Vishay Reports Results for Third Quarter 2016

  • Revenues for Q3 2016 of $592 million
  • Operating Margin Q3 of 9.7%
  • Adjusted Operating Margin Q3 of 10.1%
  • EPS Q3 of $0.24
  • Adjusted EPS Q3 of $0.25
  • Cash from operations for trailing twelve months Q3 of $304 million and capital expenditures of $142 million
  • Repurchased 0.8 million shares in Q3
  • Extension of MOSFETs restructuring program: additional cash cost of $4 to $8 million, additional annual savings of $7 to $10 million, finalized by end of 2017
  • Guidance for Q4 2016 for revenues of $560 - $600 million and gross margins of 24% - 25%

MALVERN, Pa., Nov. 07, 2016 (GLOBE NEWSWIRE) -- Vishay Intertechnology, Inc. (NYSE:VSH), one of the world's largest manufacturers of discrete semiconductors and passive components, today announced its results for the fiscal quarter and nine fiscal months ended October 1, 2016.

Revenues for the fiscal quarter ended October 1, 2016 were $592.0 million, compared to $560.7 million for the fiscal quarter ended October 3, 2015. The net earnings attributable to Vishay stockholders for the fiscal quarter ended October 1, 2016 were $36.4 million, or $0.24 per diluted share, compared to net loss attributable to Vishay stockholders of $(27.7) million, or $(0.19) per share for the fiscal quarter ended October 3, 2015.

Net earnings attributable to Vishay stockholders for the fiscal quarter ended October 1, 2016 include, restructuring and severance costs of $1.2 million, impairment of indefinite-lived intangible assets of $1.6 million, and $1.4 million for the quarterly remeasurement of the deferred tax liability recorded for the cash repatriation program. Net loss attributable to Vishay stockholders for the fiscal quarter ended October 3, 2015 includes restructuring and severance costs of $2.3 million, impairment of goodwill and long-lived assets charges totaling $63.0 million, and a loss related to the Tianjin explosion of $5.4 million. Adjusted earnings per diluted share, which exclude these items, were $0.25 and $0.17 for the fiscal quarters ended October 1, 2016 and October 3, 2015, respectively.

Commenting on the results for the third quarter 2016, Dr. Gerald Paul, President and Chief Executive Officer, stated, “The third quarter represented for Vishay the continuation of a solid business year. The strength of the automotive market is unbroken, and in the US, the industrial markets serving the oil and gas sector seem to have bottomed out. Vishay received in the quarter substantial orders for film power capacitors related to power transmission projects in China—another very tangible result of our Asia growth plan. The sales of Vishay products by its distributors to end customers were stable worldwide with strength in Asia and some seasonal weakness in Europe.”

Vishay today announced an extension of the MOSFETs Enhanced Competitiveness restructuring program. The revised program includes various cost reduction initiatives, primarily the transfer of all remaining manufacturing operations at its Santa Clara, CA, facility to other Vishay facilities or third-party subcontractors. The production transfers will be completed in steps by the end of 2017. Vishay expects to incur cash charges of approximately $4 to $8 million, primarily related to severance.

Vishay intends to maintain its R&D and management presence in Silicon Valley, even after the cessation of manufacturing operations there.

Dr. Paul stated, “We successfully completed various production transfers as part of the MOSFETs restructuring program. To realize further opportunities for cost reduction, we will extend the MOSFETs restructuring program, closing the Santa Clara facility as a manufacturing location. This extension will lead to additional cost savings of $7 to $10 million. The improved cost structure will allow Vishay to grow its MOSFETs business at higher margins by better penetrating the automotive and industrial markets.”

Commenting on the outlook Dr. Paul continued, “For the fourth quarter, based on our order book and the anticipated product mix we guide for revenues of $560 to $600 million and gross margins of 24% to 25% at constant exchange rates.”

A conference call to discuss Vishay’s third quarter financial results is scheduled for Monday, November 7, 2016 at 9:00 a.m. ET. The dial-in number for the conference call is 877-589-6174 (+1 706-643-1406 if calling from outside the United States or Canada) and the conference ID is 93666932.

There will be a replay of the conference call from 12:00 p.m. ET on Monday, November 7, 2016 through 11:59 p.m. ET on Monday, November 14, 2016. The telephone number for the replay is 800-585-8367 (+1 855-859-2056 or 404-537-3406 if calling from outside the United States or Canada) and the access code is 93666932.

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

About Vishay

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

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

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

VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands, except per share amounts)
Fiscal quarters ended
October 1, 2016 July 2, 2016 October 3, 2015
Net revenues$ 591,955 $ 590,051 $ 560,654
Costs of products sold 438,054 443,923 430,510
Gross profit 153,901 146,128 130,144
Gross margin 26.0% 24.8% 23.2%
Selling, general, and administrative expenses 93,916 92,253 88,995
Restructuring and severance costs 1,197 4,467 2,324
Impairment of intangible assets 1,559 - 57,600
Impairment of goodwill - - 5,380
Operating income (loss) 57,229 49,408 (24,155)
Operating margin 9.7% 8.4% -4.3%
Other income (expense):
Interest expense (6,165) (6,270) (6,677)
Other (380) 2,256 3,240
Gain on early extinguishment of debt - 986 -
Loss related to Tianjin explosion - - (5,350)
Total other income (expense) - net (6,545) (3,028) (8,787)
Income (loss) before taxes 50,684 46,380 (32,942)
Income taxes (benefit) 14,088 13,151 (5,392)
Net earnings (loss) 36,596 33,229 (27,550)
Less: net earnings (loss) attributable to noncontrolling interests 156 143 116
Net earnings (loss) attributable to Vishay stockholders$ 36,440 $ 33,086 $ (27,666)
Basic earnings (loss) per share attributable to Vishay stockholders$ 0.25 $ 0.22 $ (0.19)
Diluted earnings (loss) per share attributable to Vishay stockholders$ 0.24 $ 0.22 $ (0.19)
Weighted average shares outstanding - basic 146,924 147,643 147,701
Weighted average shares outstanding - diluted 149,894 149,845 147,701
Cash dividends per share$ 0.0625 $ 0.0625 $ 0.0600

VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands, except per share amounts)
Nine fiscal months ended
October 1, 2016 October 3, 2015
Net revenues$ 1,752,612 $ 1,744,560
Costs of products sold 1,315,274 1,327,896
Gross profit 437,338 416,664
Gross margin 25.0% 23.9%
Selling, general, and administrative expenses 276,455 276,717
Restructuring and severance costs 12,139 9,394
Impairment of intangible assets 1,559 57,600
Impairment of goodwill - 5,380
Operating income 147,185 67,573
Operating margin 8.4% 3.9%
Other income (expense):
Interest expense (18,901) (19,774)
Other 2,655 7,860
Gain on early extinguishment of debt 4,597 -
Loss related to Tianjin explosion - (5,350)
Total other income (expense) - net (11,649) (17,264)
Income before taxes 135,536 50,309
Income taxes 37,559 20,416
Net earnings 97,977 29,893
Less: net earnings attributable to noncontrolling interests 437 592
Net earnings attributable to Vishay stockholders$ 97,540 $ 29,301
Basic earnings per share attributable to Vishay stockholders$ 0.66 $ 0.20
Diluted earnings per share attributable to Vishay stockholders$ 0.65 $ 0.19
Weighted average shares outstanding - basic 147,470 147,700
Weighted average shares outstanding - diluted 150,125 151,607
Cash dividends per share$ 0.1875 $ 0.1800

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)
October 1, 2016 December 31, 2015
(unaudited)
Assets
Current assets:
Cash and cash equivalents$ 511,587 $ 475,507
Short-term investments 608,314 619,040
Accounts receivable, net 295,341 272,559
Inventories:
Finished goods 118,853 108,869
Work in process 182,896 201,045
Raw materials 106,754 110,657
Total inventories 408,503 420,571
Prepaid expenses and other current assets 94,309 99,815
Total current assets 1,918,054 1,887,492
Property and equipment, at cost:
Land 91,188 89,593
Buildings and improvements 579,544 562,171
Machinery and equipment 2,417,598 2,380,299
Construction in progress 61,328 79,910
Allowance for depreciation (2,300,896) (2,246,677)
848,762 865,296
Goodwill 142,032 138,244
Other intangible assets, net 89,784 103,258
Other assets 150,194 158,696
Total assets$ 3,148,826 $ 3,152,986

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)
October 1, 2016 December 31, 2015
(unaudited)
Liabilities and stockholders' equity
Current liabilities:
Notes payable to banks$ 105 $ 4
Trade accounts payable 160,221 157,210
Payroll and related expenses 128,012 113,976
Other accrued expenses 157,482 164,336
Income taxes 16,624 22,198
Total current liabilities 462,444 457,724
Long-term debt less current portion 361,467 436,738
Deferred income taxes 298,623 305,413
Other liabilities 64,257 60,450
Accrued pension and other postretirement costs 252,653 264,618
Total liabilities 1,439,444 1,524,943
Equity:
Vishay stockholders' equity
Common stock 13,425 13,546
Class B convertible common stock 1,213 1,213
Capital in excess of par value 2,044,564 2,058,492
Retained earnings (accumulated deficit) (249,535) (319,448)
Accumulated other comprehensive income (loss) (105,582) (131,327)
Total Vishay stockholders' equity 1,704,085 1,622,476
Noncontrolling interests 5,297 5,567
Total equity 1,709,382 1,628,043
Total liabilities and equity$ 3,148,826 $ 3,152,986

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
Nine fiscal months ended
October 1, 2016 October 3, 2015
Operating activities
Net earnings$ 97,977 $ 29,893
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization 119,143 134,281
(Gain) loss on disposal of property and equipment (1,373) (116)
Accretion of interest on convertible debentures 3,425 3,167
Inventory write-offs for obsolescence 17,085 15,348
Impairment of goodwill and intangible assets 1,559 62,980
Deferred income taxes (1,750) (32,523)
Gain on early extinguishment of debt (4,597) -
Other (5,386) (1,939)
Changes in operating assets and liabilities, net of effects of businesses acquired (13,455) (57,522)
Net cash provided by operating activities 212,628 153,569
Investing activities
Purchase of property and equipment (81,346) (86,767)
Proceeds from sale of property and equipment 1,241 1,989
Purchase of short-term investments (472,938) (362,595)
Maturity of short-term investments 491,867 161,611
Sale of short-term investments - 503
Sale of other investments - 400
Other investing activities 2,886 (3,967)
Net cash provided by (used in) investing activities (58,290) (288,826)
Financing activities
Principal payments on long-term debt and capital lease obligations (34,044) -
Net proceeds (payments) on revolving credit lines (41,000) (27,000)
Net changes in short-term borrowings (626) (7)
Common stock repurchases (16,981) -
Dividends paid to common stockholders (25,329) (24,378)
Dividends paid to Class B common stockholders (2,274) (2,184)
Excess tax benefit from RSUs vested - 21
Distributions to noncontrolling interests (707) (725)
Net cash provided by (used in) financing activities (120,961) (54,273)
Effect of exchange rate changes on cash and cash equivalents 2,703 (12,337)
Net increase (decrease) in cash and cash equivalents 36,080 (201,867)
Cash and cash equivalents at beginning of period 475,507 592,172
Cash and cash equivalents at end of period$ 511,587 $ 390,305

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of Adjusted Earnings Per Share
(Unaudited - In thousands, except per share amounts)
Fiscal quarters ended Nine fiscal months ended
October 1, 2016 July 2, 2016 October 3, 2015 October 1, 2016 October 3, 2015
GAAP net earnings (loss) attributable to Vishay stockholders$ 36,440 $ 33,086 $ (27,666) $ 97,540 $ 29,301
Reconciling items affecting operating margin:
Restructuring and severance costs$ 1,197 $ 4,467 $ 2,324 $ 12,139 $ 9,394
Impairment of intangible assets 1,559 - 57,600 1,559 57,600
Impairment of goodwill - - 5,380 - 5,380
Reconciling items other income (expense):
Gain on early extinguishment of debt$ - $ (986) $ - $ (4,597) $ -
Loss (gain) related to Tianjin explosion - - 5,350 - 5,350
Reconciling items affecting tax expense (benefit):
Effects of cash repatriation program$ (1,402) $ - $ - $ (3,388) $ -
Tax effects of items above (441) (2,235) (16,831) (2,436) (19,327)
Adjusted net earnings$ 37,353 $ 34,332 $ 26,157 $ 100,817 $ 87,698
Adjusted weighted average diluted shares outstanding 149,894 149,845 150,455 150,125 151,607
Adjusted earnings per diluted share*$ 0.25 $ 0.23 $ 0.17 $ 0.67 $ 0.58
* Includes add-back of interest on exchangeable notes in periods where the notes are dilutive.

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of Free Cash
(Unaudited - In thousands)
Fiscal quarters ended Nine fiscal months ended
October 1, 2016 July 2, 2016 October 3, 2015 October 1, 2016 October 3, 2015
Net cash provided by operating activities$ 117,657 $ 74,713 $ 61,207 $ 212,628 $ 153,569
Proceeds from sale of property and equipment 1,048 129 314 1,241 1,989
Less: Capital expenditures (30,273) (31,317) (37,217) (81,346) (86,767)
Free cash$ 88,432 $ 43,525 $ 24,304 $ 132,523 $ 68,791

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of EBITDA and Adjusted EBITDA
(Unaudited - In thousands)
Fiscal quarters ended Nine fiscal months ended
October 1, 2016 July 2, 2016 October 3, 2015 October 1, 2016 October 3, 2015
GAAP net earnings (loss) attributable to Vishay stockholders$ 36,440 $ 33,086 $ (27,666) $ 97,540 $ 29,301
Net earnings (loss) attributable to noncontrolling interests 156 143 116 437 592
Net earnings (loss)$ 36,596 $ 33,229 $ (27,550) $ 97,977 $ 29,893
Interest expense$ 6,165 $ 6,270 $ 6,677 $ 18,901 $ 19,774
Interest income (1,033) (1,033) (1,115) (3,200) (3,340)
Income taxes 14,088 13,151 (5,392) 37,559 20,416
Depreciation and amortization 40,026 39,100 44,096 119,143 134,281
EBITDA$ 95,842 $ 90,717 $ 16,716 $ 270,380 $ 201,024
Reconciling items
Restructuring and severance costs$ 1,197 $ 4,467 $ 2,324 $ 12,139 $ 9,394
Impairment of intangible assets 1,559 - 57,600 1,559 57,600
Impairment of goodwill - - 5,380 - 5,380
Gain on early extinguishment of debt - (986) - (4,597) -
Loss related to Tianjin explosion - - 5,350 - 5,350
Adjusted EBITDA$ 98,598 $ 94,198 $ 87,370 $ 279,481 $ 278,748
Adjusted EBITDA margin** 16.7% 16.0% 15.6% 15.9% 16.0%
** Adjusted EBITDA as a percentage of net revenues

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

Source:Vishay Intertechnology