VSH - Earnings call transcript Q1 2020 | Vishay Intertechnology, Inc.

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Peter Henrici

Good morning, and welcome to Vishay Intertechnology’s First Quarter 2020 Conference Call. With me today, are Dr. Paul, Vishay’s President and Chief Executive Officer; and Lori Lipcaman, our Executive Vice President and Chief Financial Officer.

As usual, we’ll start today’s call with the CFO, who will review Vishay’s first quarter 2020 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

reserve we’ll time questions answers. Finally, for and

section replay for call being the webcast XX This for publicly this website days. call The Investor will is Relations ir.vishay.com. at of available from approximately be our

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

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

to are principles. believe measures our adjusted or investors GAAP during measures should the addition, because that non-GAAP information In other conjunction about be not with considered accepted performance accounting according operating also refer that to We generally provide. use provides useful we we measures of this call, that may in and prepared financial businesses by we

X-K This outlines we Form share impact that earnings a filed that the various computation. the diluted morning, variables per

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

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

Lori Lipcaman

Thank you, everyone. Good Peter. morning,

Peter Henrici

Lori?

Lori Lipcaman

the QX me, EPS million. Peter. I have reported morning, was some Good release. was quarter. of for excuse you, and on for everyone. that thank earnings – Adjusted for chance a the EPS metrics. had you highlights $X.XX or to most focus $XXX Vishay $X.XX sure Peter, of morning, review revenues quarter. Good will key press I’m our

non-GAAP These certain EPS. and selling, of are are charges costs to tax related are expenses. cost in We items net of and effects are million normal our sold from included when these $X.X general subsidies, identified added included incremental have of these in operations. and Approximately million $X.X their adjusted back costs COVID-XX-related which certain administrative separable calculating goods and of

quarter, convertible moments. a during elaborate GAAP I $XX.X transactions repurchased few a principal million recognized extinguishment. loss and will of on our Also, in U.S. the on we amount these debentures

on COVID-XX an business. our impact has had

been our of closed less at temporarily had full facilities are or capacity. and are Some levels some than operating

For results generally facilities QX, limited, manufacturing to most our have continue impact the operating. been on able our has financial been of as

wages As and during I our and incremental additional hardship of have of and for additional travel introduction, the stated in during are shutdowns, to paid government-mandated net includes restrictions. safety normal employees certain we of subsidies, and allowances separable COVID-XX-related to facilities, employees incurred equipment working which wages identified manufacturing cleaning from employees for for This due charges, operations. to certain housing lockdown disinfecting temporary periods, cost cost

operations and impacts described on a missing exclude further moments. Paul impacts, directly I due on The as higher on estimated costs during such Dr. the and of just to only results our include indirect COVID-XX expectations will costs, impact future shipping quantified capacity attributable to reduced crisis. the in elaborate COVID outbreak the for revenues our and shipping few

COVID $XX was was costs, Adjusted EPS $XX $X.XX. Adjusted margin was Revenues was million, compared or operating COVID EBITDA in million, X.X%. XX.X% Gross to EBITDA Adjusted Adjusted by $X.XX. prior million, up EPS operating was were was or from the previous was and margin XX.X%. Adjusted was XX.X%. XX.X%. quarter by costs, this quarter X.X% $XXX XX.X%. year. – margin margin, X.X%. down excluding gross excluding margin,

million million for or prior in $XX increased $X Operating quarter to $XX excluding Reconciling adjusted XXXX. million income million in versus XXXX, by prior to quarter, sales, on higher impacts. from ex adjusted QX operating compared QX million, $XX income $X income rate QX based XXXX operating

of volume. main due selling equivalent normal increased with a which reductions X.X% material positive labor had cost prices. The impact a ASP $X to impact representing more efficiencies, primarily $X negative a a million, a than offset decline. Volume to were million, elements decreased increase $X impact in and average lower prices of Variable million, manufacturing and of with costs increased costs metal prices, positive X.X%

offset Fixed days due cycling travel Inventory more costs. costs by personnel positive million, impacts had in impact increases, to of a primarily QX, compensation, effect higher related of the increased and with working million. incentive $X a negative of to wage costs partially $X lower

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

costs $X cost elements of material with a negative XX.X% were, negative in prices. main average by labor were prices had ASP representing and Volume of decreased offset costs a prices The impact decreased positive of lower a million, with million, Variable decline. and than selling reduction a X.X% metal impact $XX million, a $XX decrease. increases representing more impact

slightly impacts for more total impact in of offset costs costs. immaterial and were repair a personnel Fixed decreased individually million. than costs the pricing had other higher [Technical by $X Inventory lower and maintenance Difficulty] costs travel, positive

lower reduced were COVID Selling, COVID, SG&A, $XXX $X.X of million million, administrative primarily cost. expectations, costs. for travel identified quarter expenses which due general and than was excluding the includes to

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

no to state not income subject cash tax taxes. foreign reform, taxes to withholding and any U.S. they’re taxes amounts federal and some subject The additional to company due did to during that other Recall U.S. the U.S. QX. are such repatriate while longer

during QX, will to in tax which initiated repatriate program this to $XXX million expect we about reform. We that complete U.S. response

$X.X usable approximately comprised We investments credit on and and million at billion cash $XXX quarter-end, the liquidity facility had of total $XXX capacity short-term is million.

undertaken of few debentures million amount past $X principal the remain of retire X% years tax certain than reform. or principal our the $XX.X have outstanding longer programs at of XXXX, convertible the XXXX. instruments. at able million we we the amount to to outstanding were million debentures, debt part which the This less During which only quarter, over have the of no convertible attributes Of repurchase the are convertible that beginning outstanding efficient QX end US was $XXX at of tax the

the legal We by be and conditions, our repurchase and authorized to market factors. of continue to Board Directors subject business convertible other to debentures, requirements remaining

of payments due $XXX to in credit our convertible until debentures face related amount due facility, of expiration totaled million of and principal $XXX or credit facility No on million cost of million notes value are is value convertible million our the $XXX converts revolving the unamortized the million The instruments. net remaining million, $XX XXXX. XXXX $XXX carrying due outstanding the The includes debt of XXXX $XX of principal the of issuance debt the and in and convertible June in XXXX.

U.S. tax for Our QX was GAAP rate approximately XX%.

Our benefit related GAAP of convertible tax the rate the of includes tax debentures. to the unusual some settlement

for Our of effects approximately these costs items debt unusual rate, which quarter. excludes normalized extinguishment tax effective tax XX% was tax of early COVID and the and the the

normalized our between and be rate XX% effective expect to We for XXXX XX%. tax

of the tax proportional rate. effect Generally, a our BEAT the provisions pre-tax GILTI to GILTI thus effective levels of tax and BEAT lower taxes. and increase aspects at larger U.S. and continue income, evaluate We law, the particularly of have

$XXX for Our an count taxing The level could among in million. million. significantly income mix were outstanding consolidated jurisdictions. EPS $XXX rate for approximately is second Total shares different shift based quarter assumed result share on A expected is the and effective income of tax in quarter-end results. various at purposes XXXX

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

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

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

excess from equipment includes XX-month cash the the years in $XX repatriation, related cash from last were the million. and Free $XX than generation paid million. reform, million $XXX The months U.S. Proceeds million; trailing generated taxes trailing Vishay XX of $XX $XXX years. sales flows and XX and $XXX greater for than of cash operations XX $X has in of consistently for million less period cash for each XX-month past the was tax million. period trailing to property million

XXX were Backlog conversion days. Days Inventories outstanding XX sales. resulting XX end sales $X.XXX was outstanding of at Days increased days. in quarter-over-quarter one for were the cash excluding payables exchange of at the million, quarter cycle the days, X.X quarter were of of quarter a for Days XX outstanding billion, inventory days. of months $XX rate impacts. by or

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

Gerald Paul

morning, Lori, you, Thank and good everyone.

a As Despite beginning China first of the better context we expected, rather of achieved depressed in the coronavirus in expectations. profits imposed of XXXX. second-half than mainly has and quarter be from pandemic, the quarter a plant close the to sales proven shutdowns, recovery

normalizing Strong our orders, supply chain as turnaround distribution in economic and industry. continuously an particular, inventories of in from the as from well the Asia, completed global impression in

margin the in of million $X.XX. in operating of sales, Vishay margin adjusted adjusted $XX quarter We X.X% adjusted and $X.XX sales, of margin and margin generated X.X% of gross GAAP EPS GAAP free quarter first XX.X% of of operating cash. EPS XX.X% sales, achieved of of of sales, of a gross GAAP of the

economic environment. The development components the for in quarter global the Let electronic created of me about the feelings. ambivalent talk economy first

in rebound of supply chain. a the widely strong a general, orders one hand, normalized strong and On Asia

and rather automotive economies the the driven of more due a On a sector around other to concerns the hand, by weak for world, the growing pandemic. and lockdown midterm more

normal have lead price on general. remains, and least quite at decline on times levels. The Backlogs normalized average, in

impact to some due China. after no shortages COVID-XX – exists delivery plant observed. to temporary nervousness existence, were but in real started be manufacturing But Some shutdowns to existing of problems in customers

Let the me come regions, to Americas.

and as partially in seen by mill, also in medical driven weakness home. driven strong a There as have and partially the the segments, computing telecom, for gas, was well and industrial avionics corona, from working oil demand by markets. We

starting We have seen to distributors restock.

The a the and sector. automotive there’s in the telecom, In Europe, of markets. in industrial continued medical holds demand weakness

We the OEMs. stocks to at as this is in restock, have seen as starting some also America, of increase well but safety

long Asia, is XXXX. this corona. rebound delayed to is global strong it for the going a time, But as soon strong a is I Asia a by after COVID-XX rebound for that difficult will as I In definitely a think, lead ready ready Asia subside, after upturn. In believe was

distribution still quarter, below up quarter, Global prior the X% distribution. to but Coming versus to first prior by recover XX% started in with year. POS

in Asia in by We up POS prior X%, XX% strong have the and the quarter Europe was by by seen Americas also despite POS versus increase in a coronavirus. XX%.

X.X after a in quarter four noticeably of in The X.X in in X.X continue X.X Europe year. X.X normalize X.X after In In $XX inventory million In QX. from a in X.X million $XX and turns Americas, $XX after Asia, quarter inventory four in after prior levels X.X. million year. X.X prior in in the in reduction QX, to were first and to of inventory and prior quarter year. increased reduction and four the In at turns turns were and X.X X.X quarter X.X the distribution QX in

industry the segments. to Coming

remains First of of be of the We decline believes by expect automotive The of offset XX% a that vehicles crisis vehicles to problems the all, electronic acceptance weakened multiplies already do content market corona in an automotive. electric increases. between cannot to XX% market. light production see limited. the We that

it’s a picture. Industrial, mixed very

are We and fixed work and but equipment laptop by Concerning income during up, also promising and slowly. and the corona Again, have crisis. supported peripheral industrial needs volume. strong the is sectors hand, on should computing, other slow. weak automation. learning quite XG needs oil progresses, markets help remote transportation, the Telecommunication, Server very gas

be slow. a air to new existing global grow and also Commercial remains major Consumer China are white and EMS good. of due subsided, strong, corona after goods good to TVs based avionics to reduction on programs. has military. very Military in Medical travel. down continues is

the below one achieved million Vishay’s business rate prior in versus development. $XXX our of midpoint year. and came in impacts, quarter to excluding Quarter guidance, exchange Coming million sales in million of $XXX $XXX slightly sales, prior

X.X% or year exchange Excluding and $X prior versus $XXX down sales prior effects, in or were quarter XX%. million, rate QX up by by million, versus

in for the the Americas semis from the in recovered the X.XX and quarter to X.XX Asia semis detail, distribution, after And for quarter. quarter, QX, driven after after four, X.XX the was in quarter, was X.XX fourth after book-to-bill in for after for distribution was the in quarter fourth in fourth OEMs quarter X.XX for quarter, X.XX some for In by X.XX X.XX, book-to-bill X.XX Asia. X.XX after X.XX Book-to-bill four. X.XX passives after fourth in was X.XX X.XX X.XX for first mainly Europe in X.XX

first to to X.X quarter OEMs. months an passives. backlog the X.X safety stocks months X.X It’s The increased in of semis in effect in the extent of months, from and several at X.X an months increase

There is prior prior less normal I on now X.X% decline price in quarter, of cancellations. minus Semis, year. more order total, X.X% minus think, or somewhat case, price the is versus a level is The versus normal rates, this accelerating. decline in

X% versus X.X% are versus of minus prior quarter, on minus versus year. level minus versus have price Passives minus prior a We year. quarter X% prior and prior X.X% decline, normal

expected impact normal our after In lower volumes, expected. efficiency as the highlights the I as Let quarter, me phase regained say, to margin a come the levels, may adaptation of negative operations. the more first the plants, contributive of we offset than on normal to

in slightly million rate ex impacts. costs at in fixed in $XXX below expectations, expectations, excluding quarter the also when in when first below costs impacts. again, came rate SG&A came Manufacturing the at first $XXX exchange million, quarter excluding

Vishay at the quarter prior first from the $XX,XXX, quarter was Total employment XX,XXX employees. we when of down X.X% had at end

quarter Excluding million. by exchange in increased WIP and $XX $XX rate $X the impacts, million raw finished and million, materials goods by inventories by

$X in million cost turns a X.X $XX maintenance million quarter $XX on first Inventory level in and the for year, business. $XX spending quarter. was for in prior Capital quarter in expansion, for X the X.X good versus million reduction million million first versus of turns prior remained

we in accordance markets. XXXX, the $XXX CapEx year requirements with the of For expect approximately million of

XX-month cash including XX for million again, million cash trailing taxes Concerning a cash cash for including from trailing $XX cash basis flow. $XXX basis, of operations free We of generated million generated a cash taxes repatriation, $XX and $XXX cash on repatriations. months on million we

strong to the auto Coming we many corrections business resistor resistors, steadily enjoy and inventory volumes lines, all the very technologies. chain. low virtually our recent resistors. market traditional supply With of due in medical do we and to a mill since years, and from industrial, first Vishay’s recovered product all, segments and, to in growing position offer

exchange were prior Sales in X.XX still. XX% the by the rate $XXX down Book-to-bill year, always versus quarter. X% – one quarter from million, decreased quarter X.X months, million, was impacts. prior quarter up prior slightly in in $XX quarter in and versus $XX or in by or after to million, excluding Backlog X.X the high X.XX very

after the more Gross sales which margin quarter quarter, XX% and prior was potential improvements in by XX% came of the impacted based We normal further see in for at negatively resistors on inefficiencies. volume in of low volumes.

Altogether, of the prior year. price X.X see remained turns business at good further and see X.X% with quarter level to traditional in versus expand our opportunities we resistors. level at good Inventory the of We – level first a minus normal resistors after X.X quarter continue modest on a significant for versus fourth minus prior in quarter. to X.X% decline

inductors. years. magnetic. of leads The business and in since in businesses, inductors Exploiting the consists magnetic, growing Coming need a inductors, general, power positioned Vishay technically. specialty for are power steady and well efficient to we growth very With the platform robust and inductor developed market demonstrating of

Vishay. to the of represents a Our stories the It inductors growth success greatest auto one since sector. the fast-growing years with temporary of business slowdown of due of experiences presently weakness

again, prior Sales $X $XX $X impacts. million, quarter, up in or or down versus year by million, by the but exchange first rate of inductors were million, X%, excluding X% quarter prior versus by

level months. the one remains quite at in of was Backlog down quarter, X.XX sales, prior months, somewhat XX%. of to XX% quarter prior X.X at in at quarter. close margin quarter a was after Book-to-bill was which high Gross very X.X fourth exceptional X.XX a for at from quarter

versus X.X% continue at in minus inductors, for We portfolio. highest minus pressure confidence X.X turns the were carry increasing versus quarter quarter, prior Inductors Inventory for to QX. after price the X.X% some our year. X.X within growth passives in see prior

capacitors. to Coming

position broad range a American Our with business and capacitors strong a technologies of market European niches. on based is with in

field enjoy electric of in continue in the increasing China. especially transmission in We power Asia, of to opportunities namely and cars,

X.X in below level rate year, at Sales up below Book-to-bill million, quarter. X.X quarter for capacitors to prior and extra which first the Backlogs in were months, months effects. quarter increased level high of quarter X% XX% in $XX after excludes in from the strong exchange prior a increased fourth of QX. X.X to the a X.XX

some a product quarter. the vis-à-vis the XX% results normal quarter in margin more of inventory mix build Gross in first fourth prior XX% in low and the increased quarter. sales after helped in A to QX

an turns year. capacitors, minus X.X, X.X% the in X% Inventory and acceptable in prices as level quarter versus Stable compared remained prior to quarter of QX. in at plus prior X.X versus

continue markets mill of in mainly grid ongoing strong China. from expansions, We to benefit in the and need capacitors from

Coming couplers, consists to million, products, LEDs quarter automotive below above emitters, $XX the ex as quarter, as rate business receivers, XX% infrared in of for sensors, and opto prior well but X% Sales prior opto which excludes year, products with Vishay’s of were impacts. applications.

specialty me, like fourth Presently, very backlog Asia, X.X excuse principally after growth year after quarter. the after very was plant like first a XXXX. turnaround months to prior We X.XX the times, the business strong problematic X.X – in in Book-to-bill in products at quarter, sensors. indicating lead influenced extended is level X.X of X.X high of there, a especially quarter in in in see by shutdowns months,

some more a profitability Gross of more margin disappointing We that to a the helped sales, in and at XX% had quarter build, all XX% normal quarter. in normal product after efficiencies, was inventory level. return the mix better fourth

to in prior Price X.X X.X higher quarter, as in versus fourth very minus products, first quarter, compared opto Inventory high normal for the X.X% at versus the prior even was decline turns were year. X.X% quarter. minus

that going are to again forward, noticeably will products opto contribute We confident growth. our

modernize We are process expand the and our to Heilbronn in in Germany. fab

for where complete virtually and automotive a Vishay industrial offers in broad growing years. the all we Diodes. has worldwide. market the represents business, commodity as portfolio. Diodes strong profitably keeps position very business since as are a most largest product The supplier segments and Vishay and well steadily technologies, the

supply impacted inventory After down quarter two the during the below most record degree, divisions X% $XXX in which years, that. Sales XX% by has from excludes all been a quarter the volume were prior still prior diodes suffered in QX, effect XXXX in to again. reductions of versus exchange rate by chain. year, and million, by

QX, from in in indicates in first X.X plant Backlog temporary quarter. months the quarter China. was influenced prior also was after very turnaround. by a of to level a This X.XX six which Book-to-bill shutdowns X.XX principally high increased in months

XX% The remained XX% the compared QX higher sales, gross of QX. of return higher levels. margin to the division, volumes, of low as in with diodes any will without level to on profitability in doubt,

a in and quarter X.X% in at levels, runs do X.X of versus after The a level X.X% prior decline good minus remained minus of QX. the X.X But again expect we ASP recovery. market turns normalization currently traditional above prior course Inventory year. versus

provide impact leaders experienced for of MOSFETs MOSFETs some in the to least, in last not this position product destocking be still market the and future MOSFETs. years over first but transistors. developed automotive, quarter the the strong Vishay the activities Last which have of will the successful line. a worldwide. continues in MOSFETs one growing

in X.X above Book-to-bill in remain quarter the months X.XX exchange the X.X at as but quarter X.XX year prior million, to was QX. fourth below after compared in months, quarter, in the quarter. $XXX X.X% XX% without ratio rate Sales high impacts. Backlogs were prior

versus at believe quarter be of the versus forward. turns in acceptable the QX X.X% going that compared of MOSFETs prior minus margin Inventory in in key quarter. level continue Price prior on was sales quarter, X.X% to decline Vishay’s were QX. X.X minus year. growth X.X, was We as at Gross XX% for to normal, prior

me Let summarize.

the China. The for our the for to principally became expected be been all successful, turnaround of first the of We position The lines. operationally chain, would quarter severe normalization despite plants exploit for has fairly it. supply visible in Vishay in quite product after business the headwinds

to industry, end at economies others, be our a that like many confronted problem global the this leads of is that forecasted now completely with frightens so Unfortunately, challenge, entire cannot unforeseeable lockdowns The pandemic point. realistically unknown peoples of a personally.

nevertheless Vishay’s is before. answer same been critical to the challenges, as has in the present times it

demand, Our and trying will employees safeguard plants safety to of will inefficiencies react our inventory to the steps naturally Doing take health build. quickly around and and professionally all to in minimize necessary we so, world. changes

We, tightly too. strategies. more quite focus watch our will jeopardizing generation, cash even all will successfully, general, we fixed costs I CapEx We normally in long-term and on free without believe, essential than and

very respectively financially is And Vishay and a the components mid be. after the place all long-term is to for electronic solid. – good electronics

uncertainties, between guide to For the second of a course, quarter, a substantial at we million and gross of margin despite $XXX between million XX% $XXX and sales range XX%.

Peter, you. you. it back give I to Thank

Peter Henrici

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

Operator

Your from Bank [Operator of line Ruplu with the Instructions] America. Bhattacharya question of is first

Ruplu Bhattacharya

Hi, the quarters still is taking higher as past range pretty bps range my guiding Dr. first you’ve question revenue minus. detailed well. couple which The thank at you million, XQ. a high-level, used XX in of bit $XX Paul, plus, you’re at little The calendar a margin is the gross for questions. for

given just the uncertainty guidance at with can what you. in giving environment? to calendar high-level, the about talk Thank So all for a XQ is that is macroeconomic you give you there confidence

Gerald Paul

First second of quarter. the all, we are already within

afterwards. We figured to quarter, the picture the weak we in of have And second likely think recover an be quarter. will uncertainties will this have some very extent. especially Automotive I

think, effects know. – the we most have included we we of I So

believe we XX with to our the still plus-minus we can stay that So midpoint.

very keep some percent. a low on low margin it’s than impact the – levels, contributive it’s difficult but margin very variable broader means to you more Concerning anticipate, we up. low a That a had observed the little It’s gross concerning a little spread, volume, volume. the to margin, at normally efficiency because completely such at very the we properly, do,

spread why is – that is our broader. answer Did this somewhat So we your question?

Ruplu Bhattacharya

Thanks did. for that. it Yes,

like to rise. are high about For things we’re tantalum still hearing and prices some prices. raw come down, has of ask the base question, second about like also material to palladium metals Price I’d starting but

you you And raw calendar do they they’re margins how prices how material think these going do XQ think do varying? forward? see So you impacted to in how going impact and

Gerald Paul

downs that. We don’t some changes. no practically was there the materials. quarter analyze But the In at practically and And we some on taking the major we vis-à-vis if change. changes QX, mix, no our contracts four, forward you expect impact together materials, next ups least. have, is all we also going also see forward, There in going don’t major time take for

Ruplu Bhattacharya

And in my ask channel. the to inventory I’d about Okay. like question, last distribution

the normalized? there given For Or inventory quarters, you that us inventory channel. you do inventory needs has you. still much in Thank that to Do estimate think some think last the off? couple been the worked of you’ve of of in is excess how channel there has be Vishay excess

Gerald Paul

Honestly, I’m forecasted, It of in little forecasting like that. fact. proud even happened our a

that since I said in reduced this from can words we’re many – beginning I back was $XXX – to you recall, have believe quite that number, We normal. in like is beginning the and million, so too much. if the the is which something

Ruplu Bhattacharya

Thank the details. all Okay. for you

Operator

question of next from Ackerman Your is the Cowen. Karl with line

Gerald Paul

Hello?

Operator

open. your line Ackerman, is Karl

Karl Ackerman

Hey, on last Apologize. Maybe to mute. just going morning, on everyone. distribution. had question I sorry. good back Yes, the Yes.

at today.” odds about at relating But it’s with do by outlook backlog see a – you level improve think of that million it’s bookings some a Because caused certainly – sequentially, double in uncertainty at it’s this at “normal to quarter bit to great seems your backlog? great COVID-XX? while the $XXX there distribution referenced You ordering was

Gerald Paul

stock never general I on was, form, because distribution can but I in don’t You modest in to think, exclude what you a trade, you as have restock, that. need. There the said, everything

ordering. that or double So a part distribution, to was inventory in not sure, of related increase this for is, whether

the hot quarter. so never real first We I the in shortages. that found Was saw market never

Of were same. course, suffered the and closures competition, there course, and of here plant there from

were in overall, some nevertheless, nervousness a believe there broad So at think, ordering kind to be I one. double do of seen But quarter buyers. in not some I

Karl Ackerman

bit I That’s automotive just second but the it. thinking about prepared that in server I markets to serve seeing you. slowing comments markets, on you are production your in hear as is quarter how Maybe end Got networking QX? just markets that relates guess slow. helpful. positioning is what outlook, I was guess, infrastructure you those being relative Could your Clearly, are of and two in you on the you’re Thank QX? impacted, it to a surprised expand particularly

Gerald Paul

the No, I least, hope was to here, major didn’t think no. it a want negatives believe I that. say I to a change We not misunderstanding. At anyway. –

Karl Ackerman

No, it. it’s – got

Okay.

Gerald Paul

corona. In fact, the we will situation around continue to be relatively strong, given special needs the of

Karl Ackerman

it. Got

Gerald Paul

but develops, this this I the effect. slowly, but I misunderstanding. XG is said. XG was maybe said Oh,

Karl Ackerman

floor. the Thank see you. I’ll Perfect.

Gerald Paul

Okay.

Operator

Matt line Your Stifel. next the Sheerin question is from of with

Matthew Sheerin

Dr. good you, Yes, thank and Paul. morning,

another versus and at markets. book-to-bill relatively quarter? today just the Just the the in of saw are not us distribution, the book-to-bill can trends you other tell question what end regarding you levels the booking if very I in strong but Could

Gerald Paul

April at was X.XX.

back, which doesn’t one, again such restocking. it – it was was it hold situation in not So quarter gave pretty was part a orders restocking. of They for

discontinued, this but X. was X still So April it’s

Matthew Sheerin

Right apparently.

to Okay. starting now, look you see push-outs? are your book you cancellations at order and And then as

Gerald Paul

the orders normal. No, cancellations nine ago, the are In additional quite given before. quite got in to meantime, say, high, we expected that reality, normal. high, cancellations, months ago very obviously. all which We watch which Absolutely happen, we half-a-year were

Matthew Sheerin

and auto months. the Okay. as look slowdown big production, But quarter, And to I know couple that being a pace? slower September back a there about spike much coming of you production you in don’t would September quarter? in just demand bit geographies expect next have beyond end a much being the Or the a given affected, weak the orders the concern with in is visibility all you at of

Gerald Paul

development when in volumes. to believe competition. from they quarter us they they not automotive basically differently expect on we listen that, the will that again, count customers automotive of more two. they will normal you and, the – I low Well, indicated that your tell be After would point

So QX. to in we would expect restart orders from automotive already

accurate So very was see by is, distinct it we what their will forecast – but one how a not customer. statement only

Matthew Sheerin

there reflects incremental second-half? things just like additional it normal rebound? do doesn’t don’t And to because recover cost-cutting – if margin you you if a programs. at Is And margin haven’t contribution. look Okay. the sound And things that, XX% you’ve any will is outlook, implemented implement it think in XX% lastly, basically that your plan you cost-cutting your to

Gerald Paul

It’s the obvious the cost as as if in turn area. Matt, cost fixed additional past, sour, really – be there will we’ve in cutting things done

We other plans, to careful projects. costs. that ways not most would, there will, in We our past. without for But destroying we do always we destroy sure. But damage fixed our hand, destroy, important on done be react not the on the to are it structure, your and to to very have not always

Matthew Sheerin

Okay. Thank you.

Gerald Paul

Thank you.

Operator

next Your David Paribas. Instructions] [Operator with of the question BNP is O’Connor from line

David O’Connor

or and parity ask Maybe through at book-to-bill one my two April, the side. Dr. question. X.X. thanks the Good Great. Paul, from letting mentioned morning, me you at for was

Gerald Paul

Yes.

David O’Connor

And coming the trend already? geographical give you Have see for the well? book-to-bills you Europe the us through on can there? the China maybe give and you recovery if Can us to the started breakdown as U.S. in

Gerald Paul

and quite the quarter a precise. I strong of the moment. don’t have have don’t this came pulls would April be relatively obvious economy It’s the But I Asia. that is it’s from different in that Asia numbers at that I one again, the picture weakest, will say. But Europe the Unfortunately, obvious not input the split available.

David O’Connor

given area, as maybe how home look And that slow, about in Okay. No When supply strength prepared some within on problem. there from remarks. positioning Can is server Thanks chip talk people it server makers stronger? reporting you Or that your the it you some us was on market, think, market that. working I the your the talking or reconcile trends. then at the chain? more that from talked you server for we

Gerald Paul

fact slow, What strong kind the misunderstood. with strong of the it goes reasons is think of was it said effect development before. of because it the were is relatively you said I these it I is, the of I said needs, a is was XG I slowly. corona-driven. as But mentioning. the relatively said it even remainder because but was I misunderstanding, is

was maybe misunderstanding, it before. I So it a corrected

David O’Connor

Maybe you the got Thank it. question. as that. Okay, last for

do On ordering was to side the close the that inventory? Thank you. corona as inventory more distributors to this start normal do you crisis, distributors, levels? you that patterns possible return coming and of – will think as out think inventory structurally as hold Or

Gerald Paul

and my long after an Well, career, crisis there distribution strong fast unexpectedly we’re I’ve and always was those any recovery orders, seen in relatively leading things. always

the after I expect after to corona, we the recovery would crisis. same see a think ends, will how depending again So corona of, happen fast steep kind I but it

David O’Connor

you. Thank helpful. Very

Operator

are Are There no further questions. remarks? any closing there

Peter Henrici

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

Vishay Intertechnology (VSH) 12 May 202020 Q1 Earnings call transcript