VSH - Earnings call transcript Q3 2020 | Vishay Intertechnology, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Vishay Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Peter Henrici, Head of Investor Relations. sir. ahead, go Please

Peter Henrici

Lori Good conference welcome are call. President Officer; Paul, Regina. and Vice third Financial Chief Dr. Vishay quarter Vishay's Officer. and Executive Chief XXXX With and our morning you, Executive to President and Intertechnology's Gerald Lipcaman, Thank me today

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

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

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

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

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

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

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

Lori Lipcaman

pre-announced on you higher expectation quarter. on a have $X.XX you, Thank was million, I focus EPS metrics. our of for will for October Vishay to I our earnings that Good Adjusted than the sure the $XXX chance as EPS reported press highlights had some QX and review morning, for everyone. most am of quarter. original key release. significantly revenues XX. $X.XX was Peter.

which we measures million $XX at and our XXXX subsidies, these XX.X%. end elaborate and selling to business variable $XX three, was $X.XX. costs impacts; items income X.X%. few adjusted $X a net includes Thin-Film U.S. elements to from Reconciling quarter, reductions, metal price to travel. QX, representing on subsidies XXXX. impact million, added million; adjusted was average a the X.X% principal GAAP a in EPS million with higher increase; adjusted was $X calculating was was million, Selling, certain to versus was QX, up extinguishment. also the $X.X by During $XX due we lower was financial representing transactions quarter, Operating million our prior amount were, Due our identified prior on of the margin exclude increased have Adjusted adjusted X, a a convertible million to in the quarter XX.X%. another million sales charges, also a the positive directly operating COVID-XX positive compared will cost year, effects strengthen $XX in non-GAAP Inventory to I selling impact COVID exchange Revenues $X our niche in $X XXXX QX, will margin moments. and income acquisition the for $XX Adjusted in our XX.X%. X.X% with million. competitiveness margin, and loss operating of related market. of this costs. a primarily COVID and notes a worldwide impacts with efficiencies. $XX timing or our X.X% versus $XX impact a business of recognized in volume Adjusted million, to compared fiscal by effects for on XXXX, of Applied impact shipping of identified on prior higher $X indirect previous due QX results, our decline; increased material of costs, XXXX. quarter, quarter X.X%. rate positive $X.XX. fixed EPS costs; decreased are manufacturing operating These EBITDA $XX of acquisition impact based costs, margin, excluding excluding quarter of $X operating main XX.X%. on with general negative and existing October million related to and was gross reduced prices results. to prices operating or On excess Similar had the QX decreased or volume results. Adjusted Such capacity. were more positive for administrative of ATP in impact variable in completed continue $XX we quarter thin-film higher a for the had were representing XXXX Products. prior the EPS This prices of effect XXXX $XX The million of excluding to COVID-XX volume due million year. to QX, million when compliment of EBITDA the such QX, costs operating no compared increased net million due Gross of negative a COVID and back a the than of acquisition impact insignificant COVID-XX impact rate business income $XX impacts. attributable million negative costs costs or macroeconomic macroeconomic of the ASP adjusted by to Reconciling XX% certain X.X% QX $XXX lower comparability. and a COVID-XX million, benefit by ASP were, were QX, operating outbreak. positive shipping of in in XXXX, The million, $XX QX, general impacts efficiencies, are repurchased million $XX income as based decrease $XX QX business which excluding million, but on X.X% exchange income to elements primarily versus increases million, from increase; labor impact XXXX million, income increase $X of to million million representing sales main Adjusted The average expenses and quarter had $XX decline; had offset up

expenses exchange $XX rates. million SG&A at constant For QX, XXXX, our expectations are approximately of

able to notes amount principal Year-to-date, as outstanding our price initial equity amount due extinguishment U.S. utilize better since necessary. notes our our By our rates were on the GAAP is repurchase notes fixed XXXX. we year-to-date reduced average term quarter, repurchase $XXX notes bifurcating debt, adjust primarily interest to provides reducing face of to and issuances, market the XX.X% repurchase the loss a debt the is convertible value. which future and levels with convertible The the revolver we in the key repurchased million debt flexibility to attributes. $XX for the between of The assumption due us principal convertible During have of million of XXXX. due was

remaining to up subject due notes continued million million the XX repurchase to of XXXX, an We convertible well additional be of market to of Board as convertible authorized as capacity liquidity to Directors and X the and comprised million. other credit million We by our conditions, billion Cash total $XXX factors. and on and business investments at usable the requirements legal had is of quarter-end. $XXX facility approximately $X.X short-term debentures

of of and XXXX debentures. quarter-end total at outstanding is is QX. million XXXX. credit of of the the convertible There unamortized notes the to the million amount $XXX facility a current value related remaining XXXX due costs. amounts issuance The convertible and principal do face discount were to value at for no due XXXX debentures debt remaining million, $XXX and converts $X notes $XXX revolving debt end of Our on the the comprised and net of related in million The

principal to expires time XXXX. QX meet However, so and during revolving time to future. June, do short-term XXXX No to to are until facility we financing revolve continue in payments the and needs did utilize in expect credit from due

for QX impact be QX. of to additional $X in approximately excluding note expense the convertible million interest repurchases any expect We

expected As approximately management implemented. approximately annually The provide by announced last normalized be GAAP year, fully effective XXXX. reduction are XX%. by tax year-to-date on The a cost year-to-date to to to XX%. implemented The was fully the lower rate $XX we approximately end of which tax are million programs, implementing when intended global basis are rejuvenation was rate programs costs and

both for tax For the normalized. rate quarter, XX% mathematically of this the yields and GAAP approximately

the some to GAAP tax tax includes the QX. settlement unusual rate related in convertible year-to-date benefits the of Our debentures of

extinguishment as excludes COVID the normalized as debt, effects the well the loss QX items, year-to-date tax Our on the the of costs of and restructuring charge. rate identified tax unusual pretax

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

EPS normalized effective XXXX expected XXX count is for quarter outstanding million. approximately at the purposes were rate XXXX We and The quarter-end million. be for XX% between tax expect our share XX%. of shares to Total for XXX fourth

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

period $XX cost paid $XXX repatriation. cash from million. million. Capital generation XX-month of XX tax. the for approximately the from $XXX Plus for for period Free XX quarter-over-quarter days. three has impacts. payable flows quarter consistently exchange for of cash million, and the million XX $XXX of tax million reform XX million for transition years for business million, Days paid trailing sales in was million of has million taxes months outstanding $XX the the days. generated were the cycle reduction cash excluding $XXX were days, years. inventory of for current of sales. an expansion for outstanding the of than in rate the of quarter the excess operations resulting cash was U.S. $XX related trailing end operations The of cash Days greater conversion taxes million. the $XXX months, maintenance were $XX $XX $X XX days. million, Vishay past For cash quarter decreased installment at XX-month to Days for year includes a split XX $XXX were trailing expenditures million X.X at by cash Inventory Backlog last each the was outstanding XX

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

Gerald Paul

third enjoyed in good drop impact upturn. of during Despite share developed sales, level automotive of the the gross quarter. impact historical you, manufacturing to the and better Having in We pandemic Thank million the of experienced earnings particular Vishay's margin operating we of third generation quarter quarter, the expected. quarter, segment the adapted in third per ongoing of share we morning, worldwide $X.XX in of quarter strong of X.X% has costs economic the free of full adjusted Lori sales per second in the second the and recovery The business and negative of cash earnings and remained After achieved capacities than margin good a everybody. of a of quarter. XX.X% the an $XX $X.XX. the in on

quarter hand backlogs the stretch of or the visibility increasing other to out shortages high by remained said, the Indeed, automotive yet. by have on general, principally sales no continued Lead Asian a to but driven improved price third pressure backlogs and as me level but of we unexpectedly it. also encouraging up quite is see start I normal and in were environment describe which see steadily simultaneously, of dropped economic as the mainly substantially, the XX-week orders abrupt quarter, flat normal level. we strong sign. the virtually Cancellations picking recovery a total general. With cause markets. the sector, this on times in economic real a environment supply in Let in

the experienced to same COVID the robust. come but of Americas commercial The market, production. were regions. me Americas and POA a at automotive the POS aircraft significant disruption of the have in Let recovery sales the related time,

computers disruption market Asia strong high to improvement burn in Europe in demand inventories. helped consumer particular all There been Asia the and especially China. virtually recovery, products continued related for historical has In after distribution and of segments, its Europe the second United the automotive States, energy stabilized, and markets quarter. European also recovered third in smart the extremely. the in by Industrial driven market industry quarter, steeply projects. Like in commercial suffers aircraft home growth new during automation alternative in

Inventory to X.X X.X in after from In turns the to X.X and X.X comparison QX, seen year. X.X prior Europe X.X Some in same in versus distribution. quarter, in remaining below turns prior in distribution second $XX Asia Europe in in and have by prior the sales quarter in increased the in year in QX of Americas, $XX by X%. from and Asia in decreased XX%, versus comments year. by Global quarter prior quarter million in third Americas improved increase in turns on X.X X.X distributors turns prior improved year. slightly million X.X, In X% prior two, and quarter. as at in Inventories and In quarter X.X after the POS third prior XX% X.X after distribution by year. the we by the by an in X%.

that Asian distribution confident. a remains year-over-year is can in now. better I And think all-in-all, quite substantially distribution position we say inventory

there suffer growth. on high second of automation broad we mixed remains Let Factory whereas in recovered commercial a gaming. And substantial be third in projects to benefit, and automotive industry to learning Home medical appears drives show time. After continue and air may positive, markets perceive demand industrial Electric but servers. and are up not show the to for whereas me depressed. quarter Military continue there delays. vehicles and depleted. oil The important which conditioning sales for programs we equipment at markets. decline segments. picture the substantial ramp be remain a expectations. in other large smartphone A power of strongly transmission the recovery. comment most massive the gas the in technologies work-from-home XG Overall, as strong. notebooks telecom related does crisis, point, markets production whereas avionics a support of yet Remote supply beyond chain strong, signs some is and to this observe vehicles fixed for last quarter, our continue government demand sector the

business in quarter. on development the me comment Vishay's third Let

due to $XXX indicated, As recovery year. but exchange our significantly, sales sales impact faster the We $XXX to the in sector, million versus mostly in achieved rate also quarter third to automotive million $XXX of than original of exceeded due prior relatively a sales quarter distribution. excluding and expected million guidance prior stable

distribution price versus was by high versus X.XX X.XX quarter for as X.XX impact, Excluding X.X% QX pressure after versus prior for by for X.XX was in for second quarter X.X%. exchange for the of level year historically in X.X and million compared X.XX. from million X.X% to up prior X.XX and backlog versus after months third X.XX X.XX Americas in after in X.X in after $XX still and the the sales in quarter, prior X.XX second general, quarter X.XX. rate or in X.X $X after quarter. in semiconductors Europe OEMs second prior X.XX minus year. the The after months for up were quarter, X.XX, ratio normal X.XX or passives the X% book-to-bill X.XX Asia quarter the for months. There X.X The semis X.X in third passives. X.XX. QX, to months minus after a decreased in

X.X% X.X% year versus for Some X.X% minus minus quarter, passives price the decline for prior minus prior minus versus X.X% prior for the versus and semiconductors normal prior quite versus and year. quarter acceleration prior quarter

in very employment quarter costs fixed $XX the down our third increased came close according quarter fashion. of year. in our to operations. Corona, at quarter Adjusted quarter, as end as the In at were logistics in in the all normal in offset costs to to the the able operate well million, XX,XXX, quarter Total again, third costs. third able the Manufacturing also of negative prior Despite SG&A million, were expectations. $XXX third Vishay of highlights the virtually Vishay a impacts third normal X.X% expectations. from contributive on Some was plants we, to were the margin temporarily at

and to third million was after by a two. prior by by our Inventory goods in rate the of year, third $XX Capital in versus returns $XX includes good level business. $X million. X.X in $X reduction spending quarter the million. Excluding and inventories materials of the X.X in million million $X the for additional finished the expansion, cost And quarter WIP $XX acquisition inventories $XX quarter quarter impacts, turns for exchange million ATP raw $XX million of of and the $X million decreased in million, maintenance for this

$XXX of continue of a approximately to generated of requirements XX operations cash XXXX, our accordance CapEx We million trailing the we markets. For with million on in months quite expect $XXX basis, million again generated we paid million cash including $XXX free cash trailing basis, cash taxes $XX on repatriation. cash taxes for for including a of months cash XX $XX And million from repatriation.

third XX% to We prior X% excluding recover. exchange improved quarter the the we Book-to-bill in sector, XX% automotive up by on minus X.XX with of sales in QX. in were With out star the resistor million. substrates inventory In prior comment quarter quarter established mix, specialty resistors prior annual the of in business X% quarter medical were all saw versus and still of satisfactory The and with QX, despite some further I and our quarter, which temporary growing traditional second we in in X.X% rate versus segments decline, me QX of strong all industrial the the at in producer resistors. by position the X.XX is or and quarter, at price $X normal versus now Gross $XX high process virtually sales, year. of in and level X.X-month. in market impact Let after prior ATP resistors, thin-film minus auto quarter completed million, $XXX the the was in the about $XX of X.X year, from is enjoy mill a position remained specialty million major to Vishay’s product of very prior we but customer suffered and market prior avail level as had a impacts. reduction strengthens substantially quarter X.X from million weakness was all lines after some always quite technologies. but down Inventory traditionally Sales turns offer up of resistors. X.X% in financially versus quarter. successful in acquisition acquisition QX. this, in of Backlog margin this Vishay's

We quarter. X.XX of of see come Vishay short quarter X.X power Backlog further on significant the the Coming quarter consists to artificial developed the back were down growth QX million million, are $XX With in continued growth million in the The $XX expand to of Book-to-bill of even X%, the magnetics, inductors XX% in very or up the to rate need by to QX steady by magnetics, spike inductors months efficient $X the exploiting the up prior prior months or robust general, market of by showing and exchange a for a quarter. an business inductors high opportunities slowdown long-term from in quarter prior in their platform years. X.X third were and power year leads inductors in Sales excluding and has specialty resistor in impressive path. in inductors quarter still already impact. third to was for inductors second versus and level prior since growing inductors. technically. the After the midterm. in businesses we business well-positioned

-- of million Book-to-bill but in effects. QX. improved China. American of the X.X%. carry slightly in in quarter, third to in the to capacitors, in in year-over-year a in margin vis-à-vis faced capacitors enjoy quarter. a X.X is X.X As mix. continued prior with Also second of the broad X.X Sales X% the million still exchange and high strong in prior of transmission from now into X.X improved in improved passives price We the customer Mostly further third $X a were quarter. volume, down quarter, is decline technologies was in with Capacitors, some price in turns quarter of to increasing quarter. X.X a prior in position quarter the business impact of turns from X.X%, confidence in we We gross of or on within weak X% opportunities portfolio. quarter quarter year, to cars, started quarter but X.X decline after quarter which result improved European excludes market or sales level above XX% higher margin to month, months a Asia, to the prior and in also the prior quarter. There Inventory fields range second namely prior Backlog below Inductors XX% respectively for of from $XX after sharply due to saw power the at it growth quarter. prior quarter. of XX% XX% low capacity vis-à-vis $X sales Inventory prior second electro higher in our third normal price of decreased the volume, gross capacitors niches. in had of rate X.XX and from based of quarter recover our QX highest in million, X.X decline

selling We have prior year. seen plus versus prior X% and plus prices quarter stable X.X% versus increasing

the steep really Book-to-bill the Sales X.XX above quarter million, were quarter was product QX quarter by namely months ongoing and Backlog prior X.X% quarter. year. mix, products better infrared better compared XX% prior will gross quarter spike in were in XX% in sales high of low, X.X continue good the after prior quarter. volume, X.X for XX% with has prior versus still Vishay's inventory the margin China. from recovery. quarter. receivers, reduced year, level benefit applications. prior to X.X X.XX and after couplers Driven line, as Opto XX% prior LEDs third second to consists We sensors, versus Coming markets better was rate QX. month in of a There and to impacts, efficiencies gross a expenses, for Price in the emitters, in from $XX the of Opto need strong excludes minus X.X% X.X minus up and grid turns to in decline above to margin which exchange in coming in automotive mill business quarter, of a

complete combination segments to in going the our from quarters phase We a that of Inventory in market some commodity is the virtually X% as to XX% the from was few chain historical up products the related quarter. The business a and and will to the Temporarily we suffered X.X Behind up too months, strong largest as steadily growing the are quarter. noticeably the our Heilbronn Book-to-bill of pressure you expand after of over X.XX the in inventory X.X as Vishay a in the quarter, supplier and the its a the turns and in Gross results the portfolio. Diodes start in had approaches versus in price the where offers excluding inefficiencies modernize down $XXX Apparently second automotive has compared since Germany. Taiwanese confident represents reduced in markets. from X.X increased are a the profitably technologies, to on to supply to new high. X.X margin exchange contribute prior are prior the Fab second and were prior broad Opto plant very forward know, XX% kept all the X% with quarter main industrial costs. burdened from now million, quarter process, sales Diodes. in the Diodes improved Vishay product for years. quarter. Sales to most position second worldwide. in recovery. and well much months rate by business weakness in increased as we Backlog effects. quarter down versus year, quarter. quarter in X.XX by business,

year. versus prior price quarter versus minus X.X% in acceleration prior decline, X.X% minus Some

an to line. We sales, prior strong MOSFET slightly quarter at the profitability MOSFETs, leaders Backlog volume more prior was was minus market historical in and compared less the by turns expect they're prior months normal, beneficial quarter in transistors. of X.X% X.X one MOSFETs Inventory to Sales book-to-bill mix, the for quarter the in in With and minus to of below rate automotive, prices. Results quarter prior X.X for levels the decline metal ratio year, the the X.X% line in XX% that Vishay's growth remain the view X.X versus least, X% impact as months market of the were was Vishay reduction a product margin successful which QX. going X.XX quarter X.XX in a higher were The versus the and as but MOSFETs Gross diode will to million, of growing temporarily quarter XX%. enjoy and of after the a automotive above in in at year. QX healthy in of versus compared excluding prior exchange in in normalizing. provide return use not XX% key MOSFET X.X increasing effects. MOSFET quarter Last QX. is future. we Price inventory position in Obvious was burdened $XXX with second forward. quarter. customer above

and apparently economic like than quarter, reacted happened me many of the full to capacities, controlling fundamentals faster inventories segments pandemic for positive ready and anticipated. been time. Let next third electronic the unprecedented Obviously, and has it fixed costs Recovery but quickly and Nevertheless, expected now electronics in on the downturns to is broader it of during and way way are very world the growth adapting Vishay it upturn to manufacturing steeply the principally quarter. to the from a continues very impact professionally, economy. second difficult was The has former explore recover prevail another summarize. a for we extent. by very by

Our business model be has successful. continues not to changed and

of strategic safeguarding We of employees. good our focus and on generation essential our under while our long-term cash wellbeing profitability and neglecting nor, course, offices. plants and the strategies to in neither control remains will continue Corona health

For a XX.X% guide million margin gross fourth $XXX of $XXX quarter, range million of Peter? points. to the Thank XX the basis sales you. plus/minus to we and

Peter Henrici

Thank you, Dr. Paul.

open now take are the question. We call Regina, to questions. the please first

Operator

of question Ruplu Please line ahead. Bhattacharya the with from first will Bank go Our come America. of

Ruplu Bhattacharya

Hi. questions. channel. about excess Dr. for Paul, in some past, taking in talked my inventory you've distribution you the the Thank

This quarter, you saw reduction.

you worth said think million of of I $XX inventory.

would industry, overall, distribution supply as inventory the at characterize normal? how And with look you you that, in So, the that? would demand characterize at when you

Gerald Paul

distribution expect to inventory come I the matter Asian in in a of would as level. some restocking levels we And western the world, normal at down I a say have fact. would think the really even world

know how say that the normal time. dare but completely, know I And get to it long to took I you supply to this at -- You say never would point. inventory it the since that very dare would long chain there, is

Ruplu Bhattacharya

And question quarter. the forward? that then can for the of this Should side, And maybe going that we diodes. Okay. same persist on margins saw Opto margins really good margin think level

some came had think I XX%. -- in margins at gross you

those margins progressing? So, how would you see

Gerald Paul

up at the I to believe had sustainable, development concerning would the two I I line. last the a included same and XX%. luck present we was before. it's but XXs. The but levels is Concerning words volume. the What our matter XXs, nice high And as sustainable we pure at -- these of Opto discussion a of just reconfirmed carefully a is diodes, disappointing, of fact, which the sales some optimism high-end use for my say assets little XX% sales game is also vis-à-vis levels. spiked years product to mix

You can calculate.

really you went had so gross to and XX% which ago, -- one the to you grows. years ago, and margins, only this which we If for this realistically, year would always before expect like volumes, return one sales. of a expectation line, we our commodity half And back, do say was

Ruplu Bhattacharya

do thoughts in Got your How my and maybe think the as can any sit for M&A reinvesting it. buybacks, just we priorities question, capital And dividend? allocation you talk and the business on maybe about further you here? last versus about

Gerald Paul

increased we details all a but miss course, the decision we We which time, never We do of dividends, the capital our this point the invest Board, we in sales other of and business. of plans but on invest always not produce cash. At We next We uses have the principally year. the enough. of to mind. the all these possibilities continue And we lack in that, a in of dividends. also of because pay equipment. spending, evaluate already the pay this We is, all make -- for know you all kinds

So, no change.

Ruplu Bhattacharya

the taking Okay. and the Thanks strong questions on congrats results for my in quarter.

Gerald Paul

Thank you.

Operator

line of the Please ahead. question will next with Ackerman come Karl go Our Cowen. from

Karl Ackerman

Could customer Yes. explain Hi. Paul, the if environment. rationale the current Thank I strategy, deal you Two M&A Dr. questions, encouraging may. I implementation guess, especially in the your it's you. the for thin-film see be to potential And appears of base? any deal the to synergies products with or given your a business? is And backlog? there in activity portfolio then stabilizing perhaps for more what near-term,

Gerald Paul

before resistors, it said businesses, the this absolutely the it's only way I with into specialty Can And So, also we the true. intelligent an I future. end? is resistors. look think we And for continuously but necessarily not start anyway,

will try continue. So, to we

happy course, depends I looking the Of it on very case think for we I'm are the continuously but that company. acquire in of ATP, opportunities, that And we that.

quarter, resistor. in We it the we resistors. by offer And are a technologies place leader every all in

synergize added Vishay, board, other compliments It very our nicely we which of one technology just this efforts. basis. parts to the on and we have already So, can

strong very I it's offerings XX% profitable. And about -- substrates happy in profitable, on of be move. whole film the very think north gross. quite in we I'm become a It's strong will very market. will we the

Karl Ackerman

Thank you. Understood.

in a strong For flexed quarter. degradation third the quarter, now very demand sequential June improvement and the chain on in the has my supply on considerably follow-up,

chain improve consolidation? First, part products, all, demand your remains for why supply friction chain pricing considerably you. has how Thank come down has shouldn't end your at earlier and Second, if supply and changed a the escalating rebound trade the the backlog year? of from view stretched on and if

Gerald Paul

less I products. This suspect of price course, clear. forward. Well, on will of first also nice Such times, see the Basically, amongst time decline which specialty In a decline, would the increasing commodity part a have would kind commodity some past. history, commodity of be lead question? positive to was It's products, we it lead upturn, stretch stretching if year, it's such Sorry. not go on true. we exposed yes. price of the What And If examples pressures had the it's same will that we price we not time and pressure, product by second all for But, products, expected out the the do and bit to as decline our for in that pricing we out, others. go are back -- that impacts especially down. the this seeing a cost we partially true. absolutely followed are you be be not demand some as go to

Karl Ackerman

Yes.

on trade consolidation. and view your demand and Just at the end friction see and supply how you a escalating rebound if chain perhaps all changed

Gerald Paul

very I change but We fundamentally. negatives, think, they but have it change limited, for are principal it doesn't do us. some no

Karl Ackerman

you. Thank

Operator

Stifel. line question with of next go Please the Your Alvin Park ahead. from comes

Alvin Park

Hi. for on guide. Yes. and Thank you congratulations question, result and solid a the taking

Just end if generally if fiscal automotive you of XXXX? quarter want segment see if beyond. levels any follow-up momentum on the QX still the early year December into fiscal there's peaking just the kind of wondering quarter, year March going or there's for -- insight and part the into positive I'm as to

Gerald Paul

electronification fact, for -- spike optimistic automotive runs a may quite also as matter lot. four level quarter of it us. in all, you as for least three, come, a because electrification of quarter It quarter for same the yourself. it I'm the First such And a at said basically helps expected wasn't to as in four year have automotive you at

it units fact, a of mean that us. always As the less for our sales if of car XX% I -- or by picture constant sales would matter -- more would down go was sold cars

electronification. So, major you of there's a the impact see

depends now what see -- think, confident we I'm everything that the this economy spike. on not of a world of but development clear, the I course, was a and recovery

Alvin Park

you to have seeing any into Okay. Thank currently? one see the and was high case well to industry and might as on And in up we fiscal strong, how and heat there ago, that pricing due lead the turn believe I similar may. were times industrial XXXX, you're if Capacitors, huge year-over-year, and size about to of automotives for updates spikes was [ph]. a of if as LCC Do increase very uptick the... and lead two similar stretch follow-up times constraints positive ASP extension question, quarter-over-quarter, and X% years X% A I you. if actually

Gerald Paul

You especially refer to capacitors.

Alvin Park

Yeah.

Gerald Paul

Well, in not Vishay typically is capacitors.

We and relatively as have are businesses of we specialty products. a in niche a thing, matter of high share

much of so the We good historically. through reasons, read commodities I We not battlefield there are main from with believe, there. in

are typical. we So, not

I are go Principally -- exchange were mass some of a to not you market a in and speaking, profitability we their we There wouldn't But fact. capacitors, of correcting further. matter happens it of So, the would helped what reflection capacitors on mix also matter some prices a customer as I fact. was say. improve as capacitors altogether,

Okay?

Alvin Park

Thank you very much.

Operator

Capital. the Please from line comes with question of go next Harrison Your Shawn ahead. Loop

Shawn Harrison

terms we've little is are Asia But Hi, you? pre-buying capacity. products maybe think, environment get? -- Vishay raw are competitors could are commentary the I of seen bit lead of shift tightening you potentially of Paul, to maybe more to a material up Supplies are first seeing if competitive some some kind in as raw what pre-buying share you those material seeing competitors availability, stretch difficult and kind are any of everybody. just question And in more market for out that. -- the issues Dr. on, my that there times

Gerald Paul

in has a Well, a and via little this up, why have at complained is I in simple we know I What shortages raw give come can't point that this answer I time. in materials raw But some material, the point, this it is metals this there's up availability, some not. price see and came really about I MOSFETs Concerning noble don't availability. particular, substantially. metals, at in shortages supply.

Shawn Harrison

then of for Lori, have you And two-parter. I question a kind a Okay.

How line and were of in being million that say the that this second, $XX first then on some in The that we head of takes because temporary as versus half think efforts see XXXX? year implemented OpEx roll it's just in. both inflation, do the into you you cost rate. measures out, on the might you And on let's the that terms cost of tax net savings puts the from should XXXX, first

taxes in the when Vishay what U.S.? corporate how If that there XXXX, me administration, in, that came the go might in happened change you could reform a if up the tax remind in is if impact

Lori Lipcaman

Okay.

a So, early the our point process. it's starting little at operating with in this in time, budgeting bit expenses,

an in estimate. of inflation the offset program should course, you wages give at in expenses manufacturing side. moment, to have approximately the of reduction we'd in and So, terms both cost operating But the

severely compensation On due the the incentive travel XXXX were curtailed whatever hand, were to and other in expenses COVID and diminished. the

around lower second somewhat we'd expenses X% next cases the half, half expect flare would time, in half. second as We be COVID point back be the operating between probably half a At to return up than a the an about expect increase this to and split in we it which the So, to the the there big in likely world, but means the is year. economy first seems increase first would normal.

Shawn Harrison

the lot part That's helpful. guess, a being dynamic, to was I moving And remember. pieces, of tax the XXXX. then just in There second trying

Lori Lipcaman

And regulations. There those the it been of were about the come a rules lot has interpretation few And had and years through. of pieces. moving past some

-- taxing an the of when our was to So the Vishay, related more rate our regulations Vishay taxes at tax were tax didn't mix come jurisdictions. XXXX. in extreme recent announced the down and end in the different And income actually of manner the decline

certainly on implemented if since on all down the earnings. tax what don't we would that rate over Again, take impact would but Vishay, projections a turns details into have Whitehouse mix or But Democrats to come on an the would year what be our not. depending that consideration to has know I based be of ago, the of be don't the I know yet. of could the So, the there

Shawn Harrison

helpful. Very you. Thank

Operator

with comes Your ahead. the JPMorgan. line Harlan go next from question Please of Sur

Harlan Sur

the Typically, consignment stronger the in team, fourth. you economic in your coverage, the strong given Good March is But for third your mid, see recovery quarter the plow, quarter some Are know outlook, up positive the you Good digit into global the quarter morning. forecast sequentially. and low, single to in QX? customers. get expanding I seasoning anticipating to seasonality the backlog

Gerald Paul

four guide as yourself, have QX came out a you out quarter than, you said come better seasonal. than speaking as will Principally better

think If us, quarter economy I next the same statement. pandemic easiest matter its -- helps year, to quarter one not really, a pain can I difference the somehow if fact. as if may four, of this on listen, good we So, a believe this year be but have really

Harlan Sur

for applications you can But on thin-film main resistors substrate that. I ATP complex and rationale, film obstacle. to companies. like aerospace, company's fabrication and acquisition, focus the see And for the application the your looks product in Thank on was then Yeah. like this circuit communications, it capacitors

So of is strategy circuit expansion an this electronics just substrate now versus full your thin-film in to [ph]? include

Gerald Paul

had UltraSource, acquiring three thin-film, year One, were ago one this last we and before. of between a we and now. we before are We synergies nice just some acquiring There together the were elements, one I acquired bring maybe company and another think had that. it smaller out this sometime division quite we

little a larger matter reform specialty a nice also, this altogether, And to acquire before asked specialty resistor this a maintains division. I our is was strategy, profitable of to fact. maybe as be as So, definitely businesses, idea

Harlan Sur

Yeah. for Thank you that.

question. last one Just

starting wide other to silicon of as diodes. about Are we're nitride? sort technologies has applications. based power focus gap for So, sort gallium looking transistors and more things energy hearing transistors guys more power like maybe on carbide and so Vishay carbide longer such know more of and you industrial, obviously, concurred term, silicon we're some EV, based clean put band and I components

Gerald Paul

not in -- our Not deal our it. focus. with We it's in

some it's programs, not our but focus. have We in

Harlan Sur

Paul. Thank Okay. you, Dr.

Operator

Please with David BNP O'Connor next from Exane go ahead. line Our Paribas. question comes the of

David O'Connor

Any for just from my that outperformance of you firstly, auto into for growth Thanks. Great. content versus XXXX XX EV back the in in And guys? in be your is I mentioned sales or of the side. points points, previously guess is volume How comment XXXX One for taking sustainable versus And Paul, versus I on Dr. XX Lori. that Thanks you follow-up have Maybe helpful. units. your two going then, outperformance? questions. the would characterization is auto for is around my a terms that that's -- much outperformance to the

Gerald Paul

including of But very promising all, the They impact. normal a are cars, contain electrification. still first share electrical Well, many from than their for cars small us. components it's more a standpoint,

electric matter XX% about need matter we in is competitors I beneficial if normal move components ago. there electrical hand, way, -- -- than few in difference. course, quarters They we which us. classes, of not a really fact. classes. said This cars, And, talk science of more this cars this, as well. was the class, other it's But I be fact, the a definitely the are by a to the there when So, of the was opinion driven approximately in also by our for this our but on -- the move traditional a as would electrification towards electrical non-electrical

some since but quite aspects, more time, not as which observed said about -- this more trend, So, I matter was cars we contained I ongoing electrical I the cars. a think electrical fact, which promising. is we talking really of and

David O'Connor

XXXX? impact real the into a is that. for on manufacturing as side, of impact follow-up margin Thanks. through next on we bear as any any then should cost the on the And we maybe Lori. Thanks up-cycle, go The on in for mind Understood. contribution on the savings kind the fall there that

Lori Lipcaman

reduction a gross inflation. testament, cost would in there offsets margin. costs, so the on be approximately it But fixed on based was fact program The

an in wages. of it's a So, avoidance terms increase then further

David O'Connor

Understood. it. last for Paul. And Dr. question Got maybe

elaborate On Could spoke think. some Thank semis, remarks, a that decline about acceleration, your best? the I -- price [indiscernible] and you just prepared in on you. in you bit

Gerald Paul

course, to believe this -- relative much is distribution. impact, less in and -- this shipped We shift this, to Well, that to which on temporary we the customer customers. basically We And temporary. on is is have mix price had of all some therefore. very and relative automotive temporary so seen the

I would going then and out a stretch times lead of price the if even. kind some mitigation forward of fact, In expect

David O'Connor

it. Got Thanks much. so

Operator

the concluding to management for remarks. I'll turn back over now conference any

Peter Henrici

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

Operator

call. for disconnect. now all gentlemen, and conclude that and Ladies today's you Thank may will you joining,

Vishay Intertechnology (VSH) 3 Nov 202020 Q3 Earnings call transcript