Vishay Intertechnology, Inc.

Good morning, and thank you for standing by. Welcome to VCA and Search Technology first quarter 2024 earnings conference call. At this time, all participants are on the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host. Peter Hennessy, Head of Investor Relations. Please go ahead.

Thank you, Livia. Good morning and welcome to Vishay Intertechnology's first quarter 2024 earnings call. I am joined today by Joel Smekal, our President and Chief Executive Officer, and by Dave McConnell, our Chief Financial Officer. This morning we reported results for our first 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 ir.fiche.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 a discussion of factors that could cause results to differ, please see today's press release and Fichet's 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.fiche.com, which we believe you will find useful when comparing our gap and non-gap results. We use non-gap measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with gap measures. Now, I turn the call over to President and Chief Executive Officer Joel Smekoff.

Thank you, Peter. Good morning, everyone. Thank you for joining our first quarter 2024 earnings call. I'll start my remarks on slide three with a review of the demand trends for the first quarter by end market, channel, and region. Then Dave will take us through the highlights of our financial results. and guidance for the second quarter of 2024 after that i'll wrap up with a review of our initiatives and goals for 2024 and then we'll be happy to answer any of your questions for the first quarter we are reporting revenue of 746.3 million dollars slightly above the midpoint of our guidance range 715 million to 775 million dollars the inventory digestion that began to impact our demand last quarter, extended into the first quarter, and our revenue fell 5% sequentially. A greater proportion of this oversupply inventory is for semiconductor products compared to passives. However, as I mentioned last February, we expect some end markets to improve sooner, notably aerospace and defense. And that is in fact what happened with growth both year over year and quarter over quarter. Let's now look in more detail at the revenue by market segment on the left side of slide three. Automotive, which is still the largest contributor of total revenue, declined slightly by 0.7% and also due to the beginning of a new annual contracts with OEMs and Tier 1s that went into effect on January 1. Demand from EV programs weakened in most regions, while orders for hybrids and internal combustion engines are steady to increasing. Regardless of our customers' powertrain mix, Bechet is well-positioned to supply their needs. Compared to the first quarter of last year, our automotive revenue was up 1%. Design activity and design wins in automotive continued to increase and remained focused on ADAS and e-mobility, including battery management systems, traction inverters, and onboard chargers. While current and near-term demand for EV has somewhat moderated, automotive OEMs and Tier 1s are engaging with us more closely for design and technology capability discussions for their next-generation EV projects. We have an 8% increase year over year in new design engagements with OEMs plus multiple silicon carbide design discussions with potential new OEMs. Revenue from industrial customers, our second largest revenue contributor, declined 6.2% from the fourth quarter and 23.9% versus last year's first quarter, also due to continued inventory digestion, primarily in semiconductors. Demand remained weak in Asia, influenced by the ongoing economic uncertainties in China. Europe and the Americas remain sluggish. Customers continue to digest inventory. Although revenue was soft in the quarter, we saw improvement in infrastructure projects and renewable projects where Bechet has high passive component count and some sole source positions. It should be noted in the first quarter We received a sizable order from a European industrial customer for the grid. The order in the first quarter for one of our large capacitors was $77 million. This is a multi-year program with this customer. The commitment at this point is $145 million. The project will support their demands 2024 through 2027. and they do offer some upside. Design activity for industrial customers continues to be strong, growing 22% over the first quarter last year, with smart grid infrastructure redesign and industrial automation remaining as the major focus for our customers in all regions across, along with the renewable energy generation and energy storage. In aerospace and defense, our revenue and increased 13.6% versus the fourth quarter and 34.2% versus last year. Continued strong demand in commercial aviation and from weapons system contractors in the Americas and Europe where munitions are being replenished and production of new weapons systems and communication systems is ramping up. Bichet's presence on the United States Department of Defense qualified parts list puts us in an excellent position for continued growth in this market as OEM and EMS companies require those products for their military qualified builds. With a book to build greater than one at quarter end and customers placing expedited delivery requests, we expect demand in this market segment to strengthen throughout 2024. Revenue for medical customers decreased 4.3% compared to the fourth quarter. and 18.3% compared to last year as demand returns to more normalized levels. Design activity remains strong in the areas of remote monitoring equipment and implantable devices. Revenue from our other market segments, computing, telecom, and consumer declined both sequentially and year over year by 21.9% and 40.5% respectively. reflecting ongoing semiconductor inventory digestion and some pricing pressure. While telecom and consumer remain soft, computing improved in Asia on demand for AI servers and notebooks as the next computer upgrade cycle begins. Design activity in computing is up 21% year over year, driven by demand for AI servers targeting the high-speed data transmission. accelerator cards, power management systems, and also for standard data center servers. Turning to our channel sales, OEM revenue declined 6% compared to the fourth quarter and was 7.8% lower than last year's first quarter. First quarter demand, like the fourth quarter, saw some automotive and industrial OEMs further digesting inventory. and new pricing came into effect on annual contract customers. Customers are indicating that they have inventory to consume for some products, and short lead times reduce their need to place long-term orders. EMS revenue increased 2.1% sequentially and declined 16.5% year over year, as those EMS customers serving aerospace and defense and automotive markets saw increases. while for some customers the need to replenish inventory is low, given manageable lead times in all regions. Distribution revenue for the first quarter fell 4.9% from the fourth quarter and was 18.8% below last year, as customers in all regions continue to digest semiconductor inventory. Distribution inventory worldwide was flat quarter over quarter at 26 weeks. POS worldwide was also flat. However, this flat POS worldwide masked the 3.9% increase in the Americas, reflecting strong sell-through of passives to aerospace and defense customers. Based on input from our customers, we still expect the inventory correction to extend through the second quarter, with a recovery in the second half of the year led by passives. The bill for the passive lines is moving into the positive territory, most prominently those serving aerospace defense, and markets. Bookings are also improving in some industrial and markets and computing. Semiconductor book bill continues to lag passives, and the recovery is likely to extend into the third quarter. Finally, during the quarter, we continue to advance our initiative to deepen engagement with our distributors now and that our capacity expansions will allow us to reliably supply their needs in all market cycles. Our business unit leaders have traveled to the distributors. Some were initial meetings. Others were follow-up meetings to strengthen and improve Vishay's position on the distributor's shelves by adding SKUs. All meetings are enlightening and come with many action items. Before turning the call to Dave, I want to express my deep appreciation to all employees of Vishay. for their continued excitement and enthusiasm to embrace the changes taking place at our company, and for their commitment to turning our future potential into a reality, and for collectively creating the Boucher 3.0. And now I'll turn the call over to Dave for a review of our financials. Thank you, Joel.