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Vishay Reports Results for Third Quarter 2019

October 29, 2019 7:30 AM

MALVERN, Pa., Oct. 29, 2019 (GLOBE NEWSWIRE) -- Vishay Intertechnology, Inc. (NYSE: VSH), one of the world's largest manufacturers of discrete semiconductors and passive components, today announced its results for the fiscal quarter and nine fiscal months ended September 28, 2019.

Revenues for the fiscal quarter ended September 28, 2019 were $628.3 million, compared to $685.2 million for the fiscal quarter ended June 29, 2019, and $781.0 million for the fiscal quarter ended September 29, 2018. Net earnings attributable to Vishay stockholders for the fiscal quarter ended September 28, 2019 were $30.0 million, or $0.21 per diluted share, compared to $44.5 million, or $0.31 per diluted share for the fiscal quarter ended June 29, 2019, and $77.9 million, or $0.51 per diluted share for the fiscal quarter ended September 29, 2018.

As summarized on the attached reconciliation schedule, all periods presented include items affecting comparability. Adjusted earnings per diluted share, which exclude these items net of tax and the unusual tax items, were $0.26, $0.36, and $0.60 for the fiscal quarters ended September 28, 2019, June 29, 2019, and September 29, 2018, respectively.

Commenting on results for the third quarter 2019, Dr. Gerald Paul, President and Chief Executive Officer stated, “Vishay’s financial performance has been negatively impacted by low demand, especially from distribution. However, during the third quarter inventories of Vishay’s products at distribution started to come down noticeably. Still high levels of inventories in the global supply chain should impact our business for another two quarters. We are managing the slowdown by adapting costs as we have done in the past. On the other hand, our increased machine capacities will enable Vishay to participate in the next upturn to the full extent.”

Commenting on the outlook Dr. Paul stated, “For the fourth quarter we expect a continuation of the inventory reduction in the supply chain and guide for revenues in a range of $580 to $620 million and gross margins of 23% to 24%.”

A conference call to discuss Vishay’s third quarter financial results is scheduled for Tuesday, October 29, 2019 at 9:00 a.m. ET. The dial-in number for the conference call is 877-589-6174 (+1 706-643-1406, if calling from outside the United States or Canada) and the access code is 9882458.

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

There will be a replay of the conference call from 12:00 p.m. ET on Tuesday, October 29, 2019 through 11:59 p.m. ET on Tuesday, November 12, 2019. The telephone number for the replay is +1 855-859-2056 (+1 404-537-3406, if calling from outside the United States or Canada) and the access code is 9882458.

About VishayVishay Intertechnology, Inc., a Fortune 1000 Company listed on the NYSE (VSH), is one of the world's largest manufacturers of discrete semiconductors (diodes, MOSFETs, and infrared optoelectronics) and passive electronic components (resistors, inductors, and capacitors). These components are used in virtually all types of electronic devices and equipment, in the industrial, computing, automotive, consumer, telecommunications, military, aerospace, power supplies, and medical markets. Vishay’s product innovations, successful acquisition strategy, and "one-stop shop" service have made it a global industry leader. Vishay can be found on the Internet at http://www.vishay.com.

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

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

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

VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands, except per share amounts)
Fiscal quarters ended
September 28, 2019 June 29, 2019 September 29, 2018
Net revenues$628,329 $685,240 $780,972
Costs of products sold 478,250 510,639 544,676
Gross profit 150,079 174,601 236,296
Gross margin 23.9% 25.5% 30.3%
Selling, general, and administrative expenses 91,796 95,112 98,198
Restructuring and severance costs 7,255 - -
Operating income 51,028 79,489 138,098
Operating margin 8.1% 11.6% 17.7%
Other income (expense):
Interest expense (8,564) (8,204) (10,813)
Other components of net periodic pension cost (3,348) (3,367) (3,367)
Other 5,066 2,970 2,890
Total other income (expense) - net (6,846) (8,601) (11,290)
Income before taxes 44,182 70,888 126,808
Income tax expense 13,917 26,153 48,737
Net earnings 30,265 44,735 78,071
Less: net earnings attributable to noncontrolling interests 227 258 195
Net earnings attributable to Vishay stockholders$30,038 $44,477 $77,876
Basic earnings per share attributable to Vishay stockholders$0.21 $0.31 $0.54
Diluted earnings per share attributable to Vishay stockholders$0.21 $0.31 $0.51
Weighted average shares outstanding - basic 144,628 144,621 144,383
Weighted average shares outstanding - diluted 145,027 145,023 152,946
Cash dividends per share$0.095 $0.095 $0.085

VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands, except per share amounts)
Nine fiscal months ended
September 28, 2019 September 29, 2018
Net revenues$2,058,728 $2,258,797
Costs of products sold 1,522,889 1,589,963
Gross profit 535,839 668,834
Gross margin 26.0% 29.6%
Selling, general, and administrative expenses 290,332 303,381
Restructuring and severance costs 7,255 -
Operating income 238,252 365,453
Operating margin 11.6% 16.2%
Other income (expense):
Interest expense (25,160) (26,862)
Other components of net periodic pension cost (10,111) (10,336)
Other 13,344 5,440
Loss on early extinguishment of debt (1,307) (17,309)
Total other income (expense) - net (23,234) (49,067)
Income before taxes 215,018 316,386
Income tax expense 64,377 72,508
Net earnings 150,641 243,878
Less: net earnings attributable to noncontrolling interests 667 539
Net earnings attributable to Vishay stockholders$149,974 $243,339
Basic earnings per share attributable to Vishay stockholders$1.04 $1.69
Diluted earnings per share attributable to Vishay stockholders$1.03 $1.55
Weighted average shares outstanding - basic 144,602 144,364
Weighted average shares outstanding - diluted 145,114 156,702
Cash dividends per share$0.2750 $0.2375

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)
September 28, 2019 December 31, 2018
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$731,483 $686,032
Short-term investments 56,043 78,286
Accounts receivable, net 335,189 397,020
Inventories:
Finished goods 129,485 138,112
Work in process 189,757 190,982
Raw materials 125,411 150,566
Total inventories 444,653 479,660
Prepaid expenses and other current assets 123,712 142,888
Total current assets 1,691,080 1,783,886
Property and equipment, at cost:
Land 74,053 87,622
Buildings and improvements 570,727 619,445
Machinery and equipment 2,551,127 2,510,001
Construction in progress 113,639 125,109
Allowance for depreciation (2,381,868) (2,373,176)
927,678 969,001
Right of use assets 93,103 -
Goodwill 150,309 147,480
Other intangible assets, net 62,265 65,688
Other assets 147,751 140,143
Total assets$3,072,186 $3,106,198

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)
September 28, 2019 December 31, 2018
(Unaudited)
Liabilities and stockholders' equity
Current liabilities:
Notes payable to banks$7 $18
Trade accounts payable 141,472 218,322
Payroll and related expenses 131,751 141,670
Lease liabilities 16,932 -
Other accrued expenses 164,995 229,660
Income taxes 25,945 54,436
Total current liabilities 481,102 644,106
Long-term debt less current portion 496,262 494,509
U.S. transition tax payable 140,196 154,953
Deferred income taxes 47,246 85,471
Long-term lease liabilities 80,998 -
Other liabilities 90,174 79,489
Accrued pension and other postretirement costs 248,357 260,984
Total liabilities 1,584,335 1,719,512
Redeemable convertible debentures - 2,016
Equity:
Vishay stockholders' equity
Common stock 13,235 13,212
Class B convertible common stock 1,210 1,210
Capital in excess of par value 1,427,049 1,436,011
Retained earnings (accumulated deficit) 71,956 (61,258)
Accumulated other comprehensive income (loss) (27,952) (6,791)
Total Vishay stockholders' equity 1,485,498 1,382,384
Noncontrolling interests 2,353 2,286
Total equity 1,487,851 1,384,670
Total liabilities, temporary equity, and equity$3,072,186 $3,106,198

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - in thousands)
Nine fiscal months ended
September 28, 2019 September 29, 2018
Operating activities
Net earnings$150,641 $243,878
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 122,302 121,888
(Gain) loss on disposal of property and equipment (168) (2,216)
Accretion of interest on convertible debt instruments 10,558 6,966
Inventory write-offs for obsolescence 19,214 17,059
Loss on early extinguishment of debt 1,307 17,309
Deferred income taxes (4,481) (12,348)
Other 9,029 13,021
Change in U.S. transition tax liability (14,757) (14,400)
Change in repatriation tax liability (38,814) (156,767)
Changes in operating assets and liabilities, net of effects of businesses acquired (42,810) (125,499)
Net cash provided by operating activities 212,021 108,891
Investing activities
Purchase of property and equipment (100,267) (126,391)
Proceeds from sale of property and equipment 486 8,455
Purchase of businesses, net of cash acquired (11,862) (14,880)
Purchase of short-term investments (59,440) (172,732)
Maturity of short-term investments 79,765 577,524
Other investing activities 4,021 (1,608)
Net cash provided by (used in) investing activities (87,297) 270,368
Financing activities
Proceeds from long-term borrowings - 600,000
Issuance costs (5,394) (15,621)
Repurchase of convertible debentures (22,695) (584,991)
Net proceeds (payments) on revolving credit lines - (150,000)
Net changes in short-term borrowings (12) -
Dividends paid to common stockholders (36,396) (31,378)
Dividends paid to Class B common stockholders (3,327) (2,873)
Distributions to noncontrolling interests (600) (525)
Cash withholding taxes paid when shares withheld for vested equity awards (2,708) (2,297)
Net cash used in financing activities (71,132) (187,685)
Effect of exchange rate changes on cash and cash equivalents (8,141) (11,501)
Net increase in cash and cash equivalents 45,451 180,073
Cash and cash equivalents at beginning of period 686,032 748,032
Cash and cash equivalents at end of period$731,483 $928,105

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of Adjusted Earnings Per Share
(Unaudited - In thousands, except per share amounts)
Fiscal quarters ended Nine fiscal months ended
September 28, 2019 June 29, 2019 September 29, 2018 September 28, 2019 September 29, 2018
GAAP net earnings attributable to Vishay stockholders$30,038 $44,477 $77,876 $149,974 $243,339
Reconciling items affecting operating income:
Restructuring and severance costs$7,255 $- $- $7,255 $-
Reconciling items affecting other income (expense):
Loss on early extinguishment of debt$- $- $- $1,307 $17,309
Reconciling items affecting tax expense (benefit):
Effects of tax-basis foreign exchange gain$- $7,554 $- $7,554 $-
Enactment of TCJA - - 13,496 - 25,496
Effects of cash repatriation program 2,604 (48) 680 1,971 (7,010)
Change in deferred taxes due to early extinguishment of debt - - - (1,312) (33,963)
Tax effects of pre-tax items above (1,644) - - (1,934) (3,784)
Adjusted net earnings$38,253 $51,983 $92,052 $164,815 $241,387
Adjusted weighted average diluted shares outstanding 145,027 145,023 152,946 145,114 156,702
Adjusted earnings per diluted share$0.26 $0.36 $0.60 $1.14 $1.54

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of Free Cash
(Unaudited - In thousands)
Fiscal quarters ended Nine fiscal months ended
September 28, 2019 June 29, 2019 September 29, 2018 September 28, 2019 September 29, 2018
Net cash provided by operating activities$76,202 $56,301 $70,721 $212,021 $108,891
Proceeds from sale of property and equipment 22 69 77 486 8,455
Less: Capital expenditures (30,119) (33,781) (49,745) (100,267) (126,391)
Free cash$46,105 $22,589 $21,053 $112,240 $(9,045)

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of EBITDA and Adjusted EBITDA
(Unaudited - In thousands)
Fiscal quarters ended Nine fiscal months ended
September 28, 2019 June 29, 2019 September 29, 2018 September 28, 2019 September 29, 2018
GAAP net earnings attributable to Vishay stockholders$30,038 $44,477 $77,876 $149,974 $243,339
Net earnings attributable to noncontrolling interests 227 258 195 667 539
Net earnings$30,265 $44,735 $78,071 $150,641 $243,878
Interest expense$8,564 $8,204 $10,813 $25,160 $26,862
Interest income (2,365) (2,147) (3,504) (6,711) (8,302)
Income taxes 13,917 26,153 48,737 64,377 72,508
Depreciation and amortization 40,956 40,918 40,714 122,302 121,888
EBITDA$91,337 $117,863 $174,831 $355,769 $456,834
Reconciling items
Restructuring and severance costs$7,255 $- $- $7,255 $-
Loss on early extinguishment of debt - - - 1,307 17,309
Adjusted EBITDA$98,592 $117,863 $174,831 $364,331 $474,143
Adjusted EBITDA margin** 15.7% 17.2% 22.4% 17.7% 21.0%
** Adjusted EBITDA as a percentage of net revenues

Vishay_Logo_1280x1024.jpg

Source: Vishay Intertechnology, Inc.

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