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

Jul 30, 2019 • 09:00 am ET

Previous

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

Share
Close

Loading Event

Loading Transcript

Presentation
Executive
Lori Lipcaman

the US tax reform in 2017. The payment of these taxes is reflected as an operating cash flow on the statement of cash flows. All of the reconciling items between GAAP EPS and adjusted EPS are tax-related items. There were no reconciling items impacting gross or operating margins. I will elaborate on these transactions in a few moments.

Revenues in the quarter were $685 million, down 8.0% from previous quarter and down by 10.0% compared to prior year. Gross margin was 25.5%. Operating margin was 11.6%. There were no reconciling items to arrive at adjusted operating margin. EPS was $0.31, adjusted EPS was $0.36. EBITDA was $118 million or 17.2%. There were no reconciling items to arrive at adjusted EBITDA. Reconciling versus prior quarter, operating income quarter-two 2019 compared to operating income for prior quarter based on $60 million lower sales or $57 million excluding exchange rate impacts, operating income decreased by $28 million to $79 million in Q2 2019 from $108 million in Q1 2019. The main elements were; average selling prices had a negative impact of $6 million, representing a 0.9% ASP decline, which includes US tariffs passed through to customers; volume decreased with a negative impact of $23 million, equivalent to a 7.0% decrease in volume.

Reconciling versus prior year, operating income quarter-two 2019 compared to operating income in Q2 2018, based on $76 million lower sales or $62 million lower excluding exchange rate impacts, adjusted operating income decreased by $44 million to $79 million in Q2 2019 from $123 million in Q2 2018. The main elements were; average selling prices had a negative impact of $4 million, representing a 0.6% ASP decline, which again includes US tariffs passed through to customers; volume decreased with a negative impact of $24 million, representing a 7.6% decrease; variable cost increased with a negative impact of $16 million, primarily due to U.S. tariffs, raw material prices and some manufacturing inefficiencies, other variable cost inflation was virtually offset by cost reduction; fixed costs decreased with a positive impact of $3 million, primarily due to realignment of the incentive compensation accruals for the period year-to-date June.

Selling, general and administrative expenses for the quarter were $95 million, lower than expected due to adjustments to incentive compensation accruals for the period year-to-date June. For Q3 2019, our expectations are approximately $98 million of SG&A expenses and approximately $395 million for the full year at constant exchange rates.

During the second quarter, we began the process of repatriation, which included movement of cash from some second- and third-tier subsidiaries to higher-tier subsidiaries. We received $74 million in the United States and paid withholding and foreign taxes of $20 million. In Q3, we expect to repatriate an additional $104 million, net of foreign withholding taxes of about $15 million. Substantially, all of these amounts have been or are slated to be utilized to settle certain intercompany debt, to finance capital expansion projects and to pay the tax reform transition tax. Recall that while such amounts