Q1 2023 Vishay Intertechnology Inc Earnings Call
Greetings and welcome to the Vishay Intertechnology first quarter 2023 earnings conference call.
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A brief question and answer session will follow the formal presentation.
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It is now my pleasure to introduce your host Peter and Rafi Investor Relations. Thank you Sir you may begin.
Thank you Christine.
Good morning, and a wildcard to reshape.
<unk> first quarter 2023 earnings conference call.
I'm joined today by Joe <unk>, our President and Chief Executive Officer, and primary liver cancer.
Our Chief Financial Officer.
This morning, we reported results for our first quarter earnings.
A copy of our earnings release is available in the Investor Relations section of our website at IR <unk> com.
This call is being broadcast live over the web.
Through our website.
Today's call is being recorded and will be available via replay on our website.
During the call well be referring to a slide presentation, which we also called our geography say dot com.
You should be aware that in today's conference call, we won't be making certain forward looking statements.
Future events and performance.
These statements are subject to risks and uncertainties that could cause actual results to differ from the forward looking statements.
For a discussion of factors that could cause results to differ please see today's press release and Form 10-K and Form 10-Q filings.
The Securities and Exchange Commission.
We are including information in our press release.
And on this conference call on various GAAP and non-GAAP measure.
Having provided a full GAAP to non-GAAP reconciliation in our press release as well as in the presentation posted on our jobs to shave Dot com.
<unk>, which we believe you will find useful when comparing our GAAP and non-GAAP .
Resolved.
We use non-GAAP measures because we believe they provide useful information about the operating performance of our business.
And should be considered by investors in conjunction with GAAP measures.
Now I turn the call over to President and Chief Executive Officer, Joe <unk>.
Thank you Peter Good morning, everyone welcome to our first quarter conference call I'll start my remarks on slide three of the presentation deck.
Michelle delivered strong first quarter results with revenue of $871 million above our high end of the guidance range.
We saw continued positive momentum in our sales to automotive.
Solid demand in industrial and all time high sales of specialty products to both medical and aerospace defense market segment.
Some details now about these end markets.
Automotive.
Which represents 33% of our total revenue.
Grew six 2% versus the fourth quarter and nine 6% compared to the first quarter of 2022.
Oems in all regions replenished vehicle inventories now that the supply chain constraints are improving.
We also saw continued demand for products in support of more electronic content.
<unk> features and greater electric vehicle production.
Industrial.
This is our largest segment at 37% of total revenues.
Sales here were flat versus the fourth quarter and below last year's first quarter.
We saw strong pull through in Europe .
Where we are supporting manufacturing automation and smart infrastructure.
Plus renewable energy collection and transmission.
Medical.
Medical represents 5% of total revenues.
This segment grew 21, 4% over the fourth quarter.
And we are at an all time high in Q1, and it is showing increasing promise.
Particularly in the areas of medical diagnostic equipment.
And implantable devices.
Compared to the first quarter of 2022 medical revenues grew 29, 6%.
Aerospace and defense.
Also at an all time high in Q1.
On growth of 10, 9% over the fourth quarter and 33, 6% over the first quarter last year.
Demand for this market, which constitutes 7% of total revenue.
It's being driven by customers that are supporting many different applications such as advanced radar systems missile guidance systems for the U S government and for its allies.
We are the leader in supplying passive components.
On the U S military qualified parts list.
Looking at the chart in the Middle of this slide displays revenue mixed by sales channel.
OEM revenues increased six 1% driven by demand from automotive customers plus our industrial strategic accounts.
Distribution revenues were flat quarter over quarter, However, Pos did grow six 2%.
Which was led by Europe .
There was a modest growth in the Americas.
And slightly lower Pos in Asia.
Distributor inventory at quarter end remained at 19 weeks.
With an increase in value.
EMS revenues declined seven 4% due to some inventory rebalancing <unk>.
Particularly for consumer computer and telecom markets.
Although automotive industrial and aerospace defense as well medical the demand was strong.
At the same time inside Vishay, we collectively hit the ground running to make the needed changes to make full advantage of these megatrends and connectivity mobility and sustainability that are creating new opportunities in our end markets to drive growth and optimize our returns.
Across all employees in all locations, we begin to shift our mindset to think customer first.
We are keeping our operational quality and product reliability discipline.
But we are placing a priority on having a business minded focus in everything we do.
A greater support to customer design in.
Aggregating customer demand.
A multiyear capacity planning approach.
Setting new business processes.
And fostering a change of culture, all of which contribute to developing ambitious growth plans.
That are grounded in market based intelligence.
In meeting with distributors Oems in MFS.
Initially many have said Vishay you took your limited capacity and went off to support other customers or other channels.
They had designed into shape products, but could not get delivery to support their production.
I presented our plans to them to improve our customer engagement.
Improve our customer service.
And prepare our capacity expansions to support their demand.
Now they are expressing a heightened interest in vishay to.
To bring this new approach to them quickly.
Inside vishay, not only our senior leaders, but all of our employees.
Our energetically embracing this change.
Accepting the challenge to figure out how to improve their operations.
How do we improve their customer facing activities.
Defining market opportunities.
And developing strategic plans to grow and.
The tactical steps to execute the plan.
This way of change the new era of Vishay is spreading quickly throughout the organization.
I want to specifically, thank Steve Vishay employees as they join me in this company wide mission.
Their steadfast commitment to excellence and now speed at Vishay is very much appreciate it.
On last quarter's call I shared the broad outlines of our three year plan to drive greater growth and returns.
2023 continues to be a staging year to lay the foundation for vishay to realize our full potential.
We're busy implementing a number of initiatives addressing the needed change in all customer facing aspects of our business.
I'll give you a progress update on these initiatives after Lori has shared our financial results for the first quarter Laurie.
Yes.
Thank you Joe and good morning, everyone.
I'll start my review of our first quarter results on slide four.
Revenues for the fourth quarter were 871 7 million.
The high end of our guidance.
Benefited $15 4 million from exchange rates.
Compared to the fourth quarter revenues increased one 8%, reflecting a one 2% increase in pricing and a one 5% decline in volume.
Compared to the first quarter last year revenues grew 2.0%, reflecting higher pricing more than offset the one 4% decline in volume.
At quarter end.
Cumberland for consolidated Vishay with 0.84.
Backlog was seven five months.
Compared to 8.0 months at the end of the prior quarter as lead times started coming down.
We returned a total of $34 2 million to stockholders comprised of dividend.
Two 7 million and stock repurchases of $20 2 million.
The next slide on page five <unk> income statement highlights.
Gross profit was $278 7 million.
<unk> of 32, 2% compared to 29, 1% for the fourth quarter and substantially above our forecast of margin in the range of 28%.
Compared to the fourth quarter margin increased on pricing lower material and freight costs and improved manufacturing efficiencies and yield.
Partially offset by lower volume and inflationary labor and material costs.
Compared to our guidance gross margin profits reflects the flow through of better than expected pricing from last year.
Lower than planned energy and logistics costs and higher than expected fixed cost absorption related to an inventory build.
SG&A expenses were $120 1 million.
$6 3 million higher than the $113 8 million, we reported fourth quarter.
Primarily reflecting annual salary increases and an accrual for equity incentive compensation.
Operating income increased $23 3 million versus the fourth quarter on higher gross profit offset partially by higher I think.
Operating income increased $12 3 million or eight four.
Over the first quarter of 2022.
Pretty much was 18, 2% compared to 15, 8% for the fourth quarter.
And 17, 1% for the first quarter of 2022.
EBITDA was $199 3 million, an EBITDA margin of 22, 9%.
Our normalized effective tax rate was 28, 4% for the quarter.
Same as our GAAP effective tax rate this quarter.
EPS was <unk> 79 per share.
The <unk> 69 per share for the fourth quarter last year on an adjusted basis.
On slide six we present cash conversion cycle metrics.
Dsos were 45 days unchanged from the fourth quarter and details with 32 days.
Inventory was at $656 7 million at quarter end.
Six 1% increase compared to $618 9 million.
On December 31 2022.
We are ramping up to support <unk> capacity expansion.
Pension and Mexico, and some customer context, and a capacitor segment.
A corresponding to the increase in inventory levels inventory days outstanding were 98 days compared to 93 days for the fourth quarter, bringing.
Bringing the cash conversion cycle for the first quarter to 111.
Turning to slide seven.
You can see that the cash flow from operations of $129 9 million for the first quarter was lower than the fourth quarter, primarily reflecting the increase in inventory.
Total capex was $45 6 million for the quarter.
With $30 2 million of the total invested in capacity expansion compared to $23 9 million last year.
An increase of 26, 4%.
On a trailing 12 month basis total capex was nine 5% of revenue.
Impaired to six 7% for the same period last year.
Free cash flow for the quarter was 850.
$84 6 million compared to $14 1 million for the fourth quarter and a negative $2 3 million last year.
Stockholder returns for the first quarter amounted to $34 2 million.
Consisting of $14 7 million for quarterly dividends and $22 million for stock repurchases.
We repurchased $7 9 million shares at an average price of $22 <unk> per share during the quarter.
Yes.
Total liquidity was $1 7 billion, including cash and short term investments of $1 billion in availability on our revolving credit facility of 642 two.
2 million at quarter end.
As mentioned on our earnings call when we use the revolver from time to time to meet short term financing.
On Monday, we entered into an amendment and extension of our $750 million revolving credit facility to May 2028 from June 2024.
Yes.
This amendment and extension provides us with more than ample financial and operating flexibility to execute our plans for growth.
Okay.
Turning to slide eight for our guidance for.
For the second quarter of 2023.
Revenues are expected to be between $860 million and $900 million.
Gross margin is expected to be in the range of 29 zero percent.
Or minus 50 basis points.
Capitalized cost of the inventory build during the first quarter I worked down.
SG&A expenses are expected to be between $123 million and $127 million for the quarter and still between $475 million and $485 million for the full year at current exchange rates.
For 2023, we expect a normalized effective tax rate of approximately 28%.
Finally, we remain committed to this to gain at least 70% of our free cash flow to stockholders in the form of dividend.
Its asset purchases in accordance with our stockholder return policy.
For 2020 change, we expect to return at least $100 million.
I'll now turn the call back to Joel.
Thank you Laurie let's go to slide nine.
On our call last February I introduced our near term initiatives that we are advancing during 2023, as we drive revenue growth and margin expansion.
We have identified 30 key product lines for growth across each business segment, most of which serve multiple market segments multiple applications and business channels that are aligned with the megatrends of connectivity mobility and sustainability.
To increase capacity to support them and gained share of the highest growth and highest return opportunities. We are investing in capital expansion for a total capex of approximately $385 million this year.
$660 million more than 2022.
Approximately two thirds of this capex is being spent on expansion projects.
This continues the increase in Capex that took place last year. When we spent an additional $107 million nearly all of which was earmarked for capacity expansion projects.
That additional investment will land throughout the quarters of 2023 and 2024.
Bringing down our lead time, and giving us incremental capacity to support our 30 key product line.
We are focused this year on investing in capacity expansion projects outside of China.
Our customers tell us that they do.
The value that they see in vishay being regionally located the manufacturing footprint as they pursue onshoring or near shoring efforts.
Some of this capacity expansion is already allocated to our established customers, especially for MOSFET and resistors, which still have long lead times.
Some of it is strategically reserved to serve new and emerging customers that are leaders in driving megatrend related demand.
This quarter, we put capital to work in a few ways.
In Fabs located in Germany.
Taiwan in Italy geared primarily toward growth segments of automotive and industrial for our MOSFET diodes in opto products.
New factories in Mexico for power metal strip resistors and power inductors.
Custom magnetics is another part of the inductor portfolio that we invest in and the Dominican Republic, we have increased the floor space by 50% to better serve our aerospace defense and medical customers.
Increases our overall custom magnetics capacity and floor space by 6%.
Yeah.
At the same time, we are identifying external sources of commodity product production.
Which helps us create room for our higher growth and higher margin opportunity product.
In 2024 and beyond.
At this point, we are actively engaged in developing partnerships with more than 20 sub contractors of various size.
We have qualified one of these and we will start shipping product to customers in Q3 of 2023.
I also mentioned that we are going to identify additional semiconductor foundries to alleviate the most constrained product lines.
We are moving quickly on this front and are in advanced discussions with one new partner.
We are also investing internally in engineering talent.
To enhance customer engagement and advance innovation.
During the quarter, we placed additional ftes in the Americas, Europe and Asia.
We hired silicon carbide, and Gan engineers to support R&D projects and to support customer facing business development activities.
Last quarter I talked about our expanding strategy to promote our broad product portfolio of discrete semiconductors, and passives with solutions selling.
As a reminder, vishay semiconductors, and passives can populate 80% to 100% of the components on a circuit board for many power applications.
We are introducing vishay reference designs to fully leverage <unk> broad product portfolio.
Customer engineers prefer suppliers, who can provide support with solutions.
We are building these reference boards for the engineers to be able to test to test the vishay solutions.
These boards will be available in the third quarter of this year.
We're also setting up an application lab to support customer applications in the E mobility space.
With respect to Max power.
And our development of Silicon carbide technology.
The 200 volt planner technology MOSFET is progressing according to schedule.
We plan to have samples available to customers in the third quarter.
We continue to work on the 650 volt planner technology MOSFET.
Our development of the 1200 volt trench technology is also moving forward and we have completed the process review in alignment with our foundry partners.
We made progress during this quarter designing products to support automotive and industrial applications.
Finally, the last initiative.
Instituting organizational and cultural change at Boucher.
From my perspective very.
Very critical.
We are fostering collaboration internally and externally.
Pushing decision, making down the organization and empowering risk taking all to foster a mindset of taking of thinking about the customer first in everything we do.
To ensure accountability and reward change we designed a new long term incentive plan.
That aligns to the performance of key employees with company growth and profitability targets.
The board approved the plan on March 24th and it now goes before the shareholders at our upcoming annual meeting on May 20 <unk>.
I can tell you the perceptions about vishay are changing quickly both internally and externally.
We are moving fast and deliberately.
We're making good progress on our near term initiatives.
And setting the stage for substantial growth.
Turning to slide 10 now.
I would like to remind you about the goals we have set for 2023.
We are on track to achieve achieved these goals moving ahead. According to our original plan.
I mentioned earlier that we are just in discussion with over 20 subcontractors and we still expect to have qualified and signed agreements with a number of them by the end of the year.
We also have and we will complete our evaluation on where to build the shaves next manufacturing facility.
We are putting the finishing touches on our go to market strategies for each of the 30, new product lines by region and end market.
Our development of Silicon Carbide, 600, volt and 1200 volt planner technology MOSFET is progressing well.
Finally, we remain committed to holding an analyst day in early 2024.
At which time, we will share with you our three year business plan and targets for revenue growth.
Profitability and returns on invested capital.
In closing I am pleased by the progress we are making in the pace of change.
We are moving quickly in our day to day business practices.
And our mindset to put the customer first and then in our ambitions for growth.
To capture the opportunities created by the Mega trends of connectivity mobility and sustainability.
We have the right people.
We have the right products.
And now we have the passion to do more and grow.
We are now ready to begin the question and answer session.
Okay.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
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All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Thank you. Our first question comes from the line of Ruble Bhattacharya with Bank of America. Please proceed with your question.
Hi, Thank you for taking my questions.
Joel fiscal <unk> is typically your strongest revenue growth quarter for the year yet.
Youre guiding just 1% sequential growth why is that given this backlog is still high at seven and a half months.
So.
Why is the sequential growth just 1% and then last quarter you talked about the beginning of a channel inventory correction can you update us on what Youre seeing with respect to that in terms of the channel.
And how theyre taking inventory.
Okay.
Thank you for the question.
First question about Q2 being up about 1%, we look at the contract business, we have with many automotives.
We see Q2 relatively flat versus Q1 from the automotive schedule agreements that we see.
The medical and the military continues to show strength in Q2. So that's positive we still look at the demand in the industrial segment the inventory that's at the distributors.
Kind of answer your second question combination here.
The inventory the health of our inventory at the distributors is quite good I have met with the distributors many of them and talk to about the health of inventory.
POS was a bit better than we expected we did ship product to them. The inventory has been about 19 weeks and it stays at 19 weeks, we think that it will reduce somewhat in Q2.
But the health of our inventory is good the inventory that the customer have is primarily for MRP programs are available to sell at the inventory at the distributors not so high.
So overall I think the inventory will be stable to slightly down.
Automotive driving at MFS looking at their inventory that they have in the queue will also impact the second quarter sales because ams continues to use their local inventory before they drawing more from us.
Okay also the detailed Sir if I can ask a follow up on the gross margin performance. So.
In <unk>, you had very strong gross margins of 32%.
So 15 16 million sequential growth in revenue.
So what drove the outperformance versus your expectation and you had guided 28%. So it was 400 and above.
Your guidance and then as we look into the second quarter also if you can just give us your thoughts on gross margins because on 10 million higher revenue at the midpoint.
Waiting for $200 million Thats, all your candidates sequential reduction, but just trying to understand the gross margin dynamics between <unk> and <unk>.
Yeah <unk>. This is Larry perhaps I can help you with that question.
So when we're giving guidance for gross margin.
28%, we we had.
And less pricing pressure than expected during Q1, we had lower energy costs related to a government subsidy.
And then working towards not pay them to repeat next year. So next quarter. So we now expect.
More favorable margins with a floor of about 29% for the year.
But in the second half, we expect that lower our gross margins in the first half due to some increases in labor that are still to come.
And some additional yeah.
Stationery cost.
Okay, well the terms of the details there if I can sneak one more in your in your initiate as you've talked about filling gaps in technology in gap in market coverage. If you could just elaborate on those initiatives I mean, where do you think you would want to increase your market coverage and what type of technology do you think of vishay lots to do.
Dan we would like to expand on.
But the gap the gap that we're working on quite aggressively now is being able to bring our silicon carbide technology forward.
This we see as a first topic of conversation at customer engineers and high voltage programs.
This is very important with the samples that we intend to have available in the third quarter is going to help us we will be able to get in those early discussions with engineers and then bring in the rest of the portfolio. It's really an advantage of vishay the semiconductor versus passive holding of products, so filling that high voltage.
Wide band gap semiconductor space is.
Our priority. That's one we also look at other areas like circuit protection or sensors that we we do keep our eye on to further round out our portfolio. These come from conversations with customers. They see our wide portfolio and they ask Boucher can you also consider other technology. So those are a few.
And so all the details and congrats on the strong execution in a tough market.
Thank you very much appreciate your questions.
Our next question comes from the line of Matt Sheerin with Stifel. Please proceed with your question.
Yes. Thank you.
I had a couple of course quick questions on some of the metrics could you give us the book to bill them by channel and OEM and distribution and then also on E. S. P triangles are year over year and quarter on quarter over quarter by segment.
I'll comment on the ASP.
Uh huh.
The ESP we have <unk>.
A large portion of our business, which is in contracts customer contracts.
These are quite firm for the year annual agreements with automotive accounts large Oems so that's a.
Pretty solid we see the asps quite stable there.
ASP in the channel of distribution with some commodity products being on the shelf and the distributor having likely more inventory from a competitor than they do of vishay.
That will come down to someone making a price move and trying to move that inventory.
At this moment, we do see a couple items, maybe in <unk> or in capacitors that Mike.
Might see a little price pressure, but generally we see it holding up okay.
When we look at the constrained products like power semiconductors, or the military products the pricing will be firm.
The.
It could be some price increases as well.
Depending on the product and the inflationary costs that go with it.
Overall I see pricing.
Yes.
Why was the MOSFET pricing holding up.
The MOSFET pricing is on the automotive is holding up quite well the LVL at this point is holding up well, we thought that we would see some price pressure earlier in Q1, we didn't see it.
It's been about assurance of supply MOSFET continues to be the power semiconductors continued to be the number one constrained item out there when.
When we talk to customers.
Okay.
And then.
While we wait for the book to Bill I'm, Joel just a bigger picture question.
The fundamentals that vishay and seem to be holding up.
Very well and much better than if you look at some of the broader semiconductor suppliers and passive suppliers out there and so what are your thoughts on the cycle typically in past cycles, but they are after.
After these very big runs at margin expansion, you know theres, a dropdown both in margins and revenue and we haven't really seen that in a big way yet and it sounds like you still feel good about your backlog.
And your long term.
<unk> so.
What are your thoughts on the cycle and how vishay gets through this one may be different than others.
Hey.
Sure.
The markets are changing there used to be quite define lines between automotive and industrial and telecom and computer.
The markets are now starting to blend together because of the technology, that's moving into the automobile in the technology Thats moving into industrial automation.
So we look at Vishay segments, we look at automotive.
Not only car count, but we look at the electronic content and the Adas features that are coming.
It's quite positive with the product portfolio that we have many automotive grade qualified products, we look at industrial.
There is industrial programs.
Always looking towards any better energy collection and energy distribution.
Transmission lines have to be rebuilt the grid is far from being in a suitable position to be able to provide us. The electricity, we're all going to need for EV and other electric battery powered.
Products, so theres quite a promise there in that segment medical for Vishay.
Growing.
The medical customers that we're talking to.
There is a lot of new activity and exciting programs coming forward that were delayed quite a bit because of the pandemic. So we're seeing that now building momentum.
And then military defense.
We all know what's happening in the world to Ukraine, and many countries are buying their own defense there.
On defense spending and.
And ways to protect themselves. So you Matt when you put those four <unk>.
Markets together, it's eight nearly 85% of vishay.
Automotive.
Industrial.
Medical and military.
So they are quite solid market segments, but they're also bringing in contributions from computer and telecom to support those segments. So.
We're quite.
Quite happy with the development of technology, where it's going and.
Definitely when a position vishay to be able to enjoy more of it.
Yeah, Okay, Great and then on gross margin I think Lori you said that you expect gross margin to hold up around 29% for the year that implies only a modest downtick in the second half.
So could you comment on the drivers behind that is just pricing and just like you said these end market is holding up.
Early well, so that so that margins won't be down that much.
We see that we see the March the market's holding up well.
<unk> military and medical as <unk>.
Growth markets with the percentages that I've changed is good.
<unk> on military is the strongest of the biggest we continued to put capacity in place to support that and Thats good margin business.
We see it holding up to 29%, though we're pretty confident with that 29% because of the segments as we support Matt back to your backlog question that I didn't answer.
You look at the book to Bill and we're adding capacity every quarter. So the book to Bill is coming down because.
EMS customers distributor customers. They are adjusting based on our lead times coming in they may have had backlog in our system that was out into 2024 deliveries or maybe into 2025. So we're starting to see a more normalization of what their order pattern should be not losing share, but just adjusting based on our ability to deliver sooner.
Laura you have the book to Bill here you want to go ahead.
<unk> ended the quarter the book to Bill for Matson Zero 95.
Diane <unk>.
71.
Opco sale 72.
The sisters of 0.88.
And Dr <unk> <unk> and.
In capacitors 070.
Okay Super helpful. Thanks, So much for your answers Joel and Laurie I appreciate it.
Thanks, Matt have a good day. Thank you.
Our next question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your question.
Hey, guys. Thanks for taking my questions I apologize for harping on this but I did want to ask you about inventory levels in the channel again, it sounds like a Pos and sell through are coming in better than expected and you mentioned you do want to take levels in the channel.
Second quarter do you expect to be I guess at healthy levels exiting the second quarter and then how should we think about visibility into the second half as as levels normalize should we expect sort of a roughly seasonal second half of the year as you stand now and I have a follow up thank you.
Yes, the inventory.
Meeting with the distributors Vishay is not on the heat map.
Generally speaking our inventory is not in a slow and idle position.
The inventories healthy.
It's supporting many of their program accounts.
To say, it's going to decline.
Pos is.
Better than what we expected in Q1 is holding up we see that Asia Pos should improve in Q2 and Q3 second half of the year.
So generally I think the inventory there may be a slight reduction, but it won't be significant because the product that we have on the shelf is good it's healthy.
Distributors like the mix they say, it's good product.
Second part of your question help me remember.
Our visibility into the second half and I guess as we see it now is roughly seasonable seasonal the right way to think about it.
Seasonal, but automotive, saying that they still are catching up at vehicle production.
And electronics. The features that are coming in the cars continues to expand new model years will be coming out in the second half again, so automotive looks.
To be a bit better in the second half than the first.
Industrial.
We continued to see programs coming forward on the.
Electrical grid improvements that we're talking to many large Oems about being involved in those projects. So the backlog I think we're confident in the backlog we've seen the book to Bill adjustment over the last couple of quarters. It's been below one where people have been canceling that near term, but they've been cancelling farther out orders. So I think key acute.
Second half will be seasonal to a little better.
I appreciate all the color there and then for my follow up.
You talked a lot about capacity expansion, which totally makes sense given the shortages in the past few years in the clear on under supply that Youre seeing.
That said the question, we get asked a lot from investors just given there are so many smaller facility are there opportunities to consolidate some of these sites.
That you are no longer investing in as you rationalize the overall footprint, while also still expanding your capacity just to be curious to how you're thinking about that thank you.
Yes, we're always looking at the sites and the demand of the product coming from that site.
Expansion is quite important now and choosing the right locations for vishay to be regionally located plus cost competitive is very important consolidation we have it on the radar, we always look but at this point.
Nothing definitive because the demand is quite strong across all of the product lines.
No chance at this point to slower factory down and start to move it somewhere else because the demand is quite good in the backlog at seven five.
<unk> is.
Pretty broad across most of the product lines, we continue to take a look at it though.
Understood. Thank you.
Thank you Josh.
Thank you we have no further questions at this time, Mr. Matthew I would now like to turn the floor back over to you for closing comments.
Okay. Thank you very much.
Again, everyone. Thank you for joining us on our first quarter earnings call.
I look forward to sharing our results of the second quarter and our progress towards reaching our goals for 2023 with you.
Thank you very much have a good day.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
Yes.