Vishay Intertechnology (NYSE:VSH) Reports Q4 In Line With Expectations But Quarterly Guidance Underwhelms

Petr Huřťák /
2024/02/07 7:30 am EST

Semiconductor manufacturer Vishay Intertechnology (NYSE:VSH) reported results in line with analysts' expectations in Q4 FY2023, with revenue down 8.2% year on year to $785.2 million. On the other hand, next quarter's revenue guidance of $735 million was less impressive, coming in 5.5% below analysts' estimates. It made a non-GAAP profit of $0.37 per share, down from its profit of $0.69 per share in the same quarter last year.

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Vishay Intertechnology (VSH) Q4 FY2023 Highlights:

  • Revenue: $785.2 million vs analyst estimates of $788.2 million (small miss)
  • EPS (non-GAAP): $0.37 vs analyst estimates of $0.37 (small beat)
  • Revenue Guidance for Q1 2024 is $735 million at the midpoint, below analyst estimates of $777.7 million
  • Free Cash Flow was -$138.9 million, down from $55.5 million in the previous quarter
  • Inventory Days Outstanding: 101, up from 95 in the previous quarter
  • Gross Margin (GAAP): 25.6%, down from 29.1% in the same quarter last year
  • Market Capitalization: $2.99 billion

“For the fourth quarter, the trends in inventory adjustments, contracting lead times and softened demand in industrial end markets became more apparent. While customers continue to digest higher inventory levels, we proceeded to implement our strategy to broaden participation with our distribution partners,” said Joel Smejkal, President and Chief Executive Officer.

Named after the founder's ancestral village in present-day Lithuania, Vishay Intertechnology (NYSE:VSH) manufactures simple chips and electronic components that are building blocks of virtually all types of electronic devices.

Analog Semiconductors

Demand for analog chips is generally linked to the overall level of economic growth, as analog chips serve as the building blocks of most electronic goods and equipment. Unlike digital chip designers, analog chip makers tend to produce the majority of their own chips, as analog chip production does not require expensive leading edge nodes. Less dependent on major secular growth drivers, analog product cycles are much longer, often 5-7 years.

Sales Growth

Vishay Intertechnology's revenue growth over the last three years has been unremarkable, averaging 11.7% annually. This quarter, its revenue declined from $855.3 million in the same quarter last year to $785.2 million. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

Vishay Intertechnology Total Revenue

Vishay Intertechnology had a difficult quarter as revenue dropped 8.2% year on year, missing analysts' estimates by 0.4%. This could mean that the current downcycle is deepening.

Vishay Intertechnology looks like it's headed into the trough of the semiconductor cycle, as it's guiding for a year-on-year revenue decline of 15.6% next quarter. Analysts are also estimating a 3.2% decline over the next 12 months.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business' capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

Vishay Intertechnology Inventory Days Outstanding

This quarter, Vishay Intertechnology's DIO came in at 101, which is 13 days above its five-year average, suggesting that the company's inventory has grown to higher levels than we've seen in the past.

Key Takeaways from Vishay Intertechnology's Q4 Results

Despite a small revenue miss, EPS beat by a small amount. However, the company's revenue guidance for next quarter missed analysts' expectations and its gross margin shrunk. Overall, this was a mixed quarter for Vishay Intertechnology with weak outlook likely weighing on shares. The company is down 3.9% on the results and currently trades at $20.73 per share.

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