VSH Vishay Intertechnology

Vishay Intertechnology, Inc. (NYSE: VSH), one of the world's largest manufacturers of discrete semiconductors and passive components, today announced its results for the year and fiscal quarter ended December 31, 2019.

Revenues for the year ended December 31, 2019 were $2,668.3 million, compared to $3,034.7 million for the year ended December 31, 2018.  Net earnings attributable to Vishay stockholders for the year ended December 31, 2019 were $163.9 million, or $1.13 per diluted share compared to $345.8 million, or $2.24 per diluted share for the year ended December 31, 2018.

Revenues for the fiscal quarter ended December 31, 2019 were $609.6 million, compared to $628.3 million for the fiscal quarter ended September 28, 2019, and $775.9 million for the fiscal quarter ended December 31, 2018.  Net earnings attributable to Vishay stockholders for the fiscal quarter ended December 31, 2019 were $14.0 million, or $0.10 per diluted share, compared to $30.0 million, or $0.21 per diluted share for the fiscal quarter ended September 28, 2019, and $102.4 million, or $0.69 per diluted share for the fiscal quarter ended December 31, 2018.

As summarized on the attached reconciliation schedule, all periods presented include items affecting comparability.  Adjusted earnings per diluted share, which exclude these items net of tax and the unusual tax items, were $0.13 and $1.26 for the fiscal quarter and year ended December 31, 2019, respectively, $0.26 for the fiscal quarter ended September 28, 2019, and $0.58 and $2.12 for the fiscal quarter and year ended December 31, 2018, respectively.

Commenting on results for the year 2019, Dr. Gerald Paul, President and Chief Executive Officer stated, “After a prolonged upturn in the prior two years, 2019 has been a year of correction for Vishay and the electronic components industry. The reduction of inflated inventory levels in the supply chain led to drastically reduced manufacturing volumes, which negatively impacted Vishay’s profitability. A further burden has been temporary manufacturing inefficiencies due to the very rapid and substantial adaptation of capacities to the decreased demand.”

Dr. Paul continued, commenting on the results for the fourth quarter 2019, “The performance in the fourth quarter has been disappointing due to a lower than usual contributive margin caused by an unfavorable product mix and various negative singularities impacting variable cost; lower other income; and a higher than assumed tax rate for the year. During the fourth quarter inventories of Vishay’s products at distribution were reduced by a further $37 million. Based on lower order cancellations and an order uptick from distribution in all regions, we believe that the fourth quarter represented the low point of the inventory correction in the supply chain.”

Commenting on the outlook Dr. Paul stated, “For the first quarter 2020 we expect a further inventory reduction in the supply chain and guide for revenues in the range of $605 to $645 million and gross margins of 24.0% plus/minus 70 basis points at the exchange rates of the fourth quarter 2019.  The guidance excludes the impact from the rapidly evolving coronavirus crisis.”

A conference call to discuss Vishay’s third quarter financial results is scheduled for Tuesday, February 4, 2020 at 9:00 a.m. ET. The dial-in number for the conference call is 877-589-6174 (+1 706-643-1406, if calling from outside the United States or Canada) and the access code is 4395745.

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

There will be a replay of the conference call from 12:00 p.m. ET on Tuesday, February 4, 2020, through 11:59 p.m. ET on Tuesday, February 18, 2020. The telephone number for the replay is +1 855-859-2056 (+1 404-537-3406, if calling from outside the United States or Canada) and the access code is 4395745.

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

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

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

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

VSH - Earnings

VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(In thousands, except per share amounts)
	Years ended
	December 31, 2019				December 31, 2018
	(Unaudited)
Net revenues	$	2,668,305			$	3,034,689
Costs of products sold		1,997,105				2,146,165
Gross profit		671,200				888,524
Gross margin		25.2	%			29.3	%
Selling, general, and administrative expenses		384,631				403,404
Restructuring and severance costs		24,139				-
Operating income		262,430				485,120
Operating margin		9.8	%			16.0	%
Other income (expense):
Interest expense		(33,683	)			(36,680	)
Other components of net periodic pension cost		(13,959	)			(13,118	)
Other		13,540				8,037
Loss on early extinguishment of debt		(2,030	)			(26,583	)
Total other income (expense) - net		(36,132	)			(68,344	)
Income before taxes		226,298				416,776
Income tax expense		61,508				70,239
Net earnings		164,790				346,537
Less: net earnings attributable to noncontrolling interests		854				779
Net earnings attributable to Vishay stockholders	$	163,936			$	345,758
Basic earnings per share attributable to Vishay stockholders	$	1.13			$	2.39
Diluted earnings per share attributable to Vishay stockholders	$	1.13			$	2.24
Weighted average shares outstanding - basic		144,608				144,370
Weighted average shares outstanding - diluted		145,136				154,622
Cash dividends per share	$	0.3700			$	0.3225

VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands, except per share amounts)
	Fiscal quarters ended
	December 31, 2019				September 28, 2019				December 31, 2018
Net revenues	$	609,577			$	628,329			$	775,892
Costs of products sold		474,216				478,250				556,202
Gross profit		135,361				150,079				219,690
Gross margin		22.2	%			23.9	%			28.3	%
Selling, general, and administrative expenses		94,299				91,796				100,023
Restructuring and severance costs		16,884				7,255				-
Operating income		24,178				51,028				119,667
Operating margin		4.0	%			8.1	%			15.4	%
Other income (expense):
Interest expense		(8,523	)			(8,564	)			(9,818	)
Other components of net periodic pension cost		(3,848	)			(3,348	)			(2,782	)
Other		196				5,066				2,597
Loss on early extinguishment of debt		(723	)			-				(9,274	)
Total other income (expense) - net		(12,898	)			(6,846	)			(19,277	)
Income before taxes		11,280				44,182				100,390
Income tax expense (benefit)		(2,869	)			13,917				(2,269	)
Net earnings		14,149				30,265				102,659
Less: net earnings attributable to noncontrolling interests		187				227				240
Net earnings attributable to Vishay stockholders	$	13,962			$	30,038			$	102,419
Basic earnings per share attributable to Vishay stockholders	$	0.10			$	0.21			$	0.71
Diluted earnings per share attributable to Vishay stockholders	$	0.10			$	0.21			$	0.69
Weighted average shares outstanding - basic		144,628				144,628				144,384
Weighted average shares outstanding - diluted		145,202				145,027				148,378
Cash dividends per share	$	0.095			$	0.095			$	0.0850

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)
	December 31, 2019				December 31, 2018
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	694,133			$	686,032
Short-term investments		108,822				78,286
Accounts receivable, net		328,187				397,020
Inventories:
Finished goods		122,466				138,112
Work in process		187,354				190,982
Raw materials		121,860				150,566
Total inventories		431,680				479,660
Prepaid expenses and other current assets		141,294				142,888
Total current assets		1,704,116				1,783,886
Property and equipment, at cost:
Land		75,011				87,622
Buildings and improvements		585,064				619,445
Machinery and equipment		2,606,355				2,510,001
Construction in progress		110,722				125,109
Allowance for depreciation		(2,425,627	)			(2,373,176	)
		951,525				969,001
Right of use assets		93,162				-
Goodwill		150,642				147,480
Other intangible assets, net		60,659				65,688
Other assets		160,671				140,143
Total assets	$	3,120,775			$	3,106,198

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)
	December 31, 2019				December 31, 2018
	(Unaudited)
Liabilities and stockholders' equity
Current liabilities:
Notes payable to banks	$	2			$	18
Trade accounts payable		173,915				218,322
Payroll and related expenses		122,100				141,670
Lease liabilities		20,217				-
Other accrued expenses		186,463				229,660
Income taxes		17,731				54,436
Total current liabilities		520,428				644,106
Long-term debt less current portion		499,147				494,509
U.S. transition tax payable		140,196				154,953
Deferred income taxes		22,021				85,471
Long-term lease liabilities		78,511				-
Other liabilities		100,207				79,489
Accrued pension and other postretirement costs		272,402				260,984
Total liabilities		1,632,912				1,719,512
Redeemable convertible debentures		174				2,016
Equity:
Vishay stockholders' equity
Common stock		13,235				13,212
Class B convertible common stock		1,210				1,210
Capital in excess of par value		1,425,170				1,436,011
Retained earnings (accumulated deficit)		72,180				(61,258	)
Accumulated other comprehensive income (loss)		(26,646	)			(6,791	)
Total Vishay stockholders' equity		1,485,149				1,382,384
Noncontrolling interests		2,540				2,286
Total equity		1,487,689				1,384,670
Total liabilities, temporary equity, and equity	$	3,120,775			$	3,106,198

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Cash Flows
(In thousands)
	Years ended
	December 31, 2019				December 31, 2018
	(Unaudited)
Operating activities
Net earnings	$	164,790			$	346,537
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization		164,461				161,863
(Gain) loss on disposal of property and equipment		(157	)			(2,216	)
Accretion of interest on convertible debt instruments		14,146				10,769
Inventory write-offs for obsolescence		26,494				23,872
Pensions and other postretirement benefits, net of contributions		(552	)			(1,549	)
Loss on early extinguishment of debt		2,030				26,583
Deferred income taxes		(23,009	)			(55,206	)
Other		13,341				21,194
Change in U.S. transition tax liability		(14,757	)			(14,757	)
Change in repatriation tax liability		(38,814	)			(156,767	)
Changes in operating assets and liabilities, net of effects of businesses acquired		(11,529	)			(101,817	)
Net cash provided by operating activities		296,444				258,506
Investing activities
Purchase of property and equipment		(156,641	)			(229,899	)
Proceeds from sale of property and equipment		577				55,561
Purchase of businesses, net of cash acquired		(11,862	)			(14,880	)
Purchase of short-term investments		(111,631	)			(175,403	)
Maturity of short-term investments		81,012				636,108
Other investing activities		3,587				(2,058	)
Net cash provided by (used in) investing activities		(194,958	)			269,429
Financing activities
Proceeds from long-term borrowings		-				600,000
Issuance costs		(5,394	)			(15,621	)
Repurchase of convertible debentures		(27,863	)			(960,995	)
Net proceeds (payments) on revolving credit lines		-				(150,000	)
Net changes in short-term borrowings		(16	)			15
Dividends paid to common stockholders		(48,968	)			(42,608	)
Dividends paid to Class B common stockholders		(4,476	)			(3,901	)
Distributions to noncontrolling interests		(600	)			(525	)
Cash withholding taxes paid when shares withheld for vested equity awards		(2,708	)			(2,297	)
Net cash used in financing activities		(90,025	)			(575,932	)
Effect of exchange rate changes on cash and cash equivalents		(3,360	)			(14,003	)
Net increase (decrease) in cash and cash equivalents		8,101				(62,000	)
Cash and cash equivalents at beginning of period		686,032				748,032
Cash and cash equivalents at end of period	$	694,133			$	686,032

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of Adjusted Earnings Per Share
(Unaudited - In thousands, except per share amounts)
	Fiscal quarters ended												Years ended
	December 31, 2019				September 28, 2019				December 31, 2018				December 31, 2019				December 31, 2018
GAAP net earnings attributable to Vishay stockholders	$	13,962			$	30,038			$	102,419			$	163,936			$	345,758
Reconciling items affecting operating income:
Restructuring and severance costs	$	16,884			$	7,255			$	-			$	24,139			$	-
Reconciling items affecting other income (expense):
Loss on early extinguishment of debt	$	723			$	-			$	9,274			$	2,030			$	26,583
Reconciling items affecting tax expense (benefit):
Effects of tax-basis foreign exchange gain	$	-			$	-			$	-			$	7,554			$	-
Enactment of TCJA		-				-				-				-				25,496
Effects of cash repatriation program		(11,554	)			2,604				(3,037	)			(9,583	)			(10,047	)
Change in deferred taxes due to early extinguishment of debt		(289	)			-				(20,914	)			(1,601	)			(54,877	)
Effects of changes in uncertain tax positions		2,831				-				-				2,831				-
Tax effects of pre-tax items above		(4,277	)			(1,644	)			(2,028	)			(6,211	)			(5,812	)
Adjusted net earnings	$	18,280			$	38,253			$	85,714			$	183,095			$	327,101
Adjusted weighted average diluted shares outstanding		145,202				145,027				148,378				145,136				154,622
Adjusted earnings per diluted share	$	0.13			$	0.26			$	0.58			$	1.26			$	2.12

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of Free Cash
(Unaudited - In thousands)
	Fiscal quarters ended												Years ended
	December 31, 2019				September 28, 2019				December 31, 2018				December 31, 2019				December 31, 2018
Net cash provided by operating activities	$	84,423			$	76,202			$	149,615			$	296,444			$	258,506
Proceeds from sale of property and equipment		91				22				47,106				577				55,561
Less: Capital expenditures		(56,374	)			(30,119	)			(103,508	)			(156,641	)			(229,899	)
Free cash	$	28,140			$	46,105			$	93,213			$	140,380			$	84,168

VISHAY INTERTECHNOLOGY, INC.
Reconciliation of EBITDA and Adjusted EBITDA
(Unaudited - In thousands)
	Fiscal quarters ended												Years ended
	December 31, 2019				September 28, 2019				December 31, 2018				December 31, 2019				December 31, 2018
GAAP net earnings attributable to Vishay stockholders	$	13,962			$	30,038			$	102,419			$	163,936			$	345,758
Net earnings attributable to noncontrolling interests		187				227				240				854				779
Net earnings	$	14,149			$	30,265			$	102,659			$	164,790			$	346,537
Interest expense	$	8,523			$	8,564			$	9,818			$	33,683			$	36,680
Interest income		(1,734	)			(2,365	)			(3,638	)			(8,445	)			(11,940	)
Income taxes		(2,869	)			13,917				(2,269	)			61,508				70,239
Depreciation and amortization		42,159				40,956				39,975				164,461				161,863
EBITDA	$	60,228			$	91,337			$	146,545			$	415,997			$	603,379
Reconciling items
Restructuring and severance costs	$	16,884			$	7,255			$	-			$	24,139			$	-
Loss on early extinguishment of debt		723				-				9,274				2,030				26,583
Adjusted EBITDA	$	77,835			$	98,592			$	155,819			$	442,166			$	629,962
Adjusted EBITDA margin**		12.8	%			15.7	%			20.1	%			16.6	%			20.8	%
** Adjusted EBITDA as a percentage of net revenues