Vishay Intertechnology, Inc. (VSH)

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Vishay Intertechnology, Inc. (VSH)

Q2 2010 Earnings Call

August 3, 2010 9:00 am ET

Executives

Lior Yahalomi – CFO

Dr. Felix Zandman - Executive Chairman and Chief Technical and Business Development Officer

Dr. Gerald Paul - President and CEO

Lori Lipcaman - EVP and Chief Accounting Officer

Dave Tomlinson - SVP and Corporate Controller

Analysts

Jim Suva [Ostia Merchant] – Citigroup

Matt Sheerin – Thomas Weisel Partners

Shawn Harrison [Joe] – Longbow Research

Steve Smigle [Andrew] – Raymond James

Presentation

Operator

Good morning. My name is Kayla, and I will be your conference operator today.

At this time, I would like to welcome everyone to Vishay’s Second Quarter Earnings Results 2010 Conference Call.

All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to Vishay’s CFO Loir Yahalomi. You may begin your conference.

Loir Yahalomi

Thank you, Kayla. This is Loir Yahalomi, Vishay’s Chief Financial Officer.

Ladies and Gentlemen, good morning, and welcome to Vishay’s Second Quarter 2010 Earnings Call.

On the line with me today are Dr. Zandman, Chairman and Chief Technical and Business Development Officer; Dr. Paul, Vishay’s President and Chief Executive Officer; Lori Lipcaman, Vishay’s Executive Vice President and Chief Accounting Officer; and David Tomlinson, Vishay’s Senior Vice President and Corporate Controller.

Before I start, our Corporate Controller, Dave Tomlinson, will read our customary opening statement. Dave?

David Tomlinson

You should be aware that in today’s conference call, we’ll be making certain forward-looking statements that discuss future events and performance. These statements are subject to risk 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 10K and Form 10Q filings with the SEC.

Lior Yahalomi

Thank you, Dave. After my remarks, Dr. Paul will provide an analysis of our second quarter of 2010 and Dr. Zandman will update our R&D and acquisition activities and will provide summary remarks.

As you’re aware, on July 6, 2010, we completed the spinoff of Vishay Precision Group into an independent publically-traded company. Vishay’s financial results for the second quarter of 2010, still includes VPG.

VPG is an independent company; however, we will not restate prior financial statements to present VPG as a discontinued operation for U.S. GAAP purposes.

The reason is our continuing involvement primarily due to common board members, trademark licenses and certain transitional services.

To assist in the analysis of Vishay, including and excluding VPG, we have realigned our U.S. GAAP reportable segment, segregating VPG into its own segment as detailed in our current report on the form 8K filed with the SEC this morning.

This form, 8K is available in the SEC-Edgar website, as well as on the Vishay Investor Relations website at ir.vishay.com.

I will first discuss quarterly result as reported. In other words, including VPG, and then provide information on Vishay excluding VPG.

Quarterly results for Vishay, as reported, including VPG.

For the second quarter of 2010, the share reported revenues of 701.7 million, 9.6% higher than the first quarter of 2010, and 52.4% higher than the second quarter of 2009.

Our consolidated gross margins for the second quarter was 30%, as compared to 26.1% for the first quarter of 2010, and 17.1% for the second quarter of 2009.

The increase from the first quarter of 2010 reflects the continued recovery from the global economic crisis with increased sales and the cost reduction initiatives implemented by the company.

Selling, general and administrative expenses for this quarter were 109.3 million or 15.6% of revenue compared to 101.9 million or 15.9% of revenue for the first quarter of 2010, and 83.8 million or 18.2% for the last year’s second quarter.

The second quarter of 2010 included $6 million of cost, related to the VPG transaction.

Other income and expense for the second quarter of 2010 consist mainly of $2.4 million of interest expense, and 5.5 million in foreign currency gains.

The tax rate for the second quarter of 2010 was approximately 27%.

Capital expenditures for the quarter were $31.1 million compared to 18.1 million in our first quarter of 2010 and 7 million in the second quarter of 2009.

Depreciation and amortization for the quarter was 48.9 million as compared to 50.4 million in the first quarter of 2010 and 55.8 million in the second quarter of 2009.

As announced in our press release, Vishay reported earnings attributable to Vishay stockholders of $0.40 per diluted share for the second quarter of 2010. There were no unusual items for the second quarter of 2010 hence the $0.40 is both GAAP and adjusted.

Diluted earnings per share were $0.40 for the quarter as compared to net earnings per share of $0.24 for the first quarter of 2010, and a net loss per share of $0.32 for the second quarter of 2009.

Now quarterly results for Vishay, excluding VPG.

For the second quarter of 2010, excluding VPG, Vishay had revenues of 648.8 million, 9.5% higher than the first quarter of 2010 and 54.8% higher than the second quarter of 2009.

The gross margin for the quarter was 29.4% as compared to 25.3% for the first quarter of 2010 and 16.2% for the second quarter of 2009.

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