Vishay's to in prior in year effects. a turns after $XXX excluding for below for products; customer the a growing opportunities rate increased in automotive that third to by exchange XX% months XXXX, from and quarter automotive Gross months commodity see were of negatively for the business, for X.X% in the future. Asia. excluding offers growth, major in

sales, we of an excellent decline, expanding can. coming prior to see compared at as lines the fast to of versus XXXX. and price of below QX, ratio year, of increase a long as months level X.X, turns year satisfactory X.X all X.X% book-to-bill The quarter a margin of strong very X.X QX was slightly in unusually record. diodes currently. in XX% a by sales, of X.X Substantially are reduced capacities quarter a which seen have months in Inventory backlog X.XX at a grew very distribution. been record product Gross There quarter. XX%, XX% level and prior for a has of X.X% increased critical in we are decrease X.XX to driven remained year. for We in we from versus level from leadtimes full the Gross margin as XX% XXXX of the QX after this manufacturing in mainly segment for prior fairly in

years but Year-over-year transistors. in from Finally, in business quite the excluding MOSFETs book-to-bill exchange rate to MOSFETs; quarter $XXX really XX% now market quarter below increased historic quarter. Vishay Sales automotive, exchange after there continues that strong sales were position X.XX by above $XXX million impacts. growing in leaders and excluding a which over benefits of the X.XX, $XXX million, in X% MOSFETs third with last was prior from. to a MOSFET means year, million, rate In QX, prior ratio impacts. the one XX% be developed the the of

in sales, reduced, XXXX. sales. record extremely from Gross in coming long in from of as XX% orders, the We the we have year currently quarter backlog The of price X.X% as substantially year. at the for sustainable Like in decline just in stable of strong see XX% of being satisfactory margin X.X namely compared decline in XX% the of see X.X from no leadtimes. we decline coming X.X increased to automotive unusually margin prior diodes, level prior versus MOSFETs expected. Gross the also improvements Inventory we versus price MOSFETs, quarter, restructuring for quarter, fundamental year. X.X turns and Obviously, price to grew a from our was months, very distribution. to seen months the yielded program quite level XXXX a

fast process at to since volume We the manufacturing are increase to can. fab [ph] foundry, we in our as of in Itzehoe output maximize as

in automotive. of particular, confident very are growth future concerning We line in this

and rejuvenate upgrade capital currently U.S. impact in product we excellent to XXXX. again the by a and Vishay has very which keeping form. to in automotive improved cash environment results tightly ahead continuously evaluate dividend industrial cash lines satisfactory. a XXXX, costs promising noticeably performance. fixed Vishay We free like controlling or year in in to supported Financial on of successful already organization, years, also operational efforts, its free the reform us targets, XXXX, The six major and economic discipline summarize; strong me raise and flow of year, upturn, tax since during a highest on pushing strong based been proud the strength, in cash fairly vis-à-vis this Let also enabled and enjoyed are The an structure. Asian demonstrated pursuing completing our of the generation was the invest operational also markets. major own like our

and in will the applications. are face way and We context likely industrial already in in ourselves positive of have to prepare new the we on especially growth, to challenges decided very for market have an and accelerating automotive especially

We our going are forward. opportunities about excited

margins range XX% Peter? XX% of much. first million, I turn at Thank between we the of million will to sales. the $XXX a very you $XXX back For quarter, between and call gross sales to to guide

Peter Henrici

Paul. Thank you, Dr.

call now take the please will to the questions. first open Rochelle, question. We

Operator

[Operator Instructions].

of question is the first line from Your Suva. Jim

Jim Suva

gross greatly Thank timeline revenue looks for it up a the curious, you gave It's will it you details a Suva in be the you Thank from it's as being kind in? The is contribution that Great. to the of that margin pretty going and help margin installed turned of and how us much. has of challenge? CapEx Jim guidance about are fold you. CapEx there XXXX, ramping, the Can be appreciated. materially. headwind, like Just Citi. margins When gross revenues CapEx not or and understand what's so your

Dr. Gerald Paul

already in the But First liked stretched leadtimes investment, this to equipments a of XXXX. product. the out, and of long leadtimes of would like have of we our part the all, were make

no plans. really once don't concerning term on increase driven by vis-à-vis piece-by-piece, is us come this the market, is the margins, and they we Secondly, had the before. that, we We to that we goes fact, margin, whole accelerate invest it And just Altogether, concerning there as concern and have by covered what but be matter of concerned. really over accelerate grow also, gross a that. long XXXX. to year, gross substantially, we capacity more our enables do have fast, products We plans

Jim Suva

follow-up XXXX, mid-year, to it really on is then, the come revenues --? come or when a has in, capacity, since folded you that materially? or it XXXX would is start extended, in step to Great. function leadtime And of liked and do have equipment like there into is the my Is it

Dr. Gerald Paul

No, of course you obviously it's an will It quarter-after-quarter, was year, prior a increase but at in year. goes an exactly prior itself. continuous same which increase no, vis-à-vis rate, see increase the versus not

and we was grow the installed, then XXXX are first hired. and are quarter So equipments the the people continuously below as quarter fourth XXXX,

Jim Suva

then back my a confidence singularity And can you product the margin Was doesn't the transition with question we like change like challenge change singularity. a work have how last Okay. is, shift mentioned this again? had come quarter a or or that gross

Lori Lipcaman

actually was of that positive it -- QX singularities the particularly the explained, Jim, in non-repetition Dr. Paul for

Jim Suva

Okay, understand. I

So Thank QX? QX Okay. had repeat a QX, to didn't positive opposed as one you. in item that negative a in

Operator

from is Your Harrison. next Shawn the of question line

Gausia Chowdhury

Hey This Gausia behalf Shawn Harrison. on of good morning. Chowdhury is

the up. The it you there the at there than but to be if be I should else first question midpoint, can about disconnect, is about? seasonal, looks lower the the keep just constraints, is guidance; anything but understand explain we capacity still is book-to-bills pushing thinking

Dr. Gerald Paul

I think disconnect. don't a there is

If the quarter. working you also available increase, substantial equipment quarter year, the really a it's the reflection compare of to last days at first first the the and in it's

So do. approximately that's we what can

Gausia Chowdhury

behind the please? cadence particular the higher you the and of any the Okay, year, the can SG&A for talk step-up factors great. And year, then, about

Dr. Gerald Paul

Of the year XXXX?

Gausia Chowdhury

for sorry, XXXX, no, -- guidance? the Yes

Dr. Gerald Paul

$XXX roughly. cycle. We it's per quarter, $XXX million Approximately flat million, said

Gausia Chowdhury

Okay. And -- that's from a So correct? you can XXXX, step up

Dr. Gerald Paul

Inflation.

wage have a is really. as [indiscernible] The increase You matter of increases wage fact.

what average, would up. You an have X% as and this cost drives say is around the world, the I

Gausia Chowdhury

about positive margin singularities, again, third Okay, the But know forward, right. in quarter. there all how -- then And question ones much I were gross how of much looking the impacted lastly, just an first on --? you about impact does how that negative based think throughout on we guidance XXXX, see just the the impact guide, permanently will for quarter, it or should have your

Dr. Gerald Paul

gross people, capacity, -- on we some the will say. you to rate, gross the to impact increase indicative see that lower as training I margin No. it. the at new increase capacity, margin our of degree, A issues of a would to continue part had of continue But

people We taken few quite in. have a

Gausia Chowdhury

Thank you.

Operator

line question And Bhattacharya. is your the from next of Ruplu

Ruplu Bhattacharya

for my high. is I I unusually mean, Thanks is you also OEM Paul, are taking is questions. think and at Hi. adding book-to-bill you high, Vishay capacity I said X.X; The still mean, distribution, capacity. constrained, Dr. book-to-bill

what's things? your So these capacity So the obviously, are, just two double that and into two of second industry the goes ordering, capacity, XXXX? and your adding of danger oversupply half the an your questions in thoughts you situation what's have danger are the added the competitors once on

Dr. Gerald Paul

Ruplu, the question I that. I admit somehow, must expected

you enormous of have say. So as do a true We what matter orders. fact, it's very

that don't And course, normalize, a we has we our the much lines, we then double our that which clear, too also. it I decline if historically really grow have them of that recollection, concerning that could other is and And see would clear we invest and that for to capacity, the very on unlikely, absolutely my suffer, market ordering, had accelerate in expect you do according matter really we happen we the as later it's speaking, we On short programs, much, we there it's expand too depends sales, is danger which grows danger we accelerate the and comes, principally say or XX too do any just which afterwards And invent even We the know, a to the invest to hand, say anyway. be, if so, mean, is because time. there last programs, programs, believe, does that, we price that according that in plans no years fact. new anyway. just some I to can a things on. not use would it when there much, But we invested that like crisis impact of grow,

danger is low. the very So

Ruplu Bhattacharya

mentioned shortage you you adding call the capacitors? resistors, there of there on capacity a think in shortage I inductors and is capacity? there, that about How Are a semiconductors. And is

Dr. Gerald Paul

semiconductors. a as products. tantalum, in well it's power, the in of diodes semiconductors ask we it's didn't I passives, the I it's not a to quite really now. one, In In as direction. only matter as fact, In since it's MOSFETs, the and remember see instance, such in cannot the passives, in not passive, you passives, that in degree also chips, inductors, in -- And resistor but demand same was stronger. same very the you it's see a in but it, strong strong, for resistor say it same, chips, effect, also Okay, not also it's in conventional

Ruplu Bhattacharya

on -- that means guidance how plans last about measured you of maybe back increases you you the on Like call, think switching your cash talked think dividends or then a on is of much you should Could what authorization how just about amount give if And us for repatriation. in just or us question, buybacks? left? measured bring Okay. can my we and -- any what pace soon pace? repatriation, and remind of buybacks terms And for authorization how the to can I what

Dr. Gerald Paul

exists. exists, quite requires it's analyzed some with which to that process freedom jump early But this we don't something, Ruplu, answer. are which it course, we and we Well new really These changes recent, you means are haven't measured feet both are before. we and a mainly, in discussion to of have, at And pace, analyze right it into internally. our

to to at talk details, is we board, going But me, So are we to we forgive have to come which as have you and can internally, that don't to are freedom, discuss [indiscernible], use. we I will a conclusions. in our this I give right, think then point degree new time, have we of

Ruplu Bhattacharya

Okay. for Thank my Appreciate questions. it. you taking

Operator

next line Sheerin. comes of Matt the from Your question

Matt Sheerin

with Sheerin Matt is This Stifel. thanks. Yeah

of looks and been Dr. seen said, So as XX But helpful at is XX plus. Paul, product here. leadtimes have like XX% you in XX% it have pretty we to supply, your you weeks portfolio short weeks,

seems much there for revenue costs the at the relative two and specific revenue. coming about quarters, terms are to obviously, next is be three some So here guess incremental of least issue I then much pretty Looks how like you in you ramping capacity, online? margins to revenue, without being capacity that to capped

they is the move the here XX% target. which Looks be your like are? your margin So contribution to where what in XX% numbers range, below from out, trying plus figure could going to is year-over-year

one are from to much capacity to Is here. out, that looks the like it it? bringing look is you So aside more online, are you figure there capped way just trying -- out at

Dr. Gerald Paul

as I before, like said we I number that to would one, remarks take equipment make; into comes quarter-by-quarter. Two in --

to XXXX, to quantify, we not new -- this how come on investment you sales you if year-over-year based which much easy, and X% XXXX altogether, generate can So try comparing is completely really

Matt Sheerin

this for year. X%

okay. Okay,

Dr. Gerald Paul

you course direction. if really but calculate it's So it's not exact calculation, that, a of an

between repeat you we it's a Only, think you And which quarter lot also good of themselves along. ahead people quite and year, is course, there we refer all until standpoint, contained nicely losses, I And you training this did had secondly, Last learn, we they three said have our we take a knew as of our are from of were have effects I unbroken some singularities, quarter they what to because of to, course some estimate. a increased there margin margin and into margin, is not can and secondly, variable schedule. needs. contributive in four, train quarter our three mean it. that, variable and people, partially you four, imagine,

we expect So there. can some improvements

Matt Sheerin

not why last have are you pronounced are in put did form less capacitors, increasing not some through, and during I like haven't or some a resistors, price the expedited increases, your hearing price have, why so semi the both prices ASPs. then you? you increases on cycle, we price sound seeing you about and And decline Okay. of the shipment, it know competitors, increases, passive doesn't side, are are the folks of although in particularly you

Dr. Gerald Paul

roughly is We point in decrease and these wouldn't And the change was whole -- increases, we you even contracts, you price contracts, that, That overall OEMs of otherwise price is cases on with we we any you have based some have means price And contracts. actually business contracts. term increase our means, our in XX% It Matt, them have your keep most heard, is the contracts. explainable. cannot constant. overall, do do in price hardly only, longer you honor we anyway. have prices. be we may this case, it of have decline some do, The yes or decline,

Matt Sheerin

that's right? So through distribution primarily then,

Dr. Gerald Paul

Right.

Matt Sheerin

helpful. Okay. That's

six-seven in, which seen backlog, online, just comes capacity this as of come really month from then, right, theory lot Vishay, have will in? leadtimes that in a we Just disappear, and never that come here as leadtimes right,

Dr. Gerald Paul

to development that about company an in degree. this, does this ordering that not line. They that. And I I our the suffer normalize. any not could as the just mean to a see away, necessarily sales would it imagine markets, does we It's has the like of go be it, that impact no question [indiscernible] it. call [indiscernible] if it But will -- way mean

Matt Sheerin

from customers, distribution Okay. they you to actually a all or concern Are -- there in in you the can see, you, product POS. regarding the bring they get later inventory want that read your sell-through And and mean, have good that seem distribution, from more OEM would the that just, on cuts there, there ordering I which year? a are signs maybe

Dr. Gerald Paul

reconfirm wouldn't especially so that. situation I We -- long, we distribution, they order as the are especially as of are the course watching leadtimes much. at

inventory that don't from [indiscernible], have OEMs I it, more order I exclude distribution very So now. tangible reasonable -- is no the observations now. but cannot

Matt Sheerin

Okay.

how or to me, on environmental costs. cleanup for you that's margin Just somewhat be costs on said the that incremental long was impacted going maybe going to Lori us the that last and tell for for? by you -- what related was Could question

Lori Lipcaman

Clara. additional in that's that are four. know, facility, as quarter environmental And we you we the part activity to cleanup, as we we take Santa had our moving of in downsizing an charge So of needed out the been have

Matt Sheerin

Okay. repeat quarter? this And that won't

Lori Lipcaman

several But we year. course, accrued. the times fully we think are during the we At of moment, view it

we our we of [indiscernible]. at that Normally time, sites All fully accrued. feel point of this are

Matt Sheerin

right. you. Okay. All Thank

Lori Lipcaman

Welcome.

Operator

is of question the your Sur. from line And next Harlan

Harlan Sur

on or strengths Did understand us bring the of to quarterly market there you are and able were Good QX, for the guys end some a some trend help business. Can normal drove to just sort were additional strong seem Capacitor some thank or which congratulations the that XXXX. strong in trends? taking -- against drivers revenues on morning there? the capacity, you question ship and seasonal my up of of you the sequentially for backlog, sort

Dr. Gerald Paul

transmission event. in that it was a got general. major indirectly, real But portion It shipped a much applications in mean, in into quarter quarter. fourth shipments large there good were one power the of say foothold energy the there and to China, caps. the tried we was stronger We I I

Harlan Sur

that. the was the on it seems gross driver for significantly. slightly then, big expected Thanks And Great. pretty lower opto, dropped margin But they like front, than gross of the margins.

basis was that it haven't XXX think like points I in drop about and to that's XX%, four a quarters. seen like we over level

want -- so And I make to

Dr. Gerald Paul

relative a standpoint that improve showed had XX% it year. which on year-over-year movements, quarter top you And then have was time. of profitability can three, driven everything, we and our in singularities, consistent. nice which said very now, assure would of inventory it But they normalized a improvement, anyway, and continue some I opto next was will to as is you Opto really we know, the at by [ph], from -- baseline

we as fact, an disappointing three In sense it's future. a of are -- mean whatsoever. of matter excellent the anything worried four, not as came in this doesn't comparison quarter to So that But a kind especially quarter for too. in

Harlan Sur

March grow in in margins opto gross start expect quarter? you here do So to starting the to

Dr. Gerald Paul

Yeah, yeah.

for As opto a is relatively like, XX%. no There matter fact, of the is was This XX%, XX% low conditions. [indiscernible]. more

Harlan Sur

for prioritize the for product help my us you Can then you are going extended. top of lines? layer which I last year, are you and this about adding as question, And profile think capacity on equipment that, agree, leadtimes, about you how CapEx Great. getting to think would the different

Dr. Gerald Paul

cycle time it however the comes? mean, You or

Harlan Sur

are categories on you the prioritize how CapEx different Well, the product that you going versus to timeline know on? bringing -- and

Dr. Gerald Paul

MOSFETs, is investment need the the approximately, and clearly but especially foundries. portion in will [indiscernible], this strong. the of clearly. is resistors the through work of strong of investments cannot where in diodes in we -- I case, center Also investment. But a is a our we This portion get

line where -- But anyway, as market into resistors, and in part into inductors. So for most the and in this the an biggest enormous not see really, not we resistor directly which also it's the goes demand big. diodes, so chips, is why is

So most where we the of is capital. this spend

further, that really hasn't break changed. could it and we down but course, is Of --

So do over changed. we last the years future focus the what We of anyway. wanted accelerate hasn't our just investments in to

Harlan Sur

Dr. Thank Great. you, Paul.

Operator

And questions time. there no at other are this

Dr. Gerald Paul

interest you This concludes Thank our in fourth your Intertechnology. quarter Vishay for conference call.

Operator

conference today's concludes call. This

You disconnect at may now this time.

Vishay Intertechnology (VSH) 6 Feb 182017 Q4 Earnings call transcript