Vishay Intertechnology Inc. (NYSE:VSH) Q2 2019 Earnings Conference Call Transcript

Jul 30, 2019 • 09:00 am ET

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Vishay Intertechnology Inc. (NYSE:VSH) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Your first question comes from the line of Shawn Harrison with Longbow Research.

Analyst
Shawn Harrison

Hi, everybody. Going to Paul, last quarter, I think you spoke about maybe, I know this was a guess, $100 million of excess channel inventory sitting out there. How much do you think that, that excess channel inventory is now? I'm guessing it's a bit larger given the weaker sales outlook.

Executive
Gerald Paul

I must agree. I would say it's between $100 million and $150 million, somewhere. You never know exactly. But -- I think it's between $100 million to $150 million.

Analyst
Shawn Harrison

And how long would you guess that would take to burn off? Is that something that could happen by the end of the calendar year or does that bleed into early 2020?

Executive
Gerald Paul

Yeah. It all depends very much on a few assumptions, of course. First of all, you must assume which inventory turns our distributors have as a target. Secondly, you have to take some assumptions on the development of POS. Of course, we did that. And I would say, it's about three quarters from now -- beginning now, three quarters is our best guess. But again, this contains a few assumptions.

Analyst
Shawn Harrison

And then you mentioned POS. What was point of purchase for your distribution partners for you this quarter?

Executive
Gerald Paul

You mean POA?

Analyst
Shawn Harrison

POA, yes.

Executive
Gerald Paul

POA. POA was down, you know that. We want the percentage substantially down. Let me see, give me a minute. POA, well, we sold -- you want to know the sales to distribution in reality, right?

Analyst
Shawn Harrison

Yes, please.

Executive
Gerald Paul

$368 million. Yes, $368 million.

Analyst
Shawn Harrison

Okay. And then lastly, if I may. You said almost all product lead times are back to normal. Do you have any products with extended lead times right now? I'm guessing it may be more niche applications or something specific.

Executive
Gerald Paul

Absolutely. Precisely. I wouldn't name any commodity product which has longer lead times at this point. We have normalized some niches for sure, but this has nothing to do with the normalization phase we are in. This is quite normal and depends on the productivity. Otherwise, we are down to normal in the broad form.

Analyst
Shawn Harrison

Okay. Thank you.

Executive
Gerald Paul

Thank you.

Operator
Operator

Your next question comes from the line of Karl Ackerman with Cowen.

Analyst
Karl Ackerman

Hey, good morning everyone. Lori or Dr. Paul, you and your electronic component peers have spoken about an inventory overhang at distribution partners. And as I think, Shawn alluded to earlier, just -- for some products like diodes and MOSFETs, I think lead time is extended as much as, I think, 52 weeks versus typical lead times of perhaps 8 to 10. Do you expect lead times to normalize by the end of the year that coincide with this inventory digestion cycle? And as a follow-up, as distributor inventories have begun to normalize as evidenced by the book-to-bill and distribution at 0.55 this quarter, is the restructuring effort you've announced today an indication that prices will also normalize vis-a-vis the 3% annual price declines?

Executive
Gerald Paul

Well, first of all,