Vishay Intertechnology, Inc. (VSH)

VSH 
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Vishay Intertechnology (VSH)

Q1 2013 Earnings Call

April 30, 2013 9:00 am ET

Executives

Peter G. Henrici - Senior Vice President of Corporate Communications, Corporate Secretary and Treasurer

Lori Lipcaman - Chief Financial Officer, Chief Accounting officer and Executive Vice President of Finance

Gerald Paul - Chief Executive Officer, President, Director , Member of Executive Committee and Managing Director of Vishay

Analysts

Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division

Shawn M. Harrison - Longbow Research LLC

Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division

Jim Suva - Citigroup Inc, Research Division

Sameer Kalucha - JP Morgan Chase & Co, Research Division

Presentation

Operator

Good morning. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vishay Q1 2013 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Henrici, you may begin your conference.

Peter G. Henrici

Thank you, Melissa. With me today are Dr. Gerald Paul, Vishay's President and Chief Executive Officer; and Lori Lipcaman, our Executive Vice President and Chief Financial Officer. As usual, we'll start today's call with the CFO, who will review our first quarter financial results. Dr. Gerald Paul will then give an overview of our business and discuss operational performance, as well as segment results in more detail. Finally, we'll reserve time for questions and answers.

This call is being webcast from the Investor Relations section of our website at ir.vishay.com. The replay for this call will be publicly available for approximately 30 days. You should be aware that in today's conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. For a discussion of factors that could cause results to differ, please see today's press release and Vishay's Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.

In addition, during this call, we may refer to adjusted or other financial measures that are not prepared according to generally accepted accounting principles. We use non-GAAP measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with GAAP measures that we also provide. This morning, we filed a Form 8-K that outlines the various variables that impact the diluted earnings per share computation. We expect to file our Form 10-Q for the first quarter this evening.

On the Investor Relations section of our website, you can find the presentation of the Q1 2013 financial information containing some of the operational metrics Dr. Paul will be discussing. Johan Vandoorn, Our Executive Vice President and Chief Technical Officer, will be presenting on Thursday, May 9 at the Raymond James Spring Investors Conference in Boston.

Now I turn the discussion over to Chief Financial Officer, Lori Lipcaman.

Lori Lipcaman

Thank you, Peter. Good morning, everyone. I am sure that most of you have had a chance to review our earnings press release. I will focus on some highlights and key metrics.

Vishay reported revenues for Q1 of $554 million, at the high end of the guidance. EPS for Q1 of $0.19 included a onetime tax benefit of approximately $1 million related to the retroactive enactment of the American Tax Payer Relief Act of 2012, signed into law on January 2, 2013. Adjusted EPS for quarter 1 was $0.18.

Vishay signed a definitive purchase agreement to acquire MCB Industrie S.A., a specialty resistor company located in France. We expect the transaction to close during the second quarter.

Revenues in the quarter were $554 million, up by 4.5% from previous quarter and up by 2.9% compared to prior year. Gross margin was 24.7%. Operating margin was 8.2%. EPS was $0.19. Adjusted EPS was $0.18. The adjusted EPS includes the onetime tax benefit related to the enactment of the American Taxpayer Relief Act.

Looking at the reconciliations versus prior quarter. Operating income Q1 2013 compared to operating income for prior quarter based on $24 million higher sales or $21 million higher excluding exchange rate impacts, operating net income increased by $24 million from $22 million in quarter 4 2012 to $46 million in Q1 2013. The main elements were: average selling prices, which had a negative impact of $5 million, representing a 0.8% ASP decline; Volume increased with the positive impact of $16 million; Variable costs had a positive impact of $11 million primarily related to lower material prices and volume-related deficiencies. Inventories increased with a positive impact of $4 million.

Versus prior year, operating income Q1 2013 compared to prior year based on $16 million higher sales or $15 million higher excluding exchange rate impacts, operating income decreased by $5 million from $50 million in Q1 2012 to $46 million in Q1 2013. The main elements were: average selling prices, which had a negative impact of $18 million, representing a 3.1% ASP decline; Volume increased with a positive impact of $18 million; Variable cost decreased with a positive impact of $5 million, again, primarily due to lower material prices and volume-related efficiencies; Fixed cost increased with a negative impact of $9 million. This is higher than inflation. However, Q1 of 2012 included more extreme temporary cost containment measures than we found reasonable to do this quarter.

Selling, general and administrative expenses for the quarter were $91 million. This included temporary cost reduction and containment measures, such as temporary furloughs and delayed salary increases, which will not repeat in quarter 2. However, if economic conditions worsen, we may resume these temporary measures.

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