Q1 2026 Vishay Intertechnology Inc Earnings Call

May 13, 2026

Operator: Good day. Thank you for standing by. Welcome to the Vishay Intertechnology Q1 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Peter Henrici, Head of Investor Relations. Please go ahead.

Operator: Good day. Thank you for standing by. Welcome to the Vishay Intertechnology Q1 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Peter Henrici, Head of Investor Relations. Please go ahead.

Speaker #1: After the speaker's presentation, there'll be a question-and-answer session to ask a question during the session you depress star one-one one on your telephone. You will then hear an automated message advising your hand is raised.

Speaker #1: To withdraw your question, please press star one-one again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Peter Henrici, Head of Investor Relations.

Speaker #1: Please go ahead. Thank you, Kevin. Good morning and welcome to Vishay Intertechnology's First Quarter 2026 earnings conference call. I am joined today by Joel Smejkal, our President and Chief Executive Officer, and by Dave McConnell, our Chief Financial Officer.

Peter Henrici: Thank you, Kevin. Good morning and welcome to Vishay Intertechnology's Q1 2026 Earnings Conference Call. I am joined today by Joel Smejkal, our President and Chief Executive Officer, and by Dave McConnell, our Chief Financial Officer. This morning we reported results for our Q1 2026. A copy of our earnings release is available in the investor relations section of our website at ir.vishay.com. This call is being broadcast live over the web and can be accessed through our website. In addition, today's call is being recorded and will be available via replay on our website. During the call, we will refer to a slide presentation, which we also posted on ir.vishay.com. You should be aware that during today's conference call, we will be making certain forward-looking statements that discuss future events and performance.

Speaker #1: This morning, we reported results for our first quarter 2026. A copy of our earnings release is available in the Investor Relations section of our website at ir.vishay.com.

Speaker #1: This call is being broadcast live over the web and can be accessed through our website. In addition, today's call is being recorded and will be available via replay on our website.

Speaker #1: During the call, we will refer to a slide presentation which we also posted on ir dot vishay dot com. You should be aware that during today's conference call, we will be making certain forward-looking statements that discuss future events and performance.

Peter Henrici: 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 Vishay's Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. We are including information in our press release and on this conference call on various GAAP and non-GAAP measures. We have included a full GAAP to non-GAAP reconciliation in our press release and in the presentation posted on ir.vishay.com, which we believe will be useful when comparing our GAAP and non-GAAP results. We use non-GAAP measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with GAAP measures. Now I turn the call over to President and Chief Executive Officer, Joel Smejkal.

Speaker #1: These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. For discussion of factors that could cause results to differ, please see today's press release and Vishay's Form 10-K and Form 10-Q filings with the securities and exchange commission.

Speaker #1: We are including information in our press release and on this conference call on various gaps and non-gap measures. We have included a full gap-to-non-gap reconciliation in our press release and in the presentation posted on ir dot vishay dot com, which we believe will be useful when comparing our gap and non-gap results.

Speaker #1: We use non-GAAP measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with GAAP measures.

Speaker #1: Now, I turn the call over to President and Chief Executive Officer Joel Smejkal.

Speaker #2: Thank you, Peter. Good morning, everyone. We are excited that you have joined our Q1 earnings call to hear the further progress of Vishay 3.0.

Joel Smejkal: Thank you, Peter. Good morning, everyone. We are excited that you have joined our Q1 earnings call to hear the further progress of Vishay 3.0. On today's call, I'll begin with a review of our Q1 revenue and business performance. Dave will take you through a detailed review of our Q1 financial results and our guidance for Q2 2026. After that, I'll update you on the strategic levers we are pulling under our 5-year strategic plan. Then we'll open it up for questions. For Q1, we are reporting revenue of $839 million, above our guidance range of $800 to 830 million. 4.8% higher than Q4, excuse me, 17.3% higher than last year's Q1.

Speaker #2: On today's call, I'll begin with a review of our first quarter revenue and business performance. And Dave will take you through a detailed review of our first quarter financial results.

Speaker #2: And our guidance for the second quarter of 2026. After that, I'll update you on the strategic levers we are pulling under our five-year strategic plan.

Speaker #2: And then we'll open it up for questions. For the first quarter, we are reporting revenue of $839 million. Above our guidance range of $800 to $830 million.

Speaker #2: $4.8% higher than the fourth quarter. Excuse me. And 17.3% higher than last year's first quarter. Revenue is growing across the board. In all of our end markets, in all of our channels, and in all three regions.

Joel Smejkal: Revenue is growing across the board in all of our end markets, in all of our channels, and in all three regions. Increased consumption, inventory replenishment, and Vishay market share gain drove a 5.8% increase in volume, with gains in both semis and passives. Many customer programs in multiple end markets have now started to ramp, while demand for AI-related applications remains strong. Industrial demand is accelerating. Order growth momentum was also broad-based, covering all regions, all channels, and in each of our technologies, and in all end markets. Clearly, the Vishay 3.0 transformation and our growth strategy is working. The growth initiatives that began 3 years ago are paying off.

Speaker #2: Increased consumption, inventory replenishment, and Vishay market share gain drove a 5.8% increase in volume, with gains in both semis and passives. Many customer programs in multiple end markets have now started to ramp, while demand for AI-related applications remains strong.

Speaker #2: Industrial demand is accelerating. Order growth momentum was also broad-based, covering all regions, all channels, and in each of our technologies and in all end markets.

Speaker #2: Clearly, the Vishay 3.0 transformation and our growth strategy is working. The growth initiatives that began three years ago are paying off. To expand capacity of high-growth, high-margin product lines, we put heavy CapEx investment in place.

Joel Smejkal: To expand capacity of high growth, high margin product lines, we put heavy CapEx investment in place and added subcontractors for many technologies to increase our manufacturing flexibility, and also to add part numbers to our product portfolio in semiconductors and passives. To move more closer to the customer, to listen to their product technology needs and their growth direction for Vishay to scale with them and to gain market share. To become a more technically supporting supplier with increased FAE involvement for design support, and also to offer Vishay reference designs and solutions. Total company book-to-bill at quarter end was 1.34, up from 1.2 in Q4. For semis, book-to-bill was 1.47, and for passives it was 1.23. As a result, backlog increased 21% to $1.6 billion at quarter end or 5.7 months.

Speaker #2: And added subcontractors for many technologies, to increase our manufacturing flexibility and also to add part numbers to our product portfolio in semiconductors and passives.

Speaker #2: To move more closer to the customer, to listen to their product technology needs, and their growth them, and to gain market share. To become a more technically supporting supplier, with increased FAE involvement for design support, and also to offer Vishay reference designs and solutions.

Speaker #2: Total company book-to-bill at quarter end was $1.34, up from $1.2 and $1.4. For semis, book-to-bill was $1.47. And for passives, it was $1.23. As a result, backlog increased 21% to $1.6 billion, at quarter end.

Speaker #2: Or $5.7 months. Customers are beginning to proactively place orders based on longer visibility. Some one-year forecast for Vishay to scale with them. We're also seeing customers building safety stock, like in Asia for AI-related applications.

Joel Smejkal: Customers are beginning to proactively place orders based on longer visibility, some 1-year forecast for Vishay to scale with them. We're also seeing customers building safety stock, like in Asia, for AI-related applications, as well as in all regions for automotive and industrial demand. Having positioned Vishay 3.0 to be a reliable supplier to more customers, to be a supplier with expanded capacity ready to scale with them, we intend to live up to our commitment of being a leading growth supplier. For this reason, we are intently focused on turning the backlog faster so that we participate in the market upcycle much more substantially and aggressively than in the past, while also maintaining competitive lead times. We have no intention of backsliding to the business approach of Vishay 2.0.

Speaker #2: As well as in all regions for automotive and industrial demand. Having positioned Vishay 3.0 to be a reliable supplier to more customers, to be a supplier with expanded capacity ready to scale with them, we intend to live up to our commitment of being a leading growth supplier.

Speaker #2: For this reason, we are intently focused on turning the backlog faster. So that we participate in the market upcycle much more substantially, and aggressively than in the past.

Speaker #2: While also maintaining competitive lead times. We have no intention of backsliding to the business approach of Vishay 2.0. Historically, at this point in the business upcycle, much of Vishay 2.0 capacity would have been sold out, on allocation.

Joel Smejkal: Historically, at this point in the business upcycle, much of Vishay 2.0 capacity would have been sold out on allocation and with lead times longer than 1 year. Because it took too long to fulfill orders, Vishay missed repeat opportunities, and we were no longer a reliable supplier to the customers. Today, as the market upcycle takes hold, we are increasing quarter revenue at a steeper rate to drive margin improvement and realize enhanced returns on our capital investments. Today, OEMs and tier 1s are collaborating with Vishay on technology roadmaps and forward demand planning and giving us the opportunity to scale with them. Previously inactive and underserved automotive and industrial customers are placing orders with us following our efforts to reconnect with them. Now let's turn to a review of the Q1 revenue, starting with revenue by end market on slide 3.

Speaker #2: And with lead times longer than one year, and because it took too long to fulfill orders, Vishay missed repeat opportunities. And we were no longer a reliable supplier to the customers.

Speaker #2: Today, as the market upcycle takes hold, we are increasing quarter revenue at a steeper rate. To drive margin improvement and realize enhanced returns on our capital investments.

Speaker #2: Today, OEMs in tier ones are collaborating with Vishay on technology roadmaps and forward demand planning. And giving us the opportunity to scale with them.

Speaker #2: Previously, inactive and underserved automotive and industrial customers are placing orders with us. Following our efforts to reconnect with them. So now let's turn to a review of the Q1 revenue, starting with revenue by end market on slide three.

Speaker #2: Automotive revenue increased 2.7% quarter over quarter, mostly reflecting solid OEM demand in the Americas. And Europe. As customers continue to increase electronic content and start hybrid and EV programs.

Joel Smejkal: Automotive revenue increased 2.7% quarter over quarter, mostly reflecting solid OEM demand in the Americas and Europe as customers continue to increase electronic content and start hybrid and EV programs. In Asia, revenue was way down a bit by Lunar New Year, and also customers had started to increase production in H2 of last year to get ahead of the US tariffs. Order intake increased due to our Vishay 3.0 business approach to support the production ramp-up of new vehicle programs in Europe and China, and to be responsive to customer concerns about industry-leading lead time. We're seeing a lot of success from our efforts to position Vishay with automotive OEMs and tier 1s.

Speaker #2: In Asia, revenue was weighed down a bit by Lunar New Year. And also customers had started to increase production in the second half of last year.

Speaker #2: To get ahead of the U.S. tariffs. Order intake increased due to our Vishay 3.0 business approach. To support the production ramp-up of new vehicle programs in Europe.

Speaker #2: And China. And to be responsive to customer concerns about industry-leading lead time. We're seeing a lot of success. From our efforts to position Vishay with automotive OEMs and tier ones.

Speaker #2: For example, Vishay is now the top supplier of resistors to multiple OEMs, launching new EV platforms. And we are committed to supplying these customers as they step up production each year through the planned peak in 2028.

Joel Smejkal: For example, Vishay is now the top supplier of resistors to multiple OEMs launching new EV platforms, and we are committed to supplying these customers as they step up production each year through the planned peak in 2028. Design activity continued to focus on drivetrains for hybrid EV and ICE vehicles, ADAS, battery management, and electronic power steering systems, also smart cockpits. Industrial power revenue increased by 6.5% for the fifth consecutive quarter of sequential gains. Demand continued to grow primarily for electrical power transmission and power management, renewable energy and smart metering, factory automation, and security systems. In the Americas, customers are ramping up production for new projects supporting AI infrastructure, and in Europe and China, we continue to supply smart grid programs.

Speaker #2: Design activity continued to focus on drivetrains for hybrid EV and ICE vehicles. ADAS. Battery management. And electronic power steering systems also smart cockpits. Industrial power revenue increased by 6.5% for the fifth consecutive quarter of sequential gains.

Speaker #2: Demand continued to grow primarily for electrical power transmission and power management. Renewable energy and smart metering, factory automation, and security systems. In the Americas, customers are ramping up production for new projects, supporting AI infrastructure.

Speaker #2: And in Europe and China, we continue to supply smart grid programs. Bookings were up sharply in the Americas and Europe due to greater consumption.

Joel Smejkal: Bookings were up sharply in the Americas and Europe due to greater consumption and due to lower inventories while customers increase efforts to establish supply assurance. In Europe, orders were exceptionally strong from smart grid customers for capacitors, and we won two new grid development projects in the UK. Design activity remained focused on power transmission, power management, power supplies for industrial servers, next generation AI power supplies, power monitoring and control systems, high voltage energy infrastructure, energy storage, and also smart meters. We're also working on designs for 800 volt power management for data centers and other applications. Aerospace defense revenue increased 14.1% versus Q4, and 16.8% versus last year's Q1 on strong demand from the US government, with spending approved to replenish munitions programs and with production ramping up in allied countries in Asia.

Speaker #2: And due to lower inventories, while customers increased efforts to establish supply assurance. In Europe, orders were exceptionally strong. From smart grid customers for capacitors.

Speaker #2: And we won two new grid development projects in the UK. Design activity remained focused on power. Power transmission, power management, power supplies for industrial servers.

Speaker #2: Next-generation AI power supplies. Power monitoring and control systems. High-voltage energy infrastructure. Energy storage and also smart meters. We're also working on designs for 800-volt power management for data centers and other applications.

Speaker #2: Aerospace defense revenue increased 14.1% versus Q4. And 16.8% versus last year's Q1 on strong demand from the US government. With spending approved to replenish munitions programs.

Speaker #2: And with production ramping up in allied countries in Asia. With funding now available, US defense contractors have just begun to increase orders. To support their higher demand.

Joel Smejkal: With funding now available, US defense contractors have just began to increase orders to support their higher demand, in particular for resistors, capacitors, and Custom Magnetics. Book-to-bill in the Americas at quarter end was 1.4 and has continued to build in Q2. Design activity and the first production ramp-ups are beginning to drive an increase in orders from Europe and continued order intake in Asia. As countries expand defense budgets and as new multi-year programs start this year, we see a long runway to drive growth in this end market. On the design front, we are focused on US Department of Defense programs involving drones, low Earth orbit satellites, radar systems, next generation communications, and hypersonic missiles. Healthcare sales increased 4.5% quarter over quarter and 11.1% year over year on demand from long-standing customers, particularly in the Americas.

Speaker #2: In particular, for resistors, capacitors, and custom magnetics. Book-to-bill in the Americas at quarter-end was 1.4. And has continued to build in Q2. Design activity in the first production ramp-ups are beginning to drive an increase in orders from Europe.

Speaker #2: And continued order intake in Asia. As countries expand defense budgets. And as new multi-year programs start this year, we see a long runway to drive growth in this end market.

Speaker #2: On the design front, we are focused on US Department of Defense programs involving drones, low Earth orbit satellites, radar systems, next-generation communications, and hypersonic missiles.

Speaker #2: Healthcare sales increased 4.5% quarter over quarter and 11.1% year over year, on demand from long-standing customers, particularly in the Americas. We are continuing to see success from our efforts to leverage the breadth of our portfolio.

Joel Smejkal: We are continuing to see success from our efforts to leverage the breadth of our portfolio, cross-selling semis and passives to these customers. Much of the design work here during the quarter remained around wearables, patient monitoring, and implantables, such as cardioverter defibrillators and micro implantables for glucose and temperature monitoring. In the other category, which includes telecom, computing, and consumer, revenue overall was flat versus Q4, but up 25.8% versus last year's Q1. Demand in China for AI-related applications was flat, reflecting the impact of the Lunar New Year and some shipments that were pulled into Q4. However, we did continue to receive orders for quick delivery in Asia, mainly for high voltage MOSFETs used in AI power applications. Customers are continuing to add our passive technologies and AI power management solutions, including polymer capacitors, power inductors, and current sense resistors.

Speaker #2: Cross-selling semis and passives. To these customers. Much of the design work here during the quarter remained around wearables. Patient monitoring and implantables, such as cardioverter defibrillators.

Speaker #2: And micro-implantables, for glucose and temperature monitoring. In the other category, which includes telecom, computing, and consumer. Revenue overall was flat versus Q4. But up 25.8% versus last year's Q1.

Speaker #2: Demand in China for AI-related applications was flat. Reflecting the impact of the Lunar New Year. And some shipments that were pulled in into Q4.

Speaker #2: However, we did continue to receive orders for quick delivery in Asia, mainly for high-voltage MOSFETs used in AI power applications. Customers are continuing to add our passive technologies in AI power management solutions.

Speaker #2: Including polymer capacitors. Power inductors. And current sense resistors. We keep sharpening our design components while continuing to work on the next generation design opportunities in the areas of server power.

Joel Smejkal: We keep sharpening our design components while continuing to work on the next generation design opportunities in the areas of server power, optical communication modules, and in high bandwidth network switches. With the Vishay 3.0 expanded capacity, we are seeing demand from telecom and consumer customers, which Vishay did not historically support in volume. For example, in the Americas, we are seeing increasing activity from telecom customers supporting AI optical communication network switches, both 800 Gb and 1.6 Tb. In Europe, telecom sales increased 33%, with customers forecasting higher demand for 2026 versus 2025. Demand is also tied to 5G expansion, and we're starting to receive requests for components for 6G networks. Let's turn to slide 4 for a review of Q1 revenue by channel. OEM revenue increased 7.1% and 14.4% over Q1 last year.

Speaker #2: Optimal optical communication modules. And in high-bandwidth network switches. With the Vishay 3.0 expanded capacity, we are seeing demand from telecom and consumer customers. Which Vishay did not historically support in volume.

Speaker #2: For example, in the Americas, we are seeing increasing activity from telecom customers. Supporting AI optical communication network switches. Both 800 gigabits and 1.6 terabits.

Speaker #2: In Europe, telecom sales increased 33%. With customers forecasting higher demand. For 2026 versus 2025. Demand is also tied to 5G expansion. And we're starting to receive requests for components for 6G networks.

Speaker #2: Let's turn to slide 4. For review of Q1 revenue by channel. OEM revenue increased 7.1% and 14.4% over Q1 last year. Strong shipments to large automotive, medical, aerospace, defense customers.

Joel Smejkal: Strong shipments to large automotive, medical, aerospace defense customers were the primary drivers of this increase, along with some high demand from industrial OEMs in Europe. Sales from OEMs in China declined due to the impact of Lunar New Year and shipments again that were pulled into Q4. EMS sales grew 14% versus Q4 and 21.6% versus Q1 last year. This increase demonstrates the success of our strategy to leverage our expanded capacity to maintain competitive lead times and reliable supply. We can enjoy demand momentum from more aerospace defense and industrial end customer business. EMS is now the fastest growing channel in Europe, and book-to-bill in the Americas grew 1.45 at quarter end. Sales to distribution were up 2.2% on volume gains in each region, while up 18.9% year over year.

Speaker #2: Were the primary drivers of this increase. Along with some high demand from industrial OEMs in Europe. Sales from OEMs in China declined due to the impact of Lunar New Year and shipments again that were pulled into Q4.

Speaker #2: EMS sales grew 14% versus Q4 and 21.6% versus Q1 last year. This increased demonstrates the success of our strategy. To leverage our expanded capacity.

Speaker #2: To maintain competitive lead times. And reliable supply. Then we can enjoy demand momentum. From more aerospace defense and industrial end customer business. EMS is now the fastest growing channel in Europe.

Speaker #2: And book-to-bill in the Americas. Grew 1.45 at quarter-end. Sales to distribution were up 2.2% on volume gains in each region. While up 18.9% year over year.

Joel Smejkal: Distribution is seeing higher consumption from industrial, transportation, and aerospace defense customers. They also see inventory replenishment by some of their end customers. The pace of bookings growth picked up in the Americas and Europe. In Asia, distributors are increasing backlogs in anticipation of further demand growth, lead time extensions, especially for AI-related products. Distribution inventory overall decreased to 20 weeks at quarter end from 22 weeks, and POS increased 10.7% and 24.9% versus Q1 last year, with growth in each region. You may recall over the last 2 years, we were deliberately increasing our SKU count and inventory levels at the distributors, resulting in an increase in inventory to our target of 26 weeks in Q1 of 2025. This inventory has supported strong demand led by Europe, with some customers now replenishing inventories as business conditions improve.

Speaker #2: Distribution is seeing higher consumption. From industrial. Transportation, and aerospace defense customers. They also see inventory replenishment by some of their end customers. The pace of bookings.

Speaker #2: Growth picked up in the Americas and Europe. In Asia, distributors are increasing backlogs. In anticipation of further demand growth. Lead time extensions especially for AI-related products.

Speaker #2: Distribution inventory overall decreased to 20 weeks at quarter-end from 22 weeks. And POS increased 10.7%. And 24.9% versus Q1 last year. With growth in each region.

Speaker #2: You may recall over the last two years, we were deliberately increasing our SKU count and inventory levels at the distributors. Resulting in an increase in inventory to our target of 26 weeks.

Speaker #2: In Q1 of 2025. This inventory was has supported strong demand. Led by Europe. With some customers now replenishing inventories as business conditions improve. The Americas saw a sharp increase in POS as consumption increased in industrial.

Joel Smejkal: The Americas saw a sharp increase in POS as consumption increased in industrial, automotive, aerospace defense, and medical segments. In Asia, POS increased for industrial power and strong demand for AI products. Customers are increasingly turning to distribution for supply assurance and to meet short-term needs. Turning to our geographical mix on slide 5, Europe led revenue growth for the quarter, increasing 15.3%, the Americas grew 8.6% due to significant aerospace defense demand for capacitors in addition to strengthening industrial demand. In Asia, revenue fell 4.9%, primarily during the impact of Lunar New Year, offset in part by strong AI product demand.

Speaker #2: Automotive. Aerospace defense and medical segments. In Asia, POS increased for industrial power. And strong demand for AI products. Customers are increasingly turning to distribution.

Speaker #2: For supply assurance. And to meet short-term needs. Turning to our geographical mix on slide 5. Europe-led revenue growth for the quarter increasing 15.3%. And the Americas grew 8.6%.

Speaker #2: Due to significant aerospace defense demand for capacitors. In addition to strengthening industrial demand. In Asia, revenue grew excuse me, revenue fell 4.9%. Primarily during the impact of Lunar New Year.

Speaker #2: Offset in part by strong AI product demand. Before turning the call over to Dave, I'd like to thank the Vishay employees. For their hard work to achieve the quarter's strong results.

Joel Smejkal: Before turning the call over to Dave, I'd like to thank the Vishay employees for their hard work to achieve the quarter's strong results and for their commitment to driving revenue and profitable growth as the industry's recovery continues to gain momentum. Vishay 3.0 has firmly taken hold across the organization and with our external reps. Everyone is aligned with our new business approach and energized to increase customer engagement. Dave, I'll now pass it over to you.

Speaker #2: And for their commitment to driving revenue and profitable growth. As the industry's recovery continues to gain momentum. Vishay 3.0 has firmly taken hold across the organization.

Speaker #2: And with our external reps. Everyone is aligned. With our new business approach. And energized. To increase customer engagements. Dave, I'll now pass it over to you.

Speaker #2: Thank you, Joel. And good morning, everyone. Let's start a review with the first quarter results with the highlights on slide 6. First quarter revenue was 839 million.

David McConnell: Thank you, Joe. Good morning, everyone. Let's start our review of the Q1 results with the highlights on slide 6. Q1 revenue was $839 million, exceeding our guidance range and increasing 5% sequentially, driven by strong volume growth of 6% with only a 1% decline in average selling prices. Compared to the Q1 of 2025, revenue increased 17%, driven primarily by a 14% increase in volume. Favorable foreign currency, mainly from the euro, provided an additional 4% benefit, partially offset by a 1% decline in average selling prices. Moving on to the next slide, presenting the income statement highlights. Gross profit was $177 million, delivering a gross margin of 21.0% and exceeding both our guidance and the prior quarter.

Dave McConnell: Thank you, Joe. Good morning, everyone. Let's start our review of the Q1 results with the highlights on slide 6. Q1 revenue was $839 million, exceeding our guidance range and increasing 5% sequentially, driven by strong volume growth of 6% with only a 1% decline in average selling prices. Compared to the Q1 of 2025, revenue increased 17%, driven primarily by a 14% increase in volume. Favorable foreign currency, mainly from the euro, provided an additional 4% benefit, partially offset by a 1% decline in average selling prices. Moving on to the next slide, presenting the income statement highlights. Gross profit was $177 million, delivering a gross margin of 21.0% and exceeding both our guidance and the prior quarter.

Speaker #2: Exceeding our guidance range and increasing 5% sequentially, driven by strong volume growth of 6%, with only a 1% decline in average selling prices. Compared to the first quarter of 2025, revenue increased 17%.

Speaker #2: Driven primarily by a 14% increase in volume. Favorable foreign currency, mainly from the euro, provided an additional 4% benefit. Partially offset by a 1% decline in average selling prices.

Speaker #2: Moving on to the next slide, presenting the income statement highlights. Gross profit was 177 million. Delivering a gross margin of 21.0%. And exceeding both our guidance and the prior quarter.

Speaker #2: Higher volumes drove margin expansion. Helping to offset ongoing metals and material cost pressures. We exited the quarter with Newport at gross profit neutral. Depreciation expense was 55 million.

David McConnell: Higher volumes drove margin expansion, helping to offset ongoing metals and material cost pressures. We exited the quarter with Newport at gross profit neutral. Depreciation expense was $55 million, relatively flat versus Q4. SG&A expenses were $154 million compared to $142 million for Q4 and in line with our guidance. The sequential increase is primarily due to higher stock and bonus compensation expenses. GAAP operating margin was 2.6% compared to 1.8% in Q4 and 0.1% in Q1 2025. EBITDA for the quarter was $78 million for an EBITDA margin of 9.3%, up from 8.8% in Q4.

Dave McConnell: Higher volumes drove margin expansion, helping to offset ongoing metals and material cost pressures. We exited the quarter with Newport at gross profit neutral. Depreciation expense was $55 million, relatively flat versus Q4. SG&A expenses were $154 million compared to $142 million for Q4 and in line with our guidance. The sequential increase is primarily due to higher stock and bonus compensation expenses. GAAP operating margin was 2.6% compared to 1.8% in Q4 and 0.1% in Q1 2025. EBITDA for the quarter was $78 million for an EBITDA margin of 9.3%, up from 8.8% in Q4.

Speaker #2: Relatively flat versus quarter four. SG&A expenses. Were 154 million compared to 142 million for the fourth quarter and in line with our guidance. The sequential increase is primarily due to higher stock and bonus compensation expenses.

Speaker #2: Gap operating margin. Was 2.6%. Compared to 1.8% in the fourth quarter. And 0.1% in the first quarter of '25. EBITDA for the quarter was 78 million.

Speaker #2: For an EBITDA margin of 9.3%. Up from 8.8% in the fourth quarter. Our gap effective tax rate remains elevated at low levels of pre-tax income.

David McConnell: Our GAAP effective tax rate remains elevated at low levels of pre-tax income as items such as US taxation of foreign earnings and repatriation taxes have a disproportionate impact on the effective tax rate. Q1 tax expense exceeded our guidance range as pre-tax earnings exceeded expectations. GAAP earnings per share was $0.05 compared to $0.01 per share in the Q4, and a loss of $0.03 in the Q1 of 2025. Moving on to slide 8, provides a summary table detailing revenue, gross margin, and book-to-bill ratios across our reportable segments for quick reference. As a reminder, Newport's results are reported in the MOSFET segment's gross margin. All reportable segments delivered revenue growth quarter over quarter, except for inductors, which was relatively flat. Turning to slide 9, our cash conversion cycle.

Dave McConnell: Our GAAP effective tax rate remains elevated at low levels of pre-tax income as items such as US taxation of foreign earnings and repatriation taxes have a disproportionate impact on the effective tax rate. Q1 tax expense exceeded our guidance range as pre-tax earnings exceeded expectations. GAAP earnings per share was $0.05 compared to $0.01 per share in the Q4, and a loss of $0.03 in the Q1 of 2025. Moving on to slide 8, provides a summary table detailing revenue, gross margin, and book-to-bill ratios across our reportable segments for quick reference. As a reminder, Newport's results are reported in the MOSFET segment's gross margin. All reportable segments delivered revenue growth quarter over quarter, except for inductors, which was relatively flat. Turning to slide 9, our cash conversion cycle.

Speaker #2: As items such as U.S. taxation, a foreign earnings, and repatriation taxes have a disproportionate impact on the effective tax rate. Q1 tax expense exceeded our guidance range as pre-tax earnings exceeded expectations.

Speaker #2: Gap earnings per share was $0.05 compared to $0.01 per share in the fourth quarter, and a loss of $0.03 in the first quarter of '25.

Speaker #2: Moving on to slide 8. Provides a summary table detailing revenue gross margin. And book-to-bill ratios across our reportable segments for quick reference. As a reminder, Newport's results are reported in the MOSFET segments gross margin.

Speaker #2: All reportable segments delivered revenue growth quarter over quarter except for inductors, which was relatively flat. Turning to slide 9. Our cash conversion cycle in the first quarter.

David McConnell: In the first quarter, our cash conversion cycle improved to 116 days from 125 days in Q4, in part due to our continued disciplined working capital management. In addition, during the quarter, we further utilized our accounts receivable securitization program as a means of providing efficient funding to support our immediate 12-inch fab equipment purchase needs, which contributed to our DSO improvement from 48 days in Q4 to 41 days at the end of Q1. Inventory days outstanding improved to 106 days due to increased volume in sales. Overall inventory increased to $791 million. Finished goods were relatively flat, while raw materials and WIP increased due to the impact of rising metal prices, and we built buffer stock to ensure supply to our customers given geopolitical uncertainties.

Dave McConnell: In the first quarter, our cash conversion cycle improved to 116 days from 125 days in Q4, in part due to our continued disciplined working capital management. In addition, during the quarter, we further utilized our accounts receivable securitization program as a means of providing efficient funding to support our immediate 12-inch fab equipment purchase needs, which contributed to our DSO improvement from 48 days in Q4 to 41 days at the end of Q1. Inventory days outstanding improved to 106 days due to increased volume in sales. Overall inventory increased to $791 million. Finished goods were relatively flat, while raw materials and WIP increased due to the impact of rising metal prices, and we built buffer stock to ensure supply to our customers given geopolitical uncertainties.

Speaker #2: Our cash conversion cycle improved to 116 days from 125 days in Q4. In part due to our continued disciplined working capital management. In addition, during the quarter, we further utilized our accounts receivable securitization program.

Speaker #2: As a means of providing efficient funding to support our immediate 12-inch fab equipment purchase needs. Which contributed to our DSO improvement from 48 days in Q4 to 41 days at the end of quarter one.

Speaker #2: Inventory days outstanding improved to 106 days due to increased volume and sales. Overall inventory increased to $791 million. Finished goods were relatively flat, while raw materials and WIP increased due to the impact of rising metal prices.

Speaker #2: And we've built buffer stock to ensure supply to our customers given geopolitical uncertainties. Continuing to slide 10. You can see we generated 64 million in operating cash for the first quarter.

David McConnell: Continuing to slide 10, you can see we generated $64 million in operating cash for Q1, which included an additional $63 million from the securitization of our accounts receivable. We continue to deploy cash for capacity expansion projects. Total CapEx for the quarter was $111 million, including approximately $87 million for our new twelve-inch fab in Germany. On a trailing 12-month basis, capital intensity was 10.1%, which is a decrease from the 11.3% in the prior year. Free cash flow for the quarter was -$47 million, reflecting the high CapEx compared to $55 million in Q4. Shareholder returns for Q1 consisted of our $13.6 million quarterly dividend. We did not repurchase any shares during the quarter.

Dave McConnell: Continuing to slide 10, you can see we generated $64 million in operating cash for Q1, which included an additional $63 million from the securitization of our accounts receivable. We continue to deploy cash for capacity expansion projects. Total CapEx for the quarter was $111 million, including approximately $87 million for our new twelve-inch fab in Germany. On a trailing 12-month basis, capital intensity was 10.1%, which is a decrease from the 11.3% in the prior year. Free cash flow for the quarter was -$47 million, reflecting the high CapEx compared to $55 million in Q4. Shareholder returns for Q1 consisted of our $13.6 million quarterly dividend. We did not repurchase any shares during the quarter.

Speaker #2: Which included an additional 63 million from the securitization of our accounts receivable. We continue to deploy cash for capacity expansion projects. Total capex for the quarter was 111 million, including approximately 87 million for our new 12-inch fab in Germany.

Speaker #2: On a trailing 12-month basis, capital intensity was 10.1%. Which is a decrease from the 11.3% in the prior year. Free cash flow for the quarter.

Speaker #2: Was negative 47 million, reflecting the high capex compared to 55 million in the fourth quarter. Stockholder returns for the first quarter. Consisted of our 13.6 million quarterly dividend.

Speaker #2: We did not repurchase any shares during the quarter. At the end of the quarter, our global cash and short-term investment balance was 480 million.

David McConnell: At the end of the quarter, our global cash and short-term investment balance was $480 million. We remain in a net borrowing position in the US with $250 million outstanding on our revolver. As discussed in the past, dividends, any share repurchases, and required debt service are funded through available US liquidity sources. We have $307 million accessible on our revolving credit facilities at the current EBITDA levels. We expect to continue to draw on our revolver to fund US cash needs. Moving on to the guidance on slide 11. For Q2 2026, revenues are expected to be between $875 and $905 million.

Dave McConnell: At the end of the quarter, our global cash and short-term investment balance was $480 million. We remain in a net borrowing position in the US with $250 million outstanding on our revolver. As discussed in the past, dividends, any share repurchases, and required debt service are funded through available US liquidity sources. We have $307 million accessible on our revolving credit facilities at the current EBITDA levels. We expect to continue to draw on our revolver to fund US cash needs. Moving on to the guidance on slide 11. For Q2 2026, revenues are expected to be between $875 and $905 million.

Speaker #2: And we remain in a net borrowing position in the U.S. with 250 million outstanding on our revolver. As discussed in the past, dividends and each share repurchases and required debt service are funded through available U.S.

Speaker #2: liquidity sources. We have 307 million accessible on a revolving credit facilities at the current EBITDA levels. We expect to continue to draw on our revolver to fund U.S.

Speaker #2: cash needs. Moving on to the guidance on slide 11. For the second quarter of 2026, revenues are expected to be between 875 and 905 million.

David McConnell: Gross margin is expected to be in the range of 22.0% plus or minus 50 basis points, inclusive of increased logistics costs and expected continuing higher input costs, specifically higher metals and material costs, as well as inefficiencies due to ramping up of new direct labor heads. Depreciation expense is expected to be approximately $54 million for Q2 and $216 million for the full year 2026. SG&A expenses are expected to be $155 million ±$3 million. We're continuing to invest in R&D and customer-facing activities as the overall business environment improves. Our GAAP effective tax rate remains elevated at low levels of pre-tax income and loss, or loss. We expect the effective tax rate to become more predictable and in the range of our historical average as earnings grow.

Dave McConnell: Gross margin is expected to be in the range of 22.0% plus or minus 50 basis points, inclusive of increased logistics costs and expected continuing higher input costs, specifically higher metals and material costs, as well as inefficiencies due to ramping up of new direct labor heads. Depreciation expense is expected to be approximately $54 million for Q2 and $216 million for the full year 2026. SG&A expenses are expected to be $155 million ±$3 million. We're continuing to invest in R&D and customer-facing activities as the overall business environment improves. Our GAAP effective tax rate remains elevated at low levels of pre-tax income and loss, or loss. We expect the effective tax rate to become more predictable and in the range of our historical average as earnings grow.

Speaker #2: Gross margin is expected to be in the range of 22.0% plus or minus 50 basis points. Inclusive of increased logistics costs and expected continuing higher input costs specifically higher metals and material costs as well as inefficiencies due to ramping up of new direct labor heads.

Speaker #2: Depreciation expense is expected to be approximately 54 million for the second quarter and 216 million for the full year '26. SG&A expenses are expected to be 155 million plus or minus 3 million.

Speaker #2: We're continuing to invest in R&D and customer-facing activities as the overall business environment improves. Our gap effective tax rate remains elevated at low levels of pre-tax income and loss or loss.

Speaker #2: We expect the effective tax rate to become more predictable and in the range of our historical average as earnings grow. For the second quarter of '26, we expect effective tax rate to be between 40 and 50%.

David McConnell: For Q2 2026, we expect effective tax rate to be between 40% and 50%. Finally, our stockholder return policy calls for us to return at least 70% of our free cash flow to stockholders in the form of dividends and stock repurchases. For 2026, we once again expect negative free cash flow due to our capacity expansion plans. I'll now turn the call back to Joel.

Dave McConnell: For Q2 2026, we expect effective tax rate to be between 40% and 50%. Finally, our stockholder return policy calls for us to return at least 70% of our free cash flow to stockholders in the form of dividends and stock repurchases. For 2026, we once again expect negative free cash flow due to our capacity expansion plans. I'll now turn the call back to Joel.

Speaker #2: Finally, our stockholder return policy calls for us to return at least 70% of our free cash flow to stockholders in the form of dividends and stock repurchases.

Speaker #2: For 2026, we once again expect negative free cash flow due to our capacity expansion plans. I'll now turn the call back to Joel.

Speaker #1: All right. Thank you, Dave. Let's turn to slide 12 for an update on the strategic levers we're pulling. As we execute our five-year growth plan and set the stage for Vishay's future growth.

Joel Smejkal: All right. Thank you, Dave. Let's turn to slide 12 for an update on the strategic levers we're pulling as we execute our 5-year growth plan and set the stage for Vishay's future growth. Slide 12. We are holding to our CapEx plan to spend between $400 million and $440 million during 2026. As a reminder, about half of this year's spend is allocated to the investments we are making at our 12-inch fab in Germany. Nearly all of the 12-inch fab investment will be spent during H1 of 2026, at which point we will reach the capital intensity peak of our 5-year capacity expansion plan. Starting with semiconductor projects at our Newport facility, we continue to ramp up wafer production. We completed 4 audits with tier 1 automotive customers as planned, and have 2 additional site audits planned for Q2.

Speaker #1: Slide 12. We are holding to our capex plan to spend between 400 million and 440 million during 2026. As a reminder, about half of this year's spend is allocated to the investments we are making at our 12-inch fab in Germany.

Speaker #1: Nearly all of the 12-inch fab investment will be spent during the first half of 2026, at which point we will reach the capital intensity peak of our five-year capacity expansion plan.

Speaker #1: Starting with semiconductor projects at our Newport facility, we continue to ramp up wafer production. And we completed four audits. With tier one automotive customers as planned, and have two additional site audits planned for Q2.

Speaker #1: Following these site audits, the automotive customers need to approve their programs using the Newport MOSFETs. At our 12-inch fab in Germany, we've started to install equipment during the quarter.

Joel Smejkal: Following these site audits, the automotive customers need to approve their programs using the Newport MOSFETs. At our twelve-inch fab in Germany, we've started to install equipment during the quarter and plan to finish in Q2. Our goal is to start non-automotive production in mid-2027. At SK keyfoundry, we are working towards releasing 2 products to production in Q3, which will add capacity to meet demand for AI-related application. To supplement our investments in capacity expansion, we qualified 2 additional subcontractors, one for rectifiers and the other for aluminum capacitors. Through the subcontractor initiative, we continue to place more part numbers on distributor shelves to increase our share of our customers' bill of materials. Turning to our silicon carbide strategy, we released to production the 750 volt gen 2 planar MOSFETs, both the automotive and industrial platforms.

Speaker #1: And plan to finish in the second quarter. Our goal is to start non-automotive production in mid-2027. At SK Key Foundry, we are working towards releasing two products to production in the third quarter.

Speaker #1: This will add capacity to meet demand for AI-related applications. To supplement our investments in capacity expansion, we qualified two additional subcontractors: one for rectifiers and the other for aluminum capacitors.

Speaker #1: Through the subcontractor initiative, we continue to place more part numbers on distributor shelves, to increase our share of our customers' bill of materials. Turning to our silicon carbide strategy, we released to production the 750-volt Gen II planner MOSFETs.

Speaker #1: Both the automotive and industrial platforms. We also plan to release the 1,700-volt platforms over the next couple of quarters. With respect to the 1,200-volt trench MOSFET, which we released last quarter, using an external fab, we have now started to set up Newport to be an 8-inch wafer fab for silicon carbide.

Joel Smejkal: We also plan to release the 1,700 volt platforms over the next couple of quarters. With respect to the 1,200 volt TrenchFET, which we released last quarter using an external fab, we have now started to set up Newport to be an 8-inch wafer fab for silicon carbide. Our Q2 guidance reflects the broadening opportunities we have created for Vishay through the strong execution of our growth levers and the increasingly positive direction of our high growth end markets. We are doing what Vishay 3.0 was designed to do to position Vishay to serve more customers, take full advantage of markets up cycles, and lay the foundation for long-term revenue and earnings growth.

Speaker #1: Our Q2 guidance reflects the broadening opportunities we have created for Vishay through the strong execution of our growth levers and the increasingly positive direction of our high growth end markets.

Speaker #1: We are doing what Vishay 3.0 was designed to do: to position Vishay to serve more customers, take full advantage of markets' upcycles, and lay the foundation for long-term revenue and earnings growth.

Speaker #1: With the strengthening book-to-bill and increasing rate of revenue growth, we are showing that we are participating much more so than in the past in the demand momentum leveraging our capacity investments to drive margin expansion and enhance returns.

Joel Smejkal: With a strengthening book-to-bill and increasing rate of revenue growth, we are showing that we are participating much more so than in the past in the demand momentum, leveraging our capacity investments to drive margin expansion and enhance returns. Kevin, we're now ready to open the call for questions.

Speaker #1: Kevin, we're now ready to open the call for questions.

Speaker #2: Thank you, ladies and gentlemen. If you have a question or comment at this time, please press star 11 on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star 11 again.

Operator: Thank you. Ladies and gentlemen. Our first question comes from Ruplu Bhattacharya with Bank of America. Your line is open.

Speaker #2: We'll pause for a moment while we compile our Q&A roster. Our first question comes from Rupo Bachar with Bank of America. Your line is open.

Ruplu Bhattacharya: Hi, thanks for taking my questions. Joel, I have two or three questions. First one is on the current quarter that you just reported. In automotive, did you see benefit from share gains against Nexperia, and how much was the benefit from that in the quarter? One on margins, did the Newport fab, was that still a negative, and what was the impact on gross margins in the quarter? I think I heard that it's gotten to breakeven, so are we expecting any negative impact from that fab in the Q2?

Speaker #3: Hi. Thanks for taking my questions. Joel, I have two or three questions. First one is on the current quarter that you just reported. In automotive, did you see benefit from share gains against an Xperia?

Speaker #3: And how much was the benefit from that in the quarter? And one on margins, did the Newport fab, was that still a negative? And what was the impact on gross margins in the quarter?

Speaker #3: And I think you heard that it's gotten to break-even. So, are we expecting any negative impact from that fab in the second quarter?

Joel Smejkal: Hi, Ruplu. Could you repeat your question? We missed out on the first part. The second half was perfectly clear.

Speaker #1: Hi, Rupo. Could you repeat your question? We missed out on the first part. The second half was perfectly clear.

Speaker #3: Okay. Sure. Just the question was that for the current reported quarter, in the automotive segment, did you see any share gains against an Xperia?

Ruplu Bhattacharya: Okay, sure. Just, the question was that for the current reported quarter in the automotive segment, did you see any share gains against Nexperia, and how much did revenue benefit from such share gain? On margins, was the Newport fab still a negative to gross margins, and how much was the impact in the quarter?

Speaker #3: And how much was revenue, how much did revenue benefit from such share gain? And then on margins, was the Newport fab still a negative to gross margins?

Speaker #3: And how much was the impact in the quarter?

Joel Smejkal: Regarding the share gain, yes, we're gaining share. We've been working very closely on automotives as well as OEMs to make sure there's multi sources on programs where there may have been previously or recently negative. There is share gain. We continue to position supplying product out of Itzehoe. These qualifications that we speak about in Newport are also driven by that. The 4 site audits that we had in Q1 are driven because of the expansion of Newport, but also further share gain to support those automotive accounts. 2 more audits coming in Q2. I would say we gained share based on sites we were approved, and we're gonna gain more share as we get Newport approved on these programs to become a additional source on their bill of materials from sole source. Second part of the mark was the Newport profit.

Speaker #1: Regarding the share gain, yes, we're gaining share. We've been working very closely on automotives as well as OEMs. To make sure there's multi-sources on programs, where there may have been previously or recently negative.

Speaker #1: There is share gain. We continue to position supplying product out of Itseho. And these qualifications that we speak about in Newport are also driven by that.

Speaker #1: The four site audits that we had in Q1 are driven because of the expansion of Newport, but also further share gain to support those automotive accounts.

Speaker #1: Then two more audits coming in Q2. So I would say we're gaining share based on sites we were approved. And we're going to gain more share as we get Newport approved on these programs.

Speaker #1: To become a additional source on their bill of materials. From SoulSource. Second part of the market was the Newport profit. Go ahead.

Joel Smejkal: Go ahead.

David McConnell: Hi, Ruplu. It's Dave. I'll take that one. At the end of the last quarter, we had said we would exit the quarter as something close to neutral, right? I mean, we can say that our gross profit is neutral exiting the quarter. Obviously January, February, you know, we still had costs. Okay? It's not zero for Q1 in the results. The item that we have to talk about is that the Newport results themselves now are commingled with the rest of Vishay, right? We have back end elsewhere in Vishay. We have other costs we're adding. The Newport costs by themself are not so easily separated anymore. We're gonna stop giving specific guidance on the Newport impact and talk in generalities. Okay?

Dave McConnell: Hi, Ruplu. It's Dave. I'll take that one. At the end of the last quarter, we had said we would exit the quarter as something close to neutral, right? I mean, we can say that our gross profit is neutral exiting the quarter. Obviously January, February, you know, we still had costs. Okay? It's not zero for Q1 in the results. The item that we have to talk about is that the Newport results themselves now are commingled with the rest of Vishay, right? We have back end elsewhere in Vishay. We have other costs we're adding. The Newport costs by themself are not so easily separated anymore. We're gonna stop giving specific guidance on the Newport impact and talk in generalities. Okay?

Speaker #2: Hi, Rupo. It's Dave. So I'll take that one. So what we had at the end of the last quarter, we had said is we would exit the quarter as something close to neutral, right?

Speaker #2: So we can say that. Our gross profit is neutral, exiting the quarter. But obviously, January, February, we still had costs, okay? So it's not zero for the first quarter in the results.

Speaker #2: The issue, not the issues, but the item that we have to talk about is that the Newport results themselves now are co-mingled with the rest of Vishay, right?

Speaker #2: We have backend elsewhere in Vishay. We have other costs we're adding. So the Newport costs by themselves are not so easily separated anymore. So we're going to stop giving specific items.

Speaker #2: On the Newport impact and talk in generalities, okay? As Joel said, going into the second quarter, I think your question to follow up was that we need the automotive qualifications.

David McConnell: As Joel said, going into Q2, I think your question to follow up was that we need the automotive qualifications to fill the fab, right?

Dave McConnell: As Joel said, going into Q2, I think your question to follow up was that we need the automotive qualifications to fill the fab, right?

Speaker #2: To fill the fab. Right?

Speaker #3: Okay. Okay. That's helpful. Just going back to the 2024 analyst date, right? If we look at your five-year plan that you presented at that time, between 2023 and 2028, you had an expectation of growing revenues.

Ruplu Bhattacharya: Okay, that's helpful. Just going back to the 2024 analyst day, right? If we look at your 5-year plan that you presented at that time, between 2023 and 2028, you had an expectation of growing revenues at the 10% CAGR at the midpoint, I think, and then getting the gross margin of 31% and op margin of 20% at the midpoint. That would imply something like $5 plus EPS. Given that you're at breakeven now at Newport and markets are improving and you have a healthy backlog, Joel, can you tell me, like, are those targets still reasonable? Can you still do like $5.5 billion of revenue with the footprint that you now have or that you've planned till 2028?

Speaker #3: At the 10% CAGR at the midpoint, I think. And then getting to gross margin of 31% and op margin of 20% at the midpoint.

Speaker #3: And that would imply something like $5 plus EPS. Given that you're at break even now at Newport and the markets are improving and you have a healthy backlog, Joel, can you tell me are those targets still reasonable?

Speaker #3: Can you still do like five and a half billion of revenue with the footprint that you now have or that you've planned till 2028?

Speaker #3: And what is, are those margin expectations valid? And should investors think that you can do that kind of earnings?

Ruplu Bhattacharya: Like, are those margin expectations, valid, and should investors think that you can do that kind of earnings?

Speaker #1: Yep. The targets are still there. Those are the targets. The timing of the targets was impacted by the inventory digestion that took longer into the first quarter of 2025.

Joel Smejkal: Yep. The targets are still there, most of the targets. The timing of the targets was impacted by the inventory digestion that took longer into Q1 2025. It was followed quickly thereafter by Liberation Day tariffs. Ruplu, the book-to-bill that we saw in Q4 of 1.2, now the book-to-bill of 1.34 is what we expected to see earlier in 2025. We're confident in our position. We have the capacity in place and being approved. We talk about Newport, we talk about the 12-inch fab coming on board. We're moving to be able to have in-house capacity to increase our revenue on semiconductors, MOSFETs in particular. There's another step that's later called restructuring that is part of supporting the gross margin.

Speaker #1: And then it was followed quickly thereafter by liberation day tariffs. So Rupo, the book-to-bill that we saw in Q4 of 1.2. And now the book-to-bill of 1.34 is what we expected to see earlier.

Speaker #1: In 2025, we're confident in our position. We have the capacity in place. And being approved, we talk about Newport, we talk about the 12-inch fab coming on board.

Speaker #1: So we're moving to be able to have in-house capacity to increase our revenue on semiconductors, MOSFETs in particular. There's another step that's later called restructuring.

Speaker #1: That is part of supporting the gross margin the revenue we are very, very confident the margin is going to be achieved following a restructuring project.

Joel Smejkal: The revenue, we are very, very confident the margin is going to be achieved following a restructuring project that is next after we get through this high CapEx investment. To answer your question, yes, the target of revenue still there. Gross margin, yes, still there. The timing of it is delayed a little bit because of inventory digestion and the tariff. Right now, we feel, as we said in the last call, 2026 is our quarter and our year to take off.

Speaker #1: That is next after we get through this high CapEx investment. So to answer your question, yes, the target of revenue is still there. Gross margin, yes, still there.

Speaker #1: The timing of it is delayed a little bit because of inventory digestion. And the tariffs. Right now, we feel as we said in the last call, 2026 is our quarter and our year to take off.

Speaker #3: Okay. No, that's helpful. I appreciate the details there. And then Dave, can I ask given this environment of potential share gains and growth and you're getting to break even and the Newport fab, how should we think about capital allocation, right?

Ruplu Bhattacharya: Okay. No, that's helpful. I appreciate the details there. Dave, can I ask, you know, given this environment of potential share gains and growth and you're getting to breakeven on the Newport fab, how should we think about capital allocation, right? I mean, how much, you know, you have a dividend. How should we think about increasing the dividend at the share price? I mean, how inclined are you to buy back shares? How should we think about CapEx as we go forward? Is there still, you know, some spend to be done? Just tell us how, when you look out over the next 12 months, how you're thinking about capital allocation in all of these different buckets. Thank you. Thanks for taking my questions.

Speaker #3: I mean, how much you have a dividend. How should we think about an increase in the dividend at this share price? I mean, how inclined are you to buy back shares?

Speaker #3: And then how should we think about CapEx as we go forward? Is there still some spend to be done? So just tell us how you when you look out over the next 12 months, how you're thinking about capital allocation in all of these different buckets.

Speaker #3: Thank you. Thanks for taking my questions.

David McConnell: No, it's a good question, Ruplu. We've obviously started talking internally about this. I think as Joel mentioned, though, we still have some runway to go to finish our CapEx, right? The cash is down to $480 million. You know, after we're done with the Itzehoe spending, it's gonna be lower than that. We have to finish the fab. We also have to pay for a restructuring plan. I don't think right now, at the share prices right now, we'd obviously be wanting to look at buying back stock. The dividend is set. The dividend won't be touched. Whether the board decides to increase it or not is still a decision to be made.

Dave McConnell: No, it's a good question, Ruplu. We've obviously started talking internally about this. I think as Joel mentioned, though, we still have some runway to go to finish our CapEx, right? The cash is down to $480 million. You know, after we're done with the Itzehoe spending, it's gonna be lower than that. We have to finish the fab. We also have to pay for a restructuring plan. I don't think right now, at the share prices right now, we'd obviously be wanting to look at buying back stock. The dividend is set. The dividend won't be touched. Whether the board decides to increase it or not is still a decision to be made.

Speaker #2: No, it's a good question, Rupo. We've obviously started talking internally about this. I think as Joel mentioned, though, we still have some runway to go to finish our CapEx.

Speaker #2: Right? And the cash is down to $480 million. After we're done with the Itseho spending, it's going to be lower than that. So we have to finish the fab.

Speaker #2: We also have to pay for a restructuring plan. So I don't think right now at the share prices right now, we'd obviously be wanting to look at buying back stock.

Speaker #2: The dividend is set. The dividend won't be touched. Whether the board decides to is still a decision to be made. And then, lastly, we've been fairly quiet on the M&A front the last couple of years.

Ruplu Bhattacharya: Okay.

David McConnell: Lastly, you know, we've been fairly quiet on the M&A front the last couple years, and that's unusual for us in our history. I think we would like to revisit some of the options possibly in that portion of the allocation strategy.

Dave McConnell: Lastly, you know, we've been fairly quiet on the M&A front the last couple years, and that's unusual for us in our history. I think we would like to revisit some of the options possibly in that portion of the allocation strategy.

Speaker #2: And that's unusual for us in our history. So I think we would like to revisit some of the options, possibly in that portion of the allocation strategy.

Speaker #2: Okay.

Ruplu Bhattacharya: Okay.

Speaker #3: Thank you. One moment for our next question. Our next question comes from Peter Peng with JPMorgan. Your line is open.

Operator: Thank you. One moment for our next question. Our next question comes from Peter Peng with JP Morgan. Your line is open.

Speaker #4: Hey, guys. Good job on the execution. Thanks for taking my question. Just on the gross margin front, you talked about some of the higher material costs and also expedites.

Peter Peng: Hey, guys. Good job on the execution. Thanks for taking my question. Just on the gross margin front, you talked about some of the higher material costs and also expedites. What kind of impact does that have on your Q2 guide?

Speaker #4: What kind of impact does that have on your second quarter guide?

Speaker #1: So that's a good question, Peter. Right now, what we have built into the '22 is our best estimate. I would say the material prices and the ASPs pretty much cancel each other out.

David McConnell: That's a good question, Peter. Right now with what we have built into the 2022 is our best estimate. I would say the material prices and the ASPs are pretty much cancel each other out.

Dave McConnell: That's a good question, Peter. Right now with what we have built into the 2022 is our best estimate. I would say the material prices and the ASPs are pretty much cancel each other out.

Speaker #4: Got it.

Peter Peng: Got it.

Speaker #1: Okay.

David McConnell: Okay.

Dave McConnell: Okay.

Peter Peng: I think there's a lot of tightness on the passive side and then also on some of the AI MOSFET sides, and we've been hearing about, you know, pricing increases and some of your analog and mixed signal power control peers are starting to, you know, increase prices. Wondering how are you thinking about pricing for this year?

Speaker #4: And I think there's a lot of tightness in the passive side and then also on some of the AI MOSFET sides. And we've been hearing about pricing increases in some of your analog and mixed air control appears are starting to increase prices.

Speaker #4: Wondering how are you thinking about pricing for this year?

Joel Smejkal: Peter, we started increasing pricing in Q4 of last year, dependent on the metal impact product by product. We've got 6 main technologies. Some were impacted by metals more so than others. We had price increases that were announced late Q4, early Q1, and then became effective based on the terms of contracts. We had a small benefit of price ASP improvement in Q1. It was small. Q2 is better. Dave, the ASP in Q2, about 1.5%?

Speaker #1: Peter, we started increasing pricing in the fourth quarter last year, dependent on the metal impact product-by-product. We've got six main technologies: some were impacted by metals, more so than others.

Speaker #1: So, we had price increases that were announced late fourth quarter, early first quarter, and then became effective based on the terms of contracts. So we had a small benefit of price ASP improvement in Q1.

Speaker #1: It was small. Q2 is better, Dave. The ASP in Q2, about percent and a half.

David McConnell: About one, yeah, on the margin, yep.

Dave McConnell: About one, yeah, on the margin, yep.

Speaker #2: Yeah, on the margin. Yep.

Speaker #1: One and a half percent ASPs being effective. In Q2. And then further effective in Q3. It was all about the timing. So we have raised pricing on a number of the technologies.

Joel Smejkal: 1.5% ASPs being effective in Q2, and then further effective in Q3. It was all about the timing. We have raised pricing on a number of the technologies. It's announced, it's effective, and you'll see that improving in Q2 and Q3.

Speaker #1: It's announced. It's effective. And you'll see that improving in Q2 and Q3.

Peter Peng: Got it. Perfect. Helpful. Then just on the AI data center, can you just level set us on what your total AI data center exposure is on both the semiconductor then on the passive side? What are kind of your expectations for revenue growth this year?

Speaker #4: Got it. Perfect. Helpful. And then just on the AI data center, can you just level set us on what your total AI data center exposure is on both the semiconductor and then on the passive side?

Speaker #4: And what are kind of your expectations for revenue growth this year?

Joel Smejkal: Last year we said we were under $100 million. This year we'll be well above that. Don't wanna put a number on it at the moment. There's some supply concerns by some of our competitors, where we're gaining on a nice step up in growth in 2026. Semiconductors, MOSFETs, diodes for sure. The passives, as I mentioned, Polymer Tantalum, the current sense resistors and magnetics products. We're positioning. We are connected to the ODMs in Asia. We see the programs where Vishay is on the bill of materials. We're enjoying business there. We're also backtracking where we see programs that we may be missing a technology or two that's not on the bill of materials. We're backtracking to the design house to get Vishay on the bill of materials.

Speaker #1: Last year, we said we were under $100 million. And this year, we'll be well above that. I don't want to put a number on it at the moment.

Speaker #1: There's some supply concerns by some of our competitors. Where we're gaining up a nice step up in growth in 2026. Semiconductors, MOSFETs, diodes, for sure.

Speaker #1: And then the passives, as I mentioned, polymer tantalum, the current sense resistors, and magnetics products. So we're positioning we are connected to the ODMs in Asia.

Speaker #1: We see the programs where Vishay is on the bill of materials, and we're enjoying business there. But we're also backtracking where we see programs that we may be missing a technology or two that's not on the bill of materials.

Speaker #1: We're backtracking to the design house to get Vishay on the bill of materials. So there's a lot of work going multi-direction to make sure Vishay is further increasing our participation.

Joel Smejkal: There's a lot of work going multi-direction to make sure Vishay is further increasing our participation in AI.

Speaker #1: In AI.

Peter Peng: Just a last question for me is, I think, was it 90 days ago, you guys still continue to see a mid to high single digit? I think obviously things started to accelerate. Maybe if you can provide an updated view on what are you thinking in terms of industry growth for this year?

Speaker #4: And then just last question for me is, I think was it 90 days ago? You guys still continue to see a mid to high single digit?

Speaker #4: I think obviously things started to accelerate. Maybe if you can provide an updated view on what are you thinking in terms of industry growth for this year?

Speaker #1: Industry growth, because of the multi-market segments we're in, well over double digit growth in AI. And that's going to continue to be very powerful segment.

Joel Smejkal: Industry growth, because of the multi-market segments we're in, well over double digit growth in AI, and that's going to continue to be very powerful segment. We see it's about quick delivery now. Who has competitive or leading lead times and product ready to go? That's definitely high double digit there, maybe 20% for AI. That's going to grow. Automotive car count we see is pretty stable, but content is going up, automotive mid-single digits. Industrial, we're seeing that above 10% with the product mix we have. Passives, we mentioned this a year ago. Passives was kind of leading the upturn, I think this is what makes Vishay unique, being a hybrid supplier of passives and semis. We were speaking about the industrial upturn in Q4 2024, we are realizing that quarter by quarter.

Speaker #1: And we see that it's about quick delivery now. Who has competitive or leading lead times and product ready to go? So that's definitely high double digit there.

Speaker #1: Maybe 20% for AI. That's going to grow. Automotive, car count we see is pretty stable, but content's going up. So automotive, mid single digits.

Speaker #1: Industrial, we're seeing that above 10% with the product mix we have. Passives, we mentioned this a year ago, passives was kind of leading the upturn.

Speaker #1: And I think this is what makes Vishay unique, being a hybrid supplier of passives and semis. We were speaking about the industrial upturn in the fourth quarter of 2024.

Speaker #1: And we're realizing that quarter by quarter, the book to build that we're seeing here is heavily supported by all segments, but industrial is a big part of it.

Joel Smejkal: The book-to-bill that we're seeing here is heavily supported by all segments, but industrial is a big part of it. aerospace defense, that's going to be a high growth market segment as well. At this point, the orders for defense are just beginning to come in. We've got a book-to-bill of 1.34 for the company, and the defense orders are in the very early innings. That book-to-bill strength is, we're positioning ourselves to be even greater in gaining orders from the customers. healthcare. healthcare is positive for us because we've added more materials, and that's mid-single digit. I think we see it broad-based across the board. If you were throwing a number at it's high single digit overall. Our plans from the beginning have been to outgrow the market and gain share.

Speaker #1: Aerospace defense, that's going to be a high growth market segment as well. At this point, the orders for defense are just beginning to come in.

Speaker #1: So we've got a book to build of 1.34 for the company. And the defense orders are in the very early innings. So that book to build strength is we're positioning ourselves to be even greater in gaining orders from the customers.

Speaker #1: And then healthcare. Healthcare is positive for us because we've added more materials, and that's mid-single-digit. So I think we see it broad-based across the board.

Speaker #1: If you were throwing a number at it, it's high single digit overall. And our plans from the beginning have been to outgrow the market and gain share.

Peter Peng: Mm-hmm. Perfect. Thank you, guys.

Speaker #4: Perfect. Thank you, guys.

Joel Smejkal: Peter, thanks. Nice talking to you.

Speaker #1: Peter, thanks. Nice talking to you.

Operator: I'm not showing any further questions this time. I'd like to turn the call back over to Joel for any further remarks.

Speaker #3: And I'm not showing any further questions at this time. I'd like to turn the call back over to Joel for any further remarks.

Operator: I'm not showing any further questions this time. I'd like to turn the call back over to Joel for any further remarks.

Speaker #1: All right, Kevin. Thank you very much. Thank you to everyone for joining our first quarter earnings call. As I mentioned in the fourth quarter call, 2026 is the year for Vishay 3.0 to take off.

Joel Smejkal: All right, Kevin. Thank you very much. Thank you to everyone for joining our Q1 earnings call. As I mentioned in the Q4 call, 2026 is the year for Vishay 3.0 to take off. We're invested heavily in expanding our capacity and moving closer, much closer to the customers. We're starting to realize the returns on our investment. Also, I want to mention that next week on the 18th, we will be at the J.P. Morgan Conference, 18th and 19th. We look forward to seeing any investors there. We'll talk to you again in August. Thank you again for following Vishay, and we'll then report our Q2 results. Thank you very much. Have a nice day.

Speaker #1: We're invested heavily in expanding our capacity and moving closer, much closer to the customers. We're starting to realize the returns on our investment. Also, I want to mention that next week, on the 18th, we will be at the JP Morgan conference.

Speaker #1: 18th and 19th. We look forward to seeing any investors there. We'll talk to you again in August. Thank you again for following Vishay. And we'll then report our second quarter results.

Speaker #1: Thank you very much. Have a nice day.

Speaker #3: Thank you, ladies and gentlemen. So that concludes today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.

Operator: Thank you, ladies and gentlemen. This will conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.