Vishay ((VSH)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Vishay Intertechnology’s recent earnings call painted a largely positive picture, with strong revenue growth across various segments and regions. The company highlighted a solid book-to-bill ratio and strategic investments in capacity expansion as key indicators of its robust performance. Despite some challenges, such as the negative impact from the Newport fab and manufacturing inefficiencies, the overall sentiment was optimistic, with future growth prospects outweighing the current hurdles.
Revenue Growth
Vishay reported a 7% sequential increase in second-quarter revenue, reaching $762 million. This growth was observed across all regions and end markets, showcasing the company’s broad-based strength and market penetration.
Positive Book-to-Bill Ratio
The company maintained a positive demand momentum with an overall book-to-bill ratio of 1.02. This ratio indicates that new orders are outpacing shipments, suggesting continued growth in the near term.
Automotive and Industrial Segment Growth
Vishay’s automotive revenue saw a 4% increase, while the industrial segment grew by 9% from the first quarter. These segments are crucial for the company’s growth strategy, reflecting strong demand in these key areas.
Strong AI and Smart Grid Demand
The company highlighted ongoing demand momentum in smart grid infrastructure projects and AI power applications. Significant orders and ongoing design activities in these areas underscore Vishay’s strategic focus on high-growth markets.
Capacity Expansion and Strategic Investments
Over the past 2.5 years, Vishay has invested approximately $775 million in expanding capacity for high-growth, higher profit products. These strategic investments position the company well to meet future demand and capitalize on emerging opportunities.
Newport Fab Impact
The Newport fab negatively impacted gross margin by approximately 160 basis points, with future impacts expected to range between 160 and 185 basis points. This challenge is a key focus area for the company as it seeks to mitigate its effects.
Challenges in Manufacturing and Tariff Costs
Manufacturing inefficiencies in the MOSFET segment led to a decline in gross margin, while tariff costs continue to impact the business. However, these costs are largely passed through to customers, minimizing their impact on the company’s bottom line.
Flat OEM Revenue
Despite volume increases, OEM revenue remained flat compared to the first quarter. This indicates potential challenges in converting increased production into revenue growth.
Mixed Signals in Semiconductors
The semiconductor segment presented mixed signals with a book-to-bill ratio of 0.98, reflecting some customer program adjustments and slipping demand. This area remains a focus for potential improvement.
Forward-Looking Guidance
For the third quarter, Vishay projects revenues of $775 million, plus or minus $20 million, with a gross margin of 19.7%, plus or minus 50 basis points. The guidance reflects a 2% volume increase and considers seasonal factors, particularly in Europe. The company remains optimistic about the second half of 2025, driven by demand in smart grid infrastructure, AI, and automotive electrification.
In summary, Vishay Intertechnology’s earnings call highlighted a positive trajectory with strong revenue growth and strategic investments positioning the company for future success. While challenges such as the Newport fab impact and manufacturing inefficiencies persist, the overall sentiment remains optimistic, with a promising outlook for the second half of 2025.