Vishay (VSH) Q3 Earnings Miss Estimates, Revenues Rise Y/Y

Vishay Intertechnology, Inc. VSH reported third-quarter 2021 adjusted earnings of 63 cents per share, which surged 152% year over year and 3.3% sequentially.

However, the figure missed the Zacks Consensus Estimate by 5.9%.

Revenues of $813.7 million increased 27.1% year over year but declined 0.7% from the previous quarter. Further, the figure lagged the Zacks Consensus Estimate of $834.1 million.

The strong performance of resistor, inductor, diode, MOSFET, capacitor and opto product lines drove year-over-year revenues growth in the reported quarter.

Vishay’s book-to-bill ratio was 1.26 at the end of the third quarter.

The company’s continued focus on expanding its manufacturing capacities is a key catalyst. Further, growth prospects related to factory automation, electric vehicles, and 5G infrastructure remain positives.

Vishay Intertechnology, Inc. Price, Consensus and EPS Surprise

Vishay Intertechnology, Inc. Price, Consensus and EPS Surprise

Vishay Intertechnology, Inc. price-consensus-eps-surprise-chart | Vishay Intertechnology, Inc. Quote

Product Segments in Detail

Resistors: The segment generated revenues of $181 million (22% of total revenues), up 24% year over year. The strong momentum of resistors across automotive, industrial, military and medical markets was a positive. The book-to-bill ratio for the product line was 1.26 in the reported quarter.

Inductors: The product line generated revenues of $85 million (10% of total revenues), which increased 7% on a year-over-year basis. This was primarily attributed to the company’s well-performing magnetics, which continued to drive its specialty business. The book-to-bill ratio for the product line was 1.11 at the end of the reported quarter.

MOSFET: The product line generated revenues of $176 million (22% of total revenues), improving 31% year over year. The book-to-bill ratio for the product line was 1.19 at the end of the reported quarter. Growing momentum across the automotive space and solid demand environment contributed well.

Capacitors: The product line generated revenues of $116 million (14% of total revenues), up 25% year over year. The book-to-bill ratio for the product line was 1.7 in the reported quarter. Growing opportunities for capacitors in the areas of power transmission and electro cars remain tailwinds.

However, shortages of labor were concerning as manufacturing output and sales were hurt for capacitors.

Diodes: The segment generated revenues of $185 million (23% of total revenues), up 49% from the year-ago quarter. Vishay’s strong momentum across the automotive and industrial markets with diodes remained a positive. The book-to-bill ratio for the product line was 1.31 in the quarter under review.

Optoelectronics: The product line generated revenues of $71 million (9% of the total revenues) in the reported quarter. The figure was up 9% from the year-ago quarter. The book-to-bill ratio for the product line was 1.36 for the period.

Operating Details

In third-quarter 2021, the gross margin was 27.7%, expanding 400 basis points (bps) on a year-over-year basis.

Selling, general and administrative expenses were $102.2 million, increasing 13.3% year over year. As a percentage of total revenues, the figure contracted 150 bps from the year-ago quarter to 12.6%.

Consequently, the operating margin expanded 560 bps on a year-over-year basis to 15.2%.

Balance Sheet & Cash Flows

As of Oct 2, 2021, cash and cash equivalents were $831.8 million, up from $726.8 million as of Jul 3, 2021. Short-term investments were $84.2 million, down from $129.03 million in the previous quarter. Inventories were $532.7 million, up from $507.9 million in the prior quarter.

Long-term debt was $454.8 million at the end of the third quarter compared with $454.03 million at the end of the second quarter.

In the third quarter, Vishay generated $135.7 million of cash from operations, up from $117.5 million in the previous quarter.

The company’s free cash flow in the reported quarter was $79.2 million, increasing from $85.3 million in the prior quarter.

Guidance

For fourth-quarter 2021, Vishay expects total revenues of $805-$845 million. The Zacks Consensus Estimate for the same is pegged at $817.4 million.

The company anticipates a fourth-quarter gross margin of 27.7% (+/-50 bps).

Zacks Rank & Stocks to Consider

Vishay currently has a Zacks Rank #3 (Hold).

Other similar-ranked stocks in the broader technology sector include Advanced Micro Devices AMD, PerkinElmer PKI and Mimecast Limited MIME. While Advanced Micro Devices sports a Zacks Rank #1 (Strong Buy), PerkinElmer and Mimecast carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Advanced Micro Devices, PerkinElmer, and Mimecast are currently projected at 46.2%, 41.7%, and 35%, respectively.

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