VISHAY INTERTECHNOLOGY, INC. - S&P Global … TODAY VISHAY — A PIONEER OF THE ELECTRONIC...
Transcript of VISHAY INTERTECHNOLOGY, INC. - S&P Global … TODAY VISHAY — A PIONEER OF THE ELECTRONIC...
VISHAY INTERTECHNOLOGY, INC.CORPORATE PRESENTATION
MAY 2011
VISHAY TODAY STOCK BUY-BACK Q1 RESULTS LOOKING AHEAD
2
NOTES ON FORWARD-LOOKING STATEMENTS Comments in this presentation other than statements of historical fact may constitute forward-
looking statements. Forward-looking statements are subject to various risks and uncertainties that could cause actual
results to vary materially from those anticipated.. These risks and uncertainties are described in the Company’s annual report on Form 10-K for the
year ended December 31, 2010, in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Risk Factors section in Part I.
The Company undertakes no obligation to update any forward-looking statements.
Measurements such as adjusted gross profit, adjusted operating profit, adjusted income from continuing operations and free cash are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. Management believes that adjusted gross profit, adjusted operating profit, adjusted income from continuing operations and free cash, “non-GAAP” measures, are meaningful to investors because they provide insight with respect to intrinsic operating results of the Company. Reconciling items to arrive at adjusted gross profit, adjusted operating profit, adjusted income from continuing operations and free cash represent significant charges or credits that are important to an understanding of the Company’s intrinsic operations. These reconciling items are more fully described in the Company’s annual report on Form 10-K and its quarterly reports presented on Forms 10-Q. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies.
NON-GAAP FINANCIAL MEASURES
VISHAY TODAY
VISHAY TODAY STOCK BUY-BACK Q1 RESULTS LOOKING AHEAD
VISHAY TODAY
VISHAY — A PIONEER OF THE ELECTRONIC COMPONENTS INDUSTRY
Founded in 1962 by Dr. Felix Zandman, based on an innovative resistor technology
Since 1985, strategy of accelerated growth through focused R&D and synergistic acquisitions to become a true broad-liner on a worldwide basis
Vishay components used today by virtually all major manufacturers of electronic products worldwide
4
VISHAY TODAY
THE VISHAY VISION
Offer innovative products and technologies to meet current and future market needs
Be a broad-liner for discrete electronic components offering “one-stop shop” service and custom solutions for all market segments in all regions
Be a leading supplier to our customers
Grow at a faster rate than electronics markets Vishay participates in
55
VISHAY TODAY
VISHAY — KEY STRENGTHS
Strong track record of growth through acquisitions
Broad market penetration in all industry segments and in all regions
Global technology leader in discrete semiconductors and passive components
Current and future customer-driven solutions for growth provided by R&D
Strong free cash flow generation and financial flexibility
Prudent capital structure—net cash positive
6
VISHAY TODAY
0200400600800
1,0001,2001,4001,6001,8002,0002,2002,4002,6002,8003,000
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
7
GROWTH THROUGH ACQUISITIONS
RoedersteinSprague
SferniceDraloric
Vitramon
Siliconix,Telefunken
General Semiconductor,Infineon infrared
Dale
BCcomponents
SALES IN MILLION
International RectifierPCS
YEAR
Kemet wet tantalum
Spin-off Vishay Precision Group
Q1 11: $695MAnnualized: $2.78M
VISHAY TODAY
BROAD MARKET PENETRATION
END MARKETS
SALES CHANNELSGEOGRAPHY
VISHAY REVENUES 2010EXCL. VISHAY PRECISION GROUP
COMPUTING21% CONSUMER
9%
AUTOMOTIVE15%
TELECOM12%
INDUSTRIAL24%
POWER SUPPLIES
10%
MILITARY/AERO6%
MEDICAL3%
AMERICAS23%
EUROPE36%
ASIA41%
EMS7%
OEM37%
DISTRIBUTION*56%
8
* Distribution includes Logistics Service Providers with 8%
VISHAY TODAY
BROAD CUSTOMER BASE
OEM
EMS DISTRIBUTION
NO SINGLE OEM CUSTOMER REPRESENTS OVER 5% OF SALES
9
VISHAY TODAY
BALANCED PRODUCT PORTFOLIO
45% PASSIVES - 55% SEMICONDUCTORS
VISHAY REVENUES 2010EXCL. VISHAY PRECISION GROUP
MOSFETS 24%
DIODES 23%
INFRARED OPTO 8%
RESISTORS INDUCTORS
24%
CAPACITORS 21%
10
VISHAY TODAY
BROADEST LINE OF DISCRETE SEMICONDUCTORSAND PASSIVE COMPONENTS
= Major Position = Minor PositionSource: Company estimates
DIODES MOSFETs MAGNETICS
Diodes, Rectifiers MOSFETs
Infrared Compo-nents
Opto-couplers LEDs
Aluminum, Ceramic
Power, Film,
Tantalum
Film, Power
SMD Resistors
Variable, Sensors
Inductors, Trans-
formers
VISHAY Avago AVX Fairchild Int. Rectifier Infineon KEMET KOA Murata Nichicon NXP ON Semi Panasonic Rohm Sharp ST Micro TDK/EPCOS Toshiba Yageo
SEMICONDUCTORS PASSIVE COMPONENTSOPTO CAPACITORS RESISTORS
11
VISHAY TODAY
Wirewound and other power resistors
Leaded film resistors
Thin film SMD resistors
Wet and conformal-coated tantalum capacitors
Capacitors for power electronics
MARKET AND TECHNOLOGY LEADER IN PASSIVE COMPONENTS
Source: WRTS, Company estimates
12
VISHAY TODAY
Power rectifiers
Low-voltage power MOSFETs
Infrared components
MARKET AND TECHNOLOGY LEADER INSEMICONDUCTORS
Source: WSTS, IMS, Company estimates
13
VISHAY TODAY
NATURAL HEDGEAGAINST USD-EUR CURRENCY FLUCTUATIONS
Vishay’s revenues earned and costs incurred in Euro nearly offset down to operating profit Euro weakening vs. US dollar:
• Revenues denominated in EUR are reported lower in USD (semblance of low growth)
• Costs incurred in EUR are reported lower in USD
Euro strengthening vs. US dollar:• Revenues denominated in EUR are reported higher in USD
(semblance of high growth)• Costs incurred in EUR are reported higher in USD
Currency exposure does exist in countries where we manufacture products but have less revenues:Israeli shekel, Czech koruna, Chinese yuan
14
VISHAY TODAY
1515
SALES AND GROSS MARGIN %
0%
6%
12%
18%
24%
30%
36%
0
500
1,000
1,500
2,000
2,500
3,000
02 03 04 05 06 07 08 09 10
SALES GM %
MILLIONS USD % OF SALES
VISHAY TODAY
1616
SALES AND ADJUSTED GROSS MARGIN %
0%
6%
12%
18%
24%
30%
36%
0
500
1,000
1,500
2,000
2,500
3,000
02 03 04 05 06 07 08 09 10
SALES GM ADJ %
MILLIONS USD % OF SALES
VISHAY TODAY
1717
SALES AND OPERATING MARGIN %
2008: Operating Loss was ($1,648.7), see reconciliation schedule
MILLIONS USD % OF SALES
-3%
0%
3%
6%
9%
12%
15%
18%
(500)
0
500
1,000
1,500
2,000
2,500
3,000
02 03 04 05 06 07 08 09 10
SALES OM %
VISHAY TODAY
1818
SALES AND ADJUSTED OPERATING MARGIN %
0%
3%
6%
9%
12%
15%
18%
0
500
1,000
1,500
2,000
2,500
3,000
02 03 04 05 06 07 08 09 10
SALES OM ADJ %
MILLIONS USD % OF SALES
VISHAY TODAY
19
RECONCILIATION OF GAAP TO ADJUSTED
in millions USD 2010 2009 2008 2007 2006 2005 2004 2003 2002
Reconciling items affecting gross margin:
Loss on purchase commitments, Ta write-downs 6 16 (1) 17 18 133
Product quality claims 3
Reconciling items affecting operating margin:
Restructuring and severance costs 38 63 15 40 30 47 29 19
Asset write-downs 1 5 4 7 11 27 1 12
Settlement agreement gain (28)
Executive employment agreement charge 58
Impairment of goodwill and indefinite-lived intangibles 1,723
Terminated tender offer expenses 4
Contract termination charge 19
Siliconix transaction-related charges 4
Purchased in-process R&D 10 2
Environmental remediation 4
Gain on sale of building (5) (3)
VISHAY TODAY
2020
CAPITAL EXPENDITURES
0
50
100
150
200
250
300
350
0
50
100
150
200
250
300
350
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
MILLION USD MILLION USD
VISHAY TODAY
21
STRONG GENERATION OF FREE CASH CASH FLOWS FROM OPERATIONS LESS CAPITAL EXPENDITURES PLUS PROCEEDS FROM SALE OF PROPERTY AND EQUIPMENT
($50)
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
($50)
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
MILLIONS MILLIONS
VISHAY TODAY
22
NET CASH POSITIVE
in millions (USD)Outstanding
Debt Comments Interest
Revolving Debt (up to $450M) 240 Available through December 1, 2015 LIBOR plus 1.65%
Exchangeable Unsecured Notes 95 Due 2102 or in 91 years LIBOR
Convertible Debentures, net of discount 97
$275 M principal amount; debt discount of $178 million is amortized to the income statement as additional non-
cash interest
Cash coupon: 2.25% of principal amount;
GAAP interest expense (including
amoritzation of discount) is based on
8% of net carrying amount
TOTAL DEBT 432
CASH AND CASH EQUIVALENTS,AND SHORT TERM INVESTMENTS 1,008
as of April 2, 2011
NEW GROWTH MARKETS
23
NEW GROWTH MARKETSENERGY SAVING THROUGH HYBRID AND FULLY ELECTRIC VEHICLES
ENERGY SAVING THROUGH START/STOP TECHNOLOGY IN CARS
ALTERNATE ENERGY: WIND AND SOLAR
MARKET REQUIREMENT
VISHAY SOLUTION
New functions in hybrid cars include inverters and advanced motor control and battery management
20% CAGR for hybrids expected 2009-2012
Critical components for hybrid applications: DC-links: film capacitor
modules Inverters: IGBT modules Battery controls: shunt and
discharge resistors, MOSFETs
50% of all new cars expected to be equipped with start/stop technology by 2012
Critical components for start/stop applications: DC boost converters: power
inductors, MOSFETs, Schottkydiodes, electrolytic capacitors
B6 bridges and current sensors: MOSFETs, customized Power Metal Strip® resistors
25% CAGR for solar installations 2008-2013
Critical components for alternative energy applications: Inverters: MOSFETs, intelligent
IGBT and SCR modules, snap-in electrolytic capacitors, discharge and chopper resistors
Grid filters: AC power factor correction capacitors
Junction boxes: bypass power Schottky diodes
Power capacitors
Power Schottkyby-pass diodes Discharge
/ chopperresistors
Snap-in & screw terminalelectrolytic capacitors
Phase-leg thyristors,SCR-modules
Power Metal Strip® current sense resistors
Electrolyticboost capacitors
IHLP® inductors
High break down voltage dividers
MOSFETs, TMBS® Schottky rectifiers
High current inductors
DC-Link: film capacitor module
MOSFETs,Optocouplers
Intelligent IGBT modules:MOSFETs, TANDEM diodes, ultrafast rectifiers
MOSFETs, IHLP® inductors,TMBS® Schottkyrectifiers,TVS diodes,HV MLCCs
Battery shuntcurrent sense resistors
Source: Industry estimates, RNCOS, IC Insights, Company estimates
STOCK BUY-BACK:$275MM 2.25% CONVERT
VISHAY TODAY STOCK BUY-BACK Q1 RESULTS LOOKING AHEAD
STOCK BUY-BACK
CONVERTIBLE OFFERING SUMMARY
Offering size: $275M Security: Convertible Senior Notes Maturity: November 15, 2040 Call features: Non-call 10, Soft-call life @ 150% (Vishay can call,
after year 10, at par if VSH stock price is >150% of the conversion price)
Put features: None, except upon a fundamental change Coupon: 2.25% Conversion premium / price: 12.5%, approximately $13.88 Financial covenants: None
Offering rationale: We used low coupon, long-dated convertible debt to repurchase stock. Most of our cash is offshore, and using onshore external financing is a
more efficient means to finance the share repurchase. The convertible matures in 30 years, has no financial covenants, and
provides significant financial flexibility for us.25
STOCK BUY-BACK
FINANCIAL IMPACT OF THE CONVERTIBLE Balance sheet: GAAP requires to separately account for the liability and equity components.
At year end, the debt component of the debentures was valued at approx. $96M, and the equity component, net of deferred tax effects, was valued at approx. $113M. The resulting debt discount of approx. $179M is amortized to the income statement as additional non-cash interest expense.
Income statement: Interest will be accreted at comparable straight debt rate (8%), which includes non-cash amortization
Cash flow: Cash interest will be based on the 2.25% coupon Share count: Used $275 mm to repurchase stock concurrently with the convertible offering.
The number of shares repurchased is approximately 21.72M. Share count for EPS:
Q4 2010 share count reflects the share repurchase, weighted for the period the shares were outstanding.
Intention is to net share settle upon conversion. Even though no physical dilution occurs until conversion, for GAAP purposes, diluted shares from the convertible are added through the treasury stock method of calculation based off $275 million offering amount and $13.88 conversion price.
Q4 2010 included 0.5M and Q1 2011 3.6M shares in denominator for these debentures. Filed 8-K on May 3 noting the impact of share price on denominator for EPS
Tax: Because the convertible includes a contingent interest feature, Vishay can take tax deductions at its comparable straight debt rate (8.00%).
26
Q1 2011 FINANCIAL RESULTS
VISHAY TODAY STOCK BUY-BACK Q1 RESULTS LOOKING AHEAD
Q1 FINANCIAL INFORMATION
28
HIGHLIGHTS Q1 2011
Revenues Q1 2011 of $695 million• Up 0.9% vs. Q4 2010• Up 8.5% vs. Q1 2010
Gross Margin 30.9%
Operating Margin 17.6%
EPS Q1 of $0.49 when excluding one-time tax expense
Free Cash1 Q1 2011 $80 million
Book-to-bill for total Company at 1.01 in Q1—most markets continue to be strong
1) CASH FLOWS FROM OPERATIONS LESS CAPITAL EXPENDITURES PLUS PROCEEDS FROM SALE OF PROPERTY AND EQUIPMENT
Q1 FINANCIAL INFORMATION
29
FINANCIAL RESULTS
in millions, except per share amounts Q1 2011 Q4 2010 Q1 2010
Net revenues $695 $689 $640
Gross profit $215 $212 $167
30.9% 30.7% 26.1%
Operating income $122 $121 $65
17.6% 17.5% 10.2%
Net earnings attributable to Vishay stockholders $75 $147 $45
Share count for EPS calculation 176 181 193
EPS $0.43 $0.81 $0.24
Q1 FINANCIAL INFORMATION
30
ADJUSTED FINANCIAL RESULTS
in millions, except per share amounts Q1 2011 Q4 2010 Q1 2010
Net revenues $695 $689 $640
Gross profit $215 $212 $167
30.9% 30.7% 26.1%
Adjusted operating income $122 $121 $65
17.6% 17.5% 10.2%
Adjusted net earnings attributable to Vishay stockholders $85 $88 $45
Share count for EPS calculation 176 181 193
Adjusted EPS $0.49 $0.48 $0.24
Q1 FINANCIAL INFORMATION
31
in millions Q1 2011 Q4 2010 Q1 2010
GAAP NET EARNINGS $75 $147 $45
One-time tax expense (benefit) $10 ($59) -
ADJUSTED NET EARNINGS $85 $88 $45
RECONCILIATION OF GAAP TO ADJUSTED
Q1 FINANCIAL INFORMATION
32
BALANCE SHEET OVERVIEW
*Long term debt includes $ 95 million of exchangeable unsecured notes due in 91 years, and is net of unamortized debt discount of $178 million.
in millions Q1 2011 Q4 2010 Q1 2010
Cash and cash equivalents,and short term investments $1,008 $897 $613
Long term debt incl. current portion* $432 $432 $334
Inventories $460 $428 $435
Inventory turns** 4.4 4.4 4.2
**We define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory for this same period.
in millions
Q1 FINANCIAL INFORMATION
33
CASH FLOW OVERVIEW
in millions Q1 2011 Q4 2010 Q1 2010
Depreciation $41 $42 $45
Amortization $4 $5 $6
Cash from operations $98 $206 $68
CapEx $19 $65 $18
Free Cash* $80 $141 $50*Cash flows from operations less capital expenditures plus proceeds from sale of property and equipment
in millions Q2 2008 Q1 2009
Q1 FINANCIAL INFORMATION
34
BOOK-TO-BILL DETAIL
Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010
Book-to-bill VISHAY 1.01 0.83 1.04 1.15 1.46
Book-to-bill semiconductors 1.05 0.81 1.02 1.08 1.57
Book-to-bill passive components 0.97 0.84 1.06 1.23 1.35
Book-to-bill distribution 0.99 0.71 0.95 1.17 1.67
Book-to-bill OEMs 1.04 0.97 1.16 1.14 1.22
Book-to-bill Americas 1.00 0.76 1.09 1.17 1.30
Book-to-bill Europe 1.00 0.97 1.20 1.24 1.31
Book-to-bill Asia 1.04 0.73 0.88 1.07 1.70
Q1 FINANCIAL INFORMATION
35
OPERATIONAL METRICS
Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010
Change in ASP vs. prior year VISHAY 5.1 5.2 4.2 1.1 (1.5)
Change in ASP vs. prior year semis 4.1 5.1 5.5 2.3 (2.9)
Change in ASP vs. prior year passives 6.3 5.4 2.6 0.0 (0.0)
FX effect on sales vs. previous quarter - $12 $3 ($18) ($13)
Backlog at quarter end VISHAY $912 $881 $1,010 $988 $908
Backlog in months 3.9 3.8 4.4 4.2 4.3
Q1 FINANCIAL INFORMATION
36
Excl. Spin-Off Vishay Precision Group:VISHAY SALES AND GROSS MARGIN %
0
4
8
12
16
20
24
28
32
36
300
350
400
450
500
550
600
650
700
750
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2004 2005 2006 2007 2008 2009 2010 2011
SALES GM %
$ in millions %
Q1 FINANCIAL INFORMATION
37
VISHAY SALESBY PRODUCT SEGMENT
0
40
80
120
160
200
0
40
80
120
160
200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2004 2005 2006 2007 2008 2009 2010 2011
MOSFETs Diodes Opto Resistors Capacitors
$ in millions$ in millions
Q1 FINANCIAL INFORMATION
38
VISHAY GROSS MARGINSBY PRODUCT SEGMENTS
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2004 2005 2006 2007 2008 2009 2010 2011
MOSFETs Diodes Opto Resistors Capacitors
% %
Q1 FINANCIAL INFORMATION
39
GUIDANCE FOR Q2 2011
Revenues of $695 to $735 million at performance levels similar to Q1 2011
LOOKING AHEAD
VISHAY TODAY STOCK BUY-BACK Q1 RESULTS LOOKING AHEAD
LOOKING AHEAD
41
Broad product portfolio
Strong market position in numerous lines
Balanced geographic footprint
Right mix of sales channels
Contribution margin of 45% plus
Break-even point lowered to $1,850 million
Reliable generation of “free cash”$200 to $300 million per year
VISHAY TODAY
LOOKING AHEAD
42
By organic growth
By acquisitions
By stock buy-back
While maintaining prudent capital structure
DRIVE SHAREHOLDER VALUE
IMPROVE EPS
LOOKING AHEAD
43
Growth through innovative products
Growth through improved market penetration
Growth through leveraging broad product portfolio: “one-stop shop” service
Supported by continuously growing end markets
ORGANIC GROWTH
LOOKING AHEAD
44
GROWTH THROUGH R&D
Sales of products less than 5 years old at a level of approximately 25%
Equivalent to a contribution of approx. 5% per year to organic growth
More than offsets aging of product portfolio
LOOKING AHEAD
45
TARGETED ACQUISITION STRATEGY
Solid product portfolios complementing Vishay’s existing product lines
Board decision to limit maximum debt/EBITDA for Vishay plus target: 2.5x
Cash payback in less than 8 years
Accretive to earnings in less than 12 months
Compatible with Vishay: can be integrated and run by Vishay’s present organization
Contribution margins of over 40%
LOOKING AHEAD
46
TARGETED ACQUISITION STRATEGY
Acquisitions in passive components:
• Strengthen and broaden Vishay’s position as a specialty products supplier
Acquisitions in discrete semiconductors:
• Increase market share and exploit synergies
47
SUMMARY
Doubled earnings power during crisis
Will further improve EPS by growth
Maintaining strong financial position