Vishay Intertechnology, Inc.

Good day and thank you for standing by. Welcome to the Vichay Intertechnology quarter two 2025 earnings 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 your session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to the first speaker today, Peter Henrinci, Investor Relations. Peter, go ahead.

Thank you, Amber. Good morning and welcome to Vichay Intertechnology second quarter 2025 earnings conference call. I'm joined today by Joel Smekow, our president and chief executive officer and by Dave McConnell, our chief financial officer. This morning, we reported results for our second quarter. A copy of our earnings treaty is available in the Investor Relations section of our website at .Vichay.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 by replay on our website. During the call, we will be referring to a slide presentation, which we also posted at .Vichay.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 release and Vichay's form 10K and form 10Q filing with the Securities and Exchange Commission. We are including information in our press release and on the 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 .Vichay.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 Smacov.

Thank you, Peter. Good morning, everyone. Thank you for joining our second quarter 2025 conference call. I'll start my remarks with a review of the second quarter performance and business condition, and then turn the call over to Dave, who will take you through a review of the second quarter financial results and our guidance for the third quarter of 2025. After that, I'll update you on the strategic levers we are pulling under Vichay 3.0 as we continue to execute our five-year strategic plan, and then we'll be happy to answer any of your questions. For the second quarter, revenue grew sequentially 7% to $762 million in line with our guidance. We generated revenue growth for both semis and passives, growth in all of our end markets, growth in the distribution and EMS channels, and growth in all regions. The promising signals we saw emerging in the fourth quarter have become more firm. The inventory correction cycle is principally behind us. Industry inventory levels have normalized for passives, while there is still some excess industry inventory in semis. Solid order intake during the second quarter reflected continued demand momentum in smart grid infrastructure projects and AI power application. Overall, -to-bill was positive at 1.02, with semis slipping slightly due to some customer program adjustments and passives continuing to trend upward. July -to-bill for semis has bounced back to 1.07. Our decision to invest heavily in capacity expansion between 2023 and 2028 under Vichay 3.0 is positioning us well. Over the past two and a half years, we have invested approximately $775 million to add capacity for high growth, higher profit products. I am pleased to state that today, we have the incremental capacity for nearly all products to capture the early stage of this market upturn, assuring our customers of reliable volume as they scale, and to satisfy the quick turn demand we're seeing in AI, and generally across all end markets. We have also been aggressively working growth initiatives to strengthen customer relationships, re-engage with previously underserved and inactive customers, and develop new customers. Through innovation and subcontractor engagements, our portfolio has expanded to best serve our customers' demand and to more fully leverage the breadth of technologies in our portfolio. We create design opportunities that increase our print position of customers, targeting our 80% of the bill of materials in power application. We also work to advance our silicon carbide strategy. As a result, we have positioned Vichay quite well to support the emerging market upcycle, as well as to reinforce our presence to participate in the mega trends of e-mobility and sustainability over time. Let's now turn to slide three for review by end markets. Automotive revenue increased 4% versus the quarter as demand from tier one customers improved on a modest increase in consignment polls in the Americas and the launch of new ADAS programs in Europe and higher volumes in Asia. Consignment polls from European customers were mixed, with some of them pulling at normal rates, some at higher rates, and some adjusting their forecast. Order and take grew in all regions over the course of the quarter. Automotive electrification continues to be a major focus of design activity in the second quarter for battery electric vehicles and hybrid powertrains. Along with smart cockpits, ADAS programs, traction inverters, and onboard chargers. ICE powertrain designs, those activities do still continue. Revenue from the industrial segment increased 9% from the first quarter. The normalization of customer and channel inventories helped this segment turn to more of a forward-looking demand planning approach. Also, industrial is being driven by strengthening demand for smart grid infrastructure, multi-year projects in all regions. Higher power requirements to support AI chip production and data center projects as AI adoption continues to fuel electricity requirements. For example, we received multiple large orders for the high voltage DC power transmission programs during this quarter. We expect to win additional smart grid projects as customers address electricity demands in AI data centers. Excuse me. In the Americas, orders steadily increased over the quarter with lead times in the eight to 12 week range, giving us a higher percentage of turns business we haven't seen for many quarters. In Europe, order intake for smart grid infrastructure projects more than doubled. In Asia, governments in China and India are also accelerating smart grid infrastructure spending. In parallel, demand for factory automation projects and other industrial applications remains flat in the Americas and Europe as companies are slow to invest in capital projects. New design activity remained focused on energy storage, energy conversion, high voltage DC smart grid infrastructure, uninterruptible power supplies, and next generation AI power structures. In aerospace defense, revenue increased 5% quarter over quarter on improved demand for military applications where while commercial aerospace declined due to ongoing mechanical parts supply issues in the US, the US and Europe. Book to bill stayed above one in the Americas with orders improving throughout the quarter, including orders for applications related to low earth orbit satellites. At one customer, we are supplying over 30% of the bill of materials. Distributors in Europe also report a book to bill rates above one for aerospace defense. Design activity remained focused on Department of Defense communication programs and low earth orbit satellite constellations, next generation warfare programs, including drones and missiles. In the medical end markets, revenue grew 4% reflecting stronger demanded implantables and measurement equipment. In the Americas, we are seeing the increase and success of our strategy to cross sell all the shade technologies to customers who have purchased only one or two products from us in the past years. Design activity remained focused on a variety of applications, including defibrillators, surgical assistant systems, drug delivery, diagnostic equipment for patient monitoring and hearing aid implants. Revenue from the other segments, including computer, consumer and telecom end markets was up 9% for the sixth consecutive quarter of sequential growth on escalating demand related to AI servers and server power in Asia. Consistent with the past two quarters, AI remained a quick turns business with Asia CMs frequently placing spot orders. Order intake increased anywhere between 20 to 30%, depending on the country. The main areas of design activity for computing and AI applications continue to be around power management. We continue to design in a greater percentage of components on the board, expanding our bill of material position to both semis and passives, which fits our profitability and capability to support over 80% of the components needed in a power application. In addition, we expanded the AI customer base and continued design activity with AI optical modules and graphics cards. Let's move on to slide four. Moving on to the revenue by channel from the second quarter, you can see that distribution revenue grew again quarter over quarter and was the strongest contributor to total revenue growth for the quarter. OEM revenue was essentially flat compared to the first quarter with volume up in all regions, including a recovery in Asia following a seasonal soft first quarter offset by a bit lower ASPs. Order intake by industrial OEMs in each region remain positive as we move past the inventory correction cycle and see increased demand for industrial power supplies and improve order intake from automotive customers. EMS revenue increased 13% versus the first quarter on increased AI and industrial demand and many short-term orders in Asia related to customers who wanted to ship during the tariff pause. In Europe, some regional EMS work to right size their inventory levels, which they hold for aerospace and defense customers. This is expected to clear by year end. Distribution revenue grew 11%. This reflects the success of our SKU count expansion to sell more Bechet products by having them on the shelf, which intensifies customer engagement. Our total distributor inventory reached 27 weeks at the end of Q4 and has been reduced now to 23 weeks for the second quarter as more Bechet part numbers are being consumed at faster rates. POS increased in each region and worldwide 9%. In the Americas, POS was at the highest level since the second quarter of 2023 as end customer demand recovers due to new program launches, expanded backlogs and normalized inventory levels. POA worldwide grew at a faster rate on continued turns business in each region following a 4% sequential increase in the first quarter. Turning to slide five, in terms of the geographical mix, revenue grew in each region led by Asia, which increased 12% on a rebound from the seasonally soft first quarter on strong volume associated with AI power requirements, smart grid infrastructure projects and also automotive. In the Americas, improved automotive and industrial man resulted in a 7% increase. Europe was essentially flat after having fewer workdays in Q2 and some inventory overcorrections. Before turning the call over to Dave, I'd like to thank the Bechet employees for their hard work and contributions to transforming Bechet to 3.0. Our level of service has improved. Bechet employees put the customer first every day and embrace a business-minded approach in all that they do. Their continued commitment to advancing the business towards the long-term strategy and financial goals is recognized and appreciated. I'll now turn the call over to Dave where he will review the financial results of Q2. Thank you, Joe.