VSH - Earnings call transcript Q3 2019 | Vishay Intertechnology, Inc.

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Operator

Ladies and gentlemen, thank you for standing-by. And welcome to Vishay Q3 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session [Operator Instructions].

I would now like to hand the conference over to your speaker for today, Peter Henrici. you. Thank ahead. go Please

Peter Henrici

Good Conference welcome Call. Stephanie. third Vishay quarter XXXX morning, you, to and Intertechnology's Thank

our and With Vishay's Executive Lipcaman, President today and Vice me are Chief Officer; Dr. and Financial Officer. Chief Gerald Paul, Executive President Lori

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

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

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

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

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

XXXX presentation section financials website, of quarter third find Relations can our a On Investor of the and metrics. the you

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

Lori Lipcaman

have highlights morning, chance most of key Peter. had some metrics. review I on earnings will everyone. that our and sure I am Good release. press a you, focus to Thank you

quarter. for Vishay was was reported Adjusted quarter. $XXX quarter the three million. the for $X.XX revenues for EPS of EPS $X.XX

to accrued enactment flows. the The of these $XXX United operating statement repatriation taxes on continued reform million. been XXXX. withholding tax the taxes and foreign U.S. program. $XX States, our of reflected upon cash we We paid of cash the flow of is cash have quarter, an as and million payment repatriated in During taxes These

restructuring the quarter, reduction recorded program $X million, I related transactions during few July. Also, charges moments. elaborate announced in the of on we cost in to we will a these

Revenues down by adjusted the X.X% previous $XXX in margin $XX year. compared XX.X% prior was EPS was margin X%, X.X%, XX.X%. or XX.X%. adjusted X.X%. margin was $X.XX. were EBITDA million, down EPS was million or EBITDA $XX and was quarter, to from was $X.XX, operating was quarter by Gross down operating Adjusted million,

excluding income Reconciling prior $XX quarter versus QX decreased rate operating million prior adjusted quarter, million income to sales, on exchange compared or for lower $XX XXXX income three to Adjusted from XXXX, XXXX. impacts. $XX by quarter, in million operating million operating in QX million based $XX $XX

decrease X.X% The a a ASP main a volume. $X $XX decreased prices negative with X.X% of selling million representing impact million, in equivalent had were decrease. impact negative elements average Volume to

to with and labor to primarily Variable capacities decreased adapt offset than improve near-term million, foundry costs impact to a more costs direct and $X of volume which efficiencies reductions, due cost positive expectations. manufacturing

compensation impact September. well as positive million, a to year-to-date realignment period for as with general the due decreased costs accruals belt measures, Fixed incentive tightening of $X the primarily of

excluding million in three versus on quarter Based adjusted operating or prior XXXX. exchange million lower $XXX income to lower sales, income XXXX, impacts. rate year, operating Reconciling $XXX compared QX

representing had negative XXXX. The decrease. a average ASP representing main a decreased $XX from the X.X% $XX due decline. income selling operating of in by $XX to impact XXXX decreased were Volume million, $XX prices to million million negative $XXX million million Adjusted XX.X% in QX elements impact QX of

costs increased manufacturing near-term expectations. labor $X a foundry cost and adapt negative direct volume due capacities temporary Variable and of million, primarily inefficiencies with to to to impact

variable impact belt inflation the than measures, the Other virtually $X cost costs due compensation September, Fixed positive of period which incentive the was as general tightening for to primarily as million, well offset reduction. inflation. realignment year-to-date the decreased for by of offset accruals more cost

for FX tightening expenses than and lower to year-to-date a impact quarter individually measures, immaterial items. other negative competition Inventory million. administrative realignment due the $XX Selling, and of had primarily belt million of general $X expected, incentive for were accruals September,

expectations rates. approximately of exchange full $XX million the $XXX year expenses for quarter For at our four XXXX, million constant are SG&A and approximately

During of continued second and to included repatriation higher third subsidiaries tier some our the subsidiaries. cash quarter, programs, movement which third we cash from tier

three, States foreign United quarter million and $XX we paid taxes in million. the and withholding received During of $XXX

This expansion of capital settled $XXX certain to all Substantially, debt, to brings pay $XX tax. million received She intercompany the the tax with been transition the States, and amounts the finance in these foreign year-to-date projects United to withholding down of utilized reform to million pay revolver. taxes paid. and totals have

We foreign call U.S. and tax are other longer with tax it withholding to U.S. subject federal to taxes earnings available for reform. repatriation state taxes income million accrued. some amounts additional approximately [ph] There well They're no are of taxes. due such $XXX subject to

repatriation, be timing do We in of expect are but to not the XXXX. still evaluating it such

million. quarter With end, liquidity investments at cash short-term credit revolving outstanding billion XXX comprised and the for amount No the $X.X facility. of total on

our our repurchased expire the will instruments. convertible additional any of days, debt convertible During we've The board. by not but instruments we to debt it expect a quarter, few renewed authorization in outstanding repurchased be

repurchases made to and other be legal conditions, requirements market and subject business negotiated factors. will privately open transactions market Such or transactions an through

the is of XXXX convertible notes and comprised the convertible during XXXX. Our quarter remaining - due debt XXXX and debentures in at end

discounts, value unamortized and of The of million principal costs. the related debt debentures. notes amount remaining million converts XX issuance the and related four or XXX is the Recurring totalled million, face to $XXX million new of to XXX value net

facility quarter three. end XXXX. of at revolving payments no expires No As there amounts are facility I on the revolving principal and until were XXXX said, in the due outstanding our credit June credit

to are global million reduction cost by lower fully we and intended programs $XX announced in provide implemented approximately implementing July, annually when As rejuvenation. management costs

projects Some of amount in volunteers is to cases, accept voluntary restructuring our expenses in phase already for of offer. started, programs first seek $X have separation strategy to but the only a most the these is these retirement Accordingly, million. recorded during QX early

million restructuring to December and to expect totaling XXXX. incur to the We these fully expect achieved charges be programs reductions cost $XX related by

year-to-date approximately year-to-date The effective rate The XX%. normalized rate was slightly tax GAAP basis XX%. was tax a on above

tax mathematically, in QX, of rate a approximately XX% XX%. GAAP rate of this For the quarter, for normalized yields approximately a

as GAAP currency deferred occur Our payable FX. will related to until similar remeasurement tax adjustments amounts incremental A to rate includes tax taxes repatriation, such have repatriated. remeasure such foreign upon quarterly the been foreign liability

X.X and million adjustment an X.X expense million was expensive for of remeasurement an the year-to-date. quarter The

year-to-date permanent unusual from Our deemed previously includes from expense and also gain on GAAP a some tax rate the tax exchange loan QX. tax tax the foreign to convertible basis related benefits an debentures of the in of the intercompany QX of settlement payment resulting

aspects of We continue of the provisions Texas. the to guilty tax the beat particularly law, U.S. and evaluate

results. income taxing rate tax of effective among Our could a various an shift mix our jurisdictions, level is based assumed and significantly income result consolidated in on different in

fourth share for count quarter XXXX of Senate XXX EPS or at the is expected million. million. XXX The shares quarter for end purposes Total approximately

For our to impact this variables share the a EPS count morning. filed calculation, full refer X-K explanation of and please we that the

Free $XX $XX for Cash was million. were from the million. quarter $XX was expenditures operations Capital for cash million. the the quarter quarter for

$XX million. expenditures $XXX operations For the trailing business were cost million, Capital million, for XX maintenance $XXX split for cash months, approximately reductions of million, $XXX was from $XX for million. expansion

trailing months represents property the Santa were XX sales for of equipment California. the from sale former primarily million, manufacturing XX Clara, facility the Proceeds of our in which

arrangements, under arrangement for leased cash million. have buildings. period raise trailing to Free back the the generation We $XXX the property was term XX-month short

from the months each trailing Vishay cash The past $XX in consistently than $XX XX and cash U.S. years the taxes for last million $XXX XX tax cash flows million repatriation of and operation million $XX includes excess reform related years. of paid, generating greater million million. $XXX is period XX to

days quarter XX inventory sales in X.X XXX end customers quarter-over-quarter compared cycle for conversion by cash quarter three to XX days, was $XX were per historical outstanding of or days; XX decreased were has days rate of days. the were of of outstanding excluding resulting million sales, Inventory at for average Days of the months. payables still outstanding a quarter days, our three high of Backlog $X.XXX impacts. million the months exchange

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

Gerald Paul

everybody. Lori Thank you, morning, good and

in levels a and by As financial the been predominantly burning performance from keep distribution. in has chain impacted Vishay’s high quarter revenues. the Still inventory expected, third lower demand supply orders also negatively

the $X.XX. inefficiencies be of Manufacturing further some earnings and of margin Vishay adjusted the $X.XX for product share quarter operating of temporary capacities lines. had earnings achieved GAAP and X% margin of in adjusted sales of gross X% and margin of to GAAP sales, operating per XX% share causing reduced, third per of

to paid $XX free cash, repatriation strong the We was a for which quarter show continue generation cash the $XX of million. includes of taxes this and million in

Let me about the as talk it. economic we see environment

China. like remained but industrial level the economy automotive show areas components continued third general global reasonable quarter, to in a and weakness in relative electronic Also, in for on of globally

second into come the having this normalized. below after for remain started to in in X, Inventories at chain high reached down third quarter, levels, but historical more remain Lead Backlogs a product down are record underway of come substantially actually times high the X.XX to quarter. most ratios book-to-bill supply times have the noticeably. point

which supported in price quarter POS on strong for automotive the also differently. the third to Commenting United develop levels. at decline geographically sectors rates and no products favorable by regions, industrial, rather returned military to markets Economic has remains course conditions of the in and also surprise. States to commodity be is continued continued high The the normal

global much for versus a mainly about by we impacted economic weakening, a supply quarter industrial year. distribution, is have by Europe. POS prior XX% out of in seems signs market is and prior ongoing automotive softening below there Regionally, Generally, and quarter picture. different in see Despite of inventory distribution chain the to bottomed rather some Asia and X% declined recovery. too Europe with a third Talking was segments. uncertainties, the

reflecting Asia in but declined POS X% market has a POS good U.S. by level. situation. POS X% stabilized. Europe, remained Sequentially the by at more went in down difficult in

noticeably Despite in an quarter the inventories and way. third overall down emphasize that in me let POS, broad came weaker a

QX, slightly to as to year. prior and X.X compared in in inventory turns X.X prior X.X distributors quarter, In to of declined

Europe, In after was after Asia quarter In after the In and year. X.X Americas, prior X.X prior in in X.X prior the X.X it year. second year. X.X and inventory turns in quarter X.X in the turns second X.X X.X in X.X and

to me industry various the Let come segments.

sales sales customers XXXX. automotive, First, be turnaround and automotive predict of driven a healthy, continuing Nevertheless, implementation for programs do weaker should electrification remain this by year our and by to for not the to major electromobility. expect decline

transmission picture. power to whereas in continue to Industrial markets oil lighting sectors show Industrial supplies gas, remain and and continue healthy automation, weak. a mixed power general,

and in supported course of Military States. governmental by They aerospace continue mainly markets higher are growing. spending remain solid grow Medical markets the steadily. and United to in military

good an remain in The to are of in fixed improvement year. in introduction mobile this markets X% weakening the white XG with some phones relates growth growth Computing general, drive particular expected midterm, shows the which weak. is telecom substantial to of Consumer sector. whereas in expected

year. let above versus me XXX the prior sales in development quarter Sales midpoint We and this billion the came Now, in achieved million our quarter. slightly of million guidance. of XXX in prior to third come in XXX business

third versus XX%. affects versus we're XX the Excluding sales and quarter prior down million year XXX by quarter million exchange, it down or by in X% by prior or

is the distribution We second in third X.XX X.XX X.XX the of after there backlogs X.XX, X.XX the Asia X.XX in the six after and X.XX after point after normalization for OEMs In in seen a X.XX, book-to-bill point have Europe X.XX X.XX, for X.XX in after for the for discontinuous. for after Americas a past X.XX quarter. X.XX. X.XX second form for the broad of X.XX quarter, ratio summary, after quarter actives the

quarter passes. a to of in high shrink months months the high semiconductors very second X.X months X.X from in level in down level X.X and Backlogs the in continue still third quarter to X.X high

million in Let me approximately reduced Distribution were by remind all all historical restarted commodity decline levers are semiconductors. at inventories months. concerned. product XX quarter three lines Price and virtually predominantly that by you in the has regions

Tariff prior year minus and minus prior quarter versus prior have X.X a X.X% and prices X.X% past the prior versus versus versus minus versus For plus included X.X% are were all we semiconductors, and others year. say, ago and six minus quarter prior we this and X.X quarter seen for versus year. minus X.X% for

we operations. costs Some negative direct related margin to In able innovation. Despite labor cost on by comments impacts the on the of offset the again to capacities. and by third reduction near-term of foundry adaptation quarter conservative we're and

was million, general tightening SG&A adaptation Manufacturing costs in came to bill quarter in below bonuses. million. the which due primarily and were XXX QX at in third of costs fixed XX expectations the

Total employment XX,XXX, at output prior -- down versus end quarter requirements. quarter, X% second of to was due the lower at the second by quarter the production

in remains The flat. net quarter turns the [ph] quarter rate finished a down inventories X.X. was for impacts expansion, debt million the by spent Excluding level in cost Capital materials in spending exchange $XX raw was year, million $XX for at million third versus business. $XX and good $X were million the decreased basically for of goods reduction $XX million fairly by the $XX prior maintenance QX of inventory and million million $XX in

we which million. of lower last by million, cash Concerning $XXX year reflects of $XX $XX XXXX, continue from cash in year. operations year of prior cash QX QX the versus QX, generated by taxes was of expect requirements. flow, market cash $XX for million $XX in this paid burdened burdened was about million. million repatriation of For CapEx to short-term

cash million for this taxes million. year from for including year repatriation last months million the cash $XX trailing in of by cash third We by $XX quarter on cash paid of XX basis, cash repatriation. $XXX QX We million of million in generated $XX free cash $XX taxes year, generated versus operations of million, $XX the prior paid was QX of burdened

resistors starting and sees high cash of business, profitable at paid With very resistors cash most traditional medical XX in cash $XXX inductors, position a for basis, taxes strong we and and Coming product automobile industrial and enjoy including years with free inventory of months Vishay’s the million to market and segments. a impact generated the inductors. since distributors. also on the repatriation. We trailing million $XX lines

quarter impacts. was quarter or X.XX that the at were down third the or down in million quarter. quarter ratio million, X% X.X is versus in months, year, all Sales excluding prior X% $XXX which and exchange remained prior $XX by $XX by million very prior in rate Book-to-bill by after high. by Backlog third versus X.XX still

Gross margin for resistors and inductors remained at XX% of sales.

quarter are Our third and minus present X.X% prior in this in prior requirements. line product adapted manufacturing capacities to versus good now year. Inventory turns level versus at minus a There's decline X.X% remained X.X. quarter of low-price the a

increasing remain manufacturing We in MELFs chips, for have slowed serving film future. down capacities and the we but of thin resistor ready for market expansion requirements the

opportunities technologies $XX with and enjoy range exchange the increasing quarter in Coming a excludes to the of and below We prior and capacitors million, European with effects. of broad power Sales rate in market below transmission on of capacitors, third position cars. business our year, a were strong XX% electro which quarter XX% in American prior based niches. is fields

versus in Book-to-bill after the gross to high the ratio quarter. to backlog X.X commodity in quarter inventory normalization a X.XX level result The the reduced lower sales and quarter correction, margin in Also, XX% still volume. is further of months. prior backlog X.XX third was was of prior XX% factors of a a and due quarter in

year. and vis-à-vis by and the quarter quarter were versus in by prior versus at X.X% X.X% increased X.X. normal prior were quarter Selling prior year turns vis-à-vis Inventory prices prior

strength with of lines China LEDs and United major emitters, States. well of in cutters benefiting as military and the sensors the the consists from is ongoing in product applications. of governmental programs which Opto, capacitor Opto markets business automotive for from Several keep receivers, as infrared

product of Opto that line suffers a high The bottomed weakness inventories from few a business main the Asia. mix we believe business product badly the general quarters But and in now has since predominantly unfavorable distribution and

effects. quarter, the year The in the after X.X months. quarter were exchange prior prior to $XX, which X.XX in Book-to-bill was rate backlog quarter third below in Sales excludes increased below and quarter. XX% prior XX% X.XX

of The in X.X the prior the turns in inventory good part year. levels X% is prior XX% substantially decline minus of in and X.X% to in the came quarter after to as quarter for minus Price much XX% X.X the margin lower compared second sales line below versus second Gross historical most quarter. in due is quarter at the accelerating versus quarter volume.

historic this We after back expect profitability come phase. of to the normalization more to business levels

where say supplier all at in a very and inventory portfolio. largest diodes, the very from virtually as most business, but commodity the offers are market we distributors. industrial a broad technologies has automotive business where The represents to strong the well too complete Coming as a suffers position Vishay segments we worldwide. product diodes substantially high

Sales in progresses normalization below in after X.XX quarter. the exchange $XXX the the year XX% prior second effects. explains were quarter ratio rate and XX% backlog book-to-bill prior excludes of quarter and which weak very of in quarter the The X.XX below million,

Backlog very quarter XX% margin from of reduced with to of reduction labor quarter. results. A the sales, adapt in second further months a costs quarter. to in combination in still Gross months down the X.X prior sales direct at in in of XX% from the burdened X.X came level high volume

level compared of turns remained as to at Inventory prior in X.X good X.X a quarter.

historical decline. of rates price We back to are

of year finalized. quarter have been continue has years diodes the the inventories versus included. and are the success of expect story thereby We minus supply We normalization prior extent X.X% their to recent to prior after versus X.X% definitely seen chain errors minus the full in tariff

the in years be developed market in of growing and the one leaders position automotive. last over a transistors. MOSFETs MOSFET, few to strong continues MOSFET Coming to Vishay

now $XXX MOSFET inventory Also, of year normalization exchange impact backlogs in also continues. MOSFETs supply the reductions excluding rate the were Sales the the remained and quarter below XX% at the million, quarter The book-to-bill X% chain. see for X.XX. prior in of ratio The prior below third at quarter impacts.

of Backlog quarter, quarter. at to costs has prior the came near compared for of reduced capacities to the still in month months level in quarter as X margin second in XX% includes The in gross high which adaptation. X.X XX% after foundry term sales

to normal in compared versus prior the for is turns inventory minus year. X.X versus Price minus X.X% levels X.X we at quarter MOSFETs good and Fairly decline as quarter. second have in quarter the prior seen X.X%

to We mid continue for internal demand, in capacities, particular ourselves the in to and increases expand long-term substantial foundry midterm. preparing in of automotive

summarize, after the be year me to business correction in continues record of XXXX, face and a normalization. our Let

seen before notoriously business have may We industry is electronics the all cyclical. happening this I say

East business in less and in supply two recent still global in Far favorable the general our Automotive for should markets are levels inventory quarters. chain than impact another in years, high

On the not going supplier from the forward. other very to doubt well-established product electrification will of it's growth moves all. reason there all line electronics. hand, changed a The potential benefit is towards no if at fundamentals, Vishay

to down by currently in all are slow this adapting We managing have as past. operational done the parameters, we

extent. hand, other to the will enable economic increased the to full participate next capacities in machine the upturn our On us

sales guide in burn the at a off to aims by million program. margins to and QX our fully of before implemented to way We fourth the of personal of range of implement fixed $XXX XX% announced are costs annual expect reduction well inventory XX%. XXXX, continuation $XXX of on hoping at for million the million restructuring been quarter channel gross and XX an It the between the to rejuvenation been

Peter. very you Thank much,

Peter Henrici

questions. you, to please take now Thank Stephanie, Paul. first We the call the Dr. question. open

Operator

first Matt Stifel. Our comes of the line question Sheerin with [Operator from instructions]

Matt Sheerin

that a end Dr. good in and in have exposure. morning, hit looks lagging the little versus passive or to the you that? it the and semiconductors of with that Could you semiconductors backlog bookings seems business about of thank does market terms is which passive, bit the just side because talk do be like Is holding earlier better. got the it Yes, Paul, to component up

Gerald Paul

case of case in than that passive. the Vishay share commodity is believe I higher semiconductors the in of much products in Yes, the of

It's nervousness high consists quite passive products Products we not getting the Our so share in the so in nice that and these as other of That's business do seen is lines that. never went they Specialty of much. as out a specialty lines, the backlogs commodity-oriented they much - that lack, not answer. we less have of The low really the have passive it never reason was differently. to behave

Matt Sheerin

it declines to you also new like new pricing Understood, SMEs that side. on you passive not price contracts see year, get with into is both the the expecting to as and you're areas normal the and starting the get more Are looks hidden going particularly of business? OEM in

Gerald Paul

decline the happens As components at is you know, this our main semiconductors. predominantly commodity really price and

in midst to for year made, be some concessions tell be negotiations you, We are I next the there and yes, of special. can will nothing but

just it's return normal conditions the see as it. So, we of

Matt Sheerin

the capacity. you're also sounds capacity add are product expansion what to lines? adding capacity where some continuing like and pulling tell you us areas Okay, but production you areas, on Could back you're

Gerald Paul

are quite even. few there a Yes,

So, power which of inductors. the fact, predominantly fast we don't most go moment from through But most in They independent it's that's all prominent and also a the is economic power to think have cycle can major of lines, this enough that. really hardly want the example. but success a they my market, to capacity add of have I matter a at inductor

automotive inside tried take in will forward, care the outside capacities MOSFETs have believe to as with our as well We growth and going that capacities, substantially we capacities. be of

position, good have they represent last speak so in the two the we a I for we to more think two years. to lot where are in continue places otherwise these look volume, we invested segments, a

Matt Sheerin

very Thank you much. Okay.

Operator

with line Sur Your question the JP from comes next of Harlan Morgan.

Harlan Sur

based question. these my in depressed industry your up businesses these automotive, are businesses typically specifically QX. On look a low visibility broad-based worked know I inventory so, have do and taking in that are year? six-months for your Thanks two sequentially But three- next and of segments, morning. levels, customer of for but Good QX seasonality you’ll backlog forecast, you still QX out maybe and for we some some and think get at positive off if you

Gerald Paul

Well, feel these space right. inventory really is the QX, in everything we that by burn determined off

of the and coming of fact down will matter matter quarter, in a in also news fourth believe we see still third quarter fact, impacted. which the and As do this be was a inventory continue quarter the good the first will as we

To development direction two. believe the extent, future it also the a of will quarter POS. see depends we we that, all the the real change in of

Harlan Sur

Got are and it, $XX on just sooner thank and insights was then you your the for acceleration I cost you’re And tightening view SG&A Is anticipating there. - continued program for now go global ahead. belt that. some the of Thanks SG&A, prior reduction or QX think you discipline XX. getting million, that

Gerald Paul

still be program, innocent speak. that for will It cost so it’s reduction to

We’re not save just just mix different money to batting save of an to defining. so It’s clearly. we impact,

that continue the and company’s save that we sales do as a of so. we down to started fact money seen coming to disciplined matter have We

Harlan Sur

And on SG&A do you view have for XXXX? an initial

Gerald Paul

we we do, Yes, do.

this so will may helps of the increase. to, the but have believe the a inflation, the we matter we includes rates area annual XXX somebody and SG&A less fact, We want me, inflation in than of as and

Harlan Sur

Got is it, my thanks and question. last this

Gerald Paul

direction yet, is approximately. a have finalized this the don’t portion we Yes,

Harlan Sur

and like diode those last run rates Got Appreciate it, the Opto say probably above at last cycle. margins if your I about points current bottoming, about look Opto for just are let’s my gross but the back revenue cyclical gross that. versus same diodes basis okay. they’re XXX, margins XXX lower question, lower XXX XXXX-XXXX, last downturn XXX, cycle points as And levels basis

are just as that off just difference biggest is in the customers' burn utilization lower inventories? is this What much cycle it

Gerald Paul

a MOFSETs As have mentioned changed you other are have -. to not direction fact, they matter on MOSFETs, the of because MOSFETs

Harlan Sur

right. That’s

Gerald Paul

P&L. and the Diodes we of cannot confident, believe is part case. we continue their improve that, to had also it’s speaking, included, is a do this so. are and principally cost this money, earnings Diodes and diodes, I substantially to similar see people power this reduce I specialty quarter very-very over the effect a they Opto years special

am Opto We they what, should with from they also, but lines. our They I'm not with satisfied really not than suffered suffered development are, I at satisfied have. lower the more volume,

much motor on specific very are this sensors on some the problems to that do China and way We coupler the focused down now down because they had way we and and line will in are go, believe They area, China as forcing that. turn there.

they suffered is So, line say would is no suffered more the this they question, that but historically. I more only

Harlan Sur

Dr. Okay, Paul. great. Thank you,

Operator

Your of Karl Cowen Ackerman next from question the comes line with

Karl Ackerman

Hey few initiatives ended that's some A Dr. we should and margins if at inflection upward of you my stabilize were equilibrium, growth everyone. ASP or from distribution if be product what quarters question. will expect increase few may, to notices. Thanks taking good in Paul which expect for afternoon specific an driving ahead from fast market thence guess I we mix or thence? get too I quarters a forward should sort could we

Gerald Paul

Sorry, I may understood acoustically. completely not have

down, you as so some. So, soon was as said, be what the right? it, It was dust will

ahead. go Sorry,

Karl Ackerman

for inventory, and beyond market What do will ASP driving initiatives as midst As indication for this simplicity be at your partners, product the margin through we this up distribution complex? our think of beyond or the down what's you you're work doors. the our challenge specific end walking growth

Gerald Paul

our constant. field in specialty is and stable always already you be normalization mechanics very mechanics inventories. see believe will of that upturn are we of from there the I products now, is different I like see the to wide see this going that happened leading it before happening pricing no higher after quite that was in to partially this were reasons which past the the which

on discuss will constant, is price starting price you quite inflation reduction commodity remains can many, we and are our to course, we it it, And show decline used defend decline cost often many of margin despite even since side, the this variable years it innovation. able we price we then that also despite backed by And see are some show. which to, this decline

conditions and normal concerned these we conditions I course. I'm all, of So, to not are return see, used to at we

Karl Ackerman

I of course will sequentially well but quarter. systems in know side supply calls driven paper any quarter, some chain your And on outlook about Thank to in fourth that in the you. our to fourth you addition China devices, actually and servers. in in in us, do as power decline peers of be industrial up expect automotive for your modest has as spoken the how improvements markets

looking if and you. also hoping, at what experiencing in could you're as you're quarter Thank infrastructure, network those across you specifically Just describe what we're areas, seeing fourth QX?

Gerald Paul

China talking particular in or... are You

Karl Ackerman

Automotive but in broadly, automotive, particular, yes. For China

Gerald Paul

Okay. especially in a understanding standpoint produced general, Well, is in much. my particular, down of from to in China automotive down is peak is

the of also for quite hand, to automotive of and of been and that also. and you cars in automotive is the he China terms and same in the story downtown. is the it's case now well this that the automotive bodies would always be not we On this necessarily in true does see has supplier, other This produced sees for pieces place fact consequence the in of the we course, electrification more mean takes more of down old terms electronic pieces

this next more also models believe the for belief. production is stagnating context I grow year believe us concerned maybe which and every common local In or rates and even China to despite years they may electrical not not well so suppliers quite of the the want is that automotive this content become in think sophisticated help relatively I constant the are will do because particularly to am I particular I small as in growing

same doing not in is well doesn't the also stay this have very China the way. to but total, at moment

that You can come back they rates. be growth optimistic higher to modestly also

globally, in it -- China really Okay, of neither about concerned not this nor be area continued strengths obviously. I'm our automotive to so

Karl Ackerman

Thanks.

regard curious and Sorry, addition out? as with saying just to what server to called of of - on clarification a you're some you. peers infrastructure network in had Thank your

Gerald Paul

you. Thank

Operator

Your line Research. of next the with Shawn question Longbow comes from Harrison

Shawn Harrison

going question we thereafter that your that sometime versus Paul, X Is that distribution you'll from is months the Dr. distribution quarter do to see positions guess level. to be the inventory or first normal it at normalize that versus be X.X get normalizing? trend backlog the think you anything there backlog once should I also your back

Gerald Paul

that. never a doubt was on There

from by the quite in knew the two year being partially and Vishay started XXXX, knew from beginning not not grow able to we getting driven nervousness, get to one that we this day we're not and years the everybody knew last During products. the we was from time very only boomed, heavily enough

normalized. no out backlog times about There will they months already No go is normal. it, backlogs lead months go absolutely is the doubt backlog element has to three it this question business this always back of three back as a have typically level in fierce to will the that done have when the which

Shawn Harrison

any high I picture And concern the at guess and of over and a potential initiative. products kind but general end, you or And larger components months question. -- about whether Chinese there's commodity could out theories out competition. what in for XX years competition growing more start China couple components a the to threats the is domestic to you Chinese on whether market, is semiconductor risks business maybe looming there that risk more -- there the a end this from next made of and they suppliers Then there tried see obviously mid the talk that

Gerald Paul

also. Chinese are We

connection of you have fact, a matter as bad So, refer must today. a I - if

refer local you our I China If this in what and understood. to vis-à-vis suppliers competitiveness is

a in of fact. producing China is also are matter We

there not to we concerned the go I'm moment together suppliers with at the So, China. all also,

to of And But used these the be. exists market part will in much much why sales. grow center We it's see think so growing that the we away. reasons so for biggest there far not anymore an negative go are us. so it I China prove economy so doesn't a as to be our It's of may And I efforts remains of us that the days. reasons also believe

So, we will quite are compete optimistic that there, to we and and in future we confident can continue go

Operator

from Bank Your of the next question line Bhattacharya Ruplu America. with comes of

is open. Your line

Ruplu Bhattacharya

Hi, can me hear you now?

Gerald Paul

Yes.

Ruplu Bhattacharya

quarters inventory inventory worth Did question. you be across or Europe to is of of that Hi. is needs about two Paul, Thank I that you geographically for region? Dr. correctly taking understand the that in most equally burned off. it that mentioned there's distributed my

Gerald Paul

it's a inventory. No. too This distribution much No, the not broad case. is of no,

broad. it's So,

Ruplu Bhattacharya

of on that quarters more see getting downward I understand correctly And inventory, still that pricing? you stable. And then have that pricing if is not pressure two because you continuing did would put more

Gerald Paul

products the the do. on down products specialty pricing always two they which in prices go of of commodity during were always the first been, last all stable shortage, they to like stable have for kind rather like Now, of years now they start

products. of learned that that not cope But At a pressure price returning. There of the And matter see as inventory mean we continuous does times a more is have matter fact. now of on is we necessarily to with decrease there's as a commodity it fact. decline price

Ruplu Bhattacharya

supply Okay, always capacity. mean, question, and on you your I have view for last do have industry added versus a demand? competitors my

have would you year? or does months in a next much capacity that view do system exists impact of six the pricing that demand? now the and how And in total the how or So, compare

Gerald Paul

two You of so increases industry refer the I in capacity high years, last right. to the far our suspect

in is there put it. question the time. at believe, put was the of I demand of I capacity one in and always And no Vishay any about ones. policy we-- course, be lot a is place, Of the But of and ahead point to being

to have We have believe the our that I the volume. up. turn markets markets when economy serve to want will the And

we of very will this a in also. need true think course competition is I capacity foreseeable future, and for my this

connection. not see do I direct a

direct pressure. I but see I price it theoretically, argue, course, connection admit not capacity -- should seen you the that. the not do in have property a I available I can exist, but between machine would no, Of

not somebody the sometimes, wants and this now. to always are cases finish momentum not we also You is but where innocent can driving line find overall,

Ruplu Bhattacharya

you taking Thank right. All my Okay. questions. for

Operator

management this turn no back questions closing time. There to you. Thank remarks. over additional at for it I'll

Peter Henrici

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

Operator

This call. today's conference Thank concludes you.

now disconnect. may You

Vishay Intertechnology (VSH) 29 Oct 192019 Q3 Earnings call transcript