Vishay Intertechnology, Inc.

Good day and thank you for standing by. Welcome to the Vishay Intertechnology Q3 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Peter Henrici, Investor Relations.

Thank you, Josh. Good morning and welcome to Vishay Intertechnology's third quarter 2023 earnings conference call. I am joined today by Joel Smekal, our President and Chief Executive Officer, and by Laurie Lipkeman, our Chief Financial Officer. This morning, we reported results for our third quarter. A copy of our earnings release is available in the Investor Relations section of our website at ir.vichet.com. This call is being broadcast live over the web and can be accessed through our website. In addition, today's call is being recorded and will be available via replay on our website. During the call, we will be referring to a slide presentation, which we also posted at irvichet.com. 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 discussion of factors that could cause results to differ, please see today's press Viches, Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. We are including information in our press release and on this conference call on various gap and non-gap measures. We have included a full gap to non-gap reconciliation in our press release as well as in the presentation posted on ir.viches.com. which we believe you will find useful when comparing our GAAP and non-GAAP results. 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. Now, I turn the call over to President and Chief Executive Officer Joel Smeka. Thank you, Peter.

Good morning, everyone. I'll start my remarks on slide three with a review of the demand trends for the third quarter, and then Lori will take you through the highlights of our financial results. After that, I'll come back to give you a progress report on the near-term initiatives we're implementing to improve all customer-facing aspects of our business as we set the stage for faster top-line growth and margin expansion. then we'd be happy to answer any of your questions. Today for the third quarter, we are reporting revenue of $853.7 million, which is within our guidance range of $840 million to $880 million. As expected, revenue declined both quarter over quarter and year over year due to inventory adjustments by our distribution and EMS partners in response to softened demand, among industrial customers and also our contracting lead times. Looking at our revenue mix, first by end market, automotive, which accounted for 37% of total revenue, was 2% higher than the second quarter and grew 10% versus the third quarter last year. Our sales supporting the further electronic content of internal combustion engine vehicles continues to be strong. Design activities related to increasing electronic content in EVs, hybrids, and internal combustion engines are accelerating. Industrial, representing 35% of total revenue, declined 9% versus the second quarter and 18% from last year. Macroeconomic uncertainties and higher interest rates curb demand in all regions, And in China, the economic recovery has yet to find solid footing. As a result, channel and end customer inventories are at a higher level, which will take longer to burn off. Nevertheless, design activity in the areas of industrial automation, smart grid infrastructure, EV charging infrastructure, among other applications, has not slowed down. In addition, a shipment of our largest capacitors to support an electrical grid project was pushed out to the fourth quarter. In aerospace and defense, revenue was slightly below the second quarter, but grew 19% versus the third quarter last year on continued strong demand from commercial aviation and from weapons system contractors in the US and Europe. Defense orders have been increasing at a faster rate now since the war in Israel began last month. Revenue from medical customers came in 14% below second quarter and 2% below the third quarter last year due to the timing of orders and product mix. Here we build the customer forecasted demand and have increased our inventories based on strong demand signals from our medical diagnostic equipment and implantable devices customers. However, toward the end of the quarter, some shipments were held up as customers faced supply chain issues. Weekly polls now have resumed in Q4. Consistent with weak demand trends during the first half of the year, revenue from the other end market segments declined 5% versus the second quarter and 26% versus last year, mostly on volume declines. In terms of channel sales, increases in OEM revenue both quarter over quarter and year over year were overshadowed by the declines in distribution sales and to a lesser extent declines in EMS sales. During the quarter, distribution revenue fell 10% compared to the second quarter and was 18% lower than the third quarter last year as a result of both inventory adjustments and pauses in buying through the channel, primarily by industrial and EMS accounts. Distribution inventory at quarter end was 24 weeks versus 21 weeks last quarter, with increases in all regions, more so in the Americas. During the quarter, we intentionally increased distribution inventory as part of our strategy to expand our participation in this higher margin channel. I'll come back to this topic after Lori reviews our third quarter results. POS decreased 7%, reflecting weakened industrial demand in all regions. OEM revenue grew 4% quarter over quarter and 11% year over year, driven by strength in demand from automotive customers in each region. EMS revenue declined 6% quarter-over-quarter and 14% year-over-year, reflecting inventory adjustments by EMS customers, as lead times are now mostly inside of 10 weeks, and demand from their customers softened in all regions. Before turning the call over to Lori for a review of our financial results, I want to comment on the situation in Israel. As you likely know, Vishay has three manufacturing locations and one office in Israel and 2,400 employees. In the face of daily challenges and the emotional toll from the October 7 attacks, each of the sites continues to operate normally and ships parts without interruption. In fact, for over 50 years, Vishay has shipped product from Israel to all regions of the world without interruption. We're in communication with those customers who have expressed concern about our ability to deliver products from Israel. Since Bichet is classified as an essential business in Israel, we're able to operate with a high attendance, typically greater than 90%. I have the utmost admiration for our employees in Israel, for their fortitude, and their resilience, we are extremely grateful for their steadfast dedication in this difficult time. Globally as well, I would like to thank all of our employees for their continued contribution to transforming Bechet into a business-minded organization focused on driving growth and margin expansion and putting the customer first. We'll now go to Laurie for the financial results.