Vishay Intertechnology, Inc.

Good day, and thank you for standing by. Welcome to the Vishay Intertechnology Quarter 3 2025 Earnings Call. At this time, all participants are in listen mode only. 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 automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would like to now hand the conference over to our first speaker, Mr. Peter. Please go ahead.

Thank you, Raven. Good morning and welcome to Vishay Intertechnology's third quarter 2025 earnings conference 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 third quarter. A copy of our earnings release is available in the Investor Relations section of our website at ir.bichet.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.bichet.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 Richer'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 GAAP and non-GAAP measures. We have included a full GAAP to non-GAAP reconciliation in our press release, as well as in the presentation posted on ir.cche.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 Smacall.

Joel Smacall Thank you, Peter. Good morning, everyone. Thank you for joining our third quarter 2025 conference call. I'll start my remarks with a review of the third quarter performance and business condition, and then turn the call over to Dave, who will take you through a review of the third quarter financial results and our guidance for the fourth quarter of 2025. After that, I'll update you on the strategic levers we are pulling under Bichet 3.0 as we continue to execute on our five-year strategic plan, and then we'll be happy to answer any of your questions. For the third quarter, revenue grew sequentially 4% to $791 million, 2% above the midpoint of our guidance. Many market segments were up over Q2. Automotive, industrial, computer, and medical were positive. Asia achieved the greatest growth, notably from automotive customers and sales to distributors supporting computing and industrial. Our sales to Asia distribution was positive in Q3 because of a large number of orders placed in Q2 to get ahead of the tariffs. Boucher book to bill in the quarter was slightly below parity. Orders from OEMs were up in all region. Orders from EMS were positive over Q2. Distribution orders in the Americas and Europe were positive above Q2. while Asia distribution orders were lower following the higher order amount in Q2, which was mentioned previously. Both semi and passive book to bill was slightly below one. Book to bill for October is at a run rate of 1.15. Our backlog continues to build at a gradual pace as it has since the beginning of the year. Orders are up 19% year over year. indicating that conditions are improving in automotive, smart grid infrastructure, aerospace defense, and AI-related power requirements. However, a very large portion of these orders are still placed with short-term delivery requests. Turns business, expedites, pull-ins, they all continue in nearly all markets as customers for the most part are still not planning ahead. In Asia, the percentage of short-term delivery orders continues over 50%. This seems to be the new normal for our business at the moment. Our decision three years ago to invest heavily in incremental capacity has positioned Bechet to satisfy nearly all of these quick-turn delivery requests without having to choose one customer over another. Today, Bechet is demonstrating to customers that we can reliably satisfy quick turn demand while still maintaining competitive lead times. At the same time, we remain well positioned to capture the early stages of upturns in market demand and supplying customers as they scale. We are now serving the channels of distribution, OEM and EMS more reliably. Let's turn to a review of the revenue, which is by end market on slide three. Automotive revenue increased 7% versus the second quarter on higher volume in the Americas and Europe. We mentioned in the Q2 call that we saw automotive positive in the second half of 2025. Tier 1 customers increased their pull rates, and we've increased our engagements with more automotive OEMs in Tier 1 now that we have capacity. Automotive customers have audited our UK and Mexico sites, where we have now gained more site approvals. We work closely now with the OEMs in Tier 1 to further approve our product PCN. Our design activities continue in all automotive powertrain, ICE, hybrid, and battery electric vehicle. Increasing our revenue in all automotive applications is our focus as electronic content increases, particularly in traction inverters, ADAS features, safety and smart cockpit application, and electronic braking and power steering. Revenue from the industrial segment increased 2% for the second quarter, driven heavily by our shipment of capacitors to smart grid infrastructure projects for programs led by Europe and China OEM. Q3 seasonality slowed bookings a bit in the Americas and Europe. The industrial market is showing some improvement. There continues to be a pickup and replenishment orders in the channel now that inventories are mostly consumed. As reported each quarter, we see the orders for our high voltage DC power capacitor as an early indicator of the improving industrial business. We continue to win large orders for customers in Europe, Asia, and India, for high voltage DC power transmission to be delivered in 2025. Demand for industrial power management customers will be next to increase as the smart grid transmission lines are put in place. Growing opportunities for Bechet are industrial power for electricity to AI data centers, automotive hybrid EV for power management requirements as well for the AI chip production sites. Our design activity is focused largely on AI power structures and grid improvements, as the build of data centers is driving demand for control systems, which monitor backup power and cooling. Along with power supplies and power distribution management, we also work on designs for industrial automation, robotic platforms, energy storage, and smart meters. In aerospace defense, revenue decreased 2% quarter over quarter as the U.S. Department of Defense was slow to release funding for major programs. Now in this quarter, orders are beginning to pick up with the release of funding to large military contractors and the replenishment of the distribution channel inventory to support defense business. The majority of designs in the US and Europe remain focused on new and legacy weapon systems, communication systems, drones, commercial aerospace and satellite programming. In the medical market segment, revenue grew 2% on increased activity by some of our larger longstanding customers and in support of new programs and increased activity for existing programs in cardiovascular, pacemakers and defibrillators, medical surgical, surgical tools, patient monitoring, and respiratory care, neuroscience for chronic pain and movement disorders, and cochlear hearing applications. Ongoing demand for these applications also drove order growth. Our design activities remain focused on all medical products and applications. Our strategy to cross-sell all Bechet technologies to existing medical customers continues to progress positively. As an example, we have designed in and qualified to supply additional passives for a new project at a long-standing medical customer. This will start in 2026. We're continuing to develop opportunities to sell across our portfolio with this customer and others. Revenue from the other market segment, including computing, consumer, and telecom end markets was up 4% quarter over quarter, reflecting ongoing demand for AI servers and server power. Asia is where these transactions take place. We see increased order flow as new AI server power projects move into production. We continued in the third quarter to increase our customer count and are now supplying more AI customers. At the same time, in addition to MOSFETs and ICs, we design and supply customers with diodes, capacitors, inductors, and resistors to expand our overall part counts. We continue to win qualifications with polymer tantalum, also for magnetics, and current sense resistors. Design activity remains focused on power conversion and power management, including multi-phase DC to DC converters, ultra-low DC resistance inductors, polymer tantalum capacitors for the GPU chipset power, and also AI optical modules. Next generation data centers are requiring higher input voltages in order to deliver more power to each rack with less power loss. These are further opportunities for Bichet's products. Let's move to slide four for revenue by channel. OEM revenue grew 6% quarter over quarter, driven primarily by increased volume with automotive and industrial accounts, plus shipments for smart grid infrastructure projects in Europe and Asia. Order intake increased in all regions during the quarter and is back to levels last seen in 2022. Sales to the EMS channel fell 7%, with reductions in all regions, reflecting mix. Order intake for EMS increased from the second quarter, also reaching the highest level we've seen in three years. As a result, our new investment in incremental capacity, we are in a much improved position to participate in the EMS channel business. We can reliably satisfy increasing demand from EMS customers that are operating in a short-term visibility. We are supplying aerospace, defense projects, automotive, industrial, and AI-related program. Distribution revenue increased 4% with nearly all of the Q3 growth coming from Asia, while Europe and the Americas were more seasonal. AI servers, industrial, and smart grid infrastructure projects supported the Asia increase. Our intake grew in all regions to prepare backlogs as end customers' inventory further normalized. In the Americas, order intake increased significantly, driven primarily by demand from aerospace defense customers. Distribution inventory was flat compared to Q2, while inventory overall is holding steady at 23 weeks. Both POS and POA remain stable in each region. Based on data from our customers, we can see that our initiative to gain share with distributors is working. We continue to add part number SKUs throughout the channel, recently including many new release inductor products, placing more part numbers on the distributor shelves as we deepen engagement with them and position Bechet for further share gains. Turning to slide five in terms of geographical mix, revenue growth for this quarter came predominantly from Asia with a 7% increase in sales. America's revenue was up slightly and Europe was essentially flat due to the seasonal impacts, mostly in August. Before turning the call over to Dave, I'd like to thank the Bechet employees for their hard work and for their continued commitment to Bechet's strategic and financial goals. They put the customer first every day. They embrace a business-minded approach to help the customers when looking for support. In the current climate, they may be asked by a customer to expedite a Boucher delivery or to help prevent a line down due to shortages from another supplier. We work hard to step in and help the customer. Our sales, business development, marketing, operations, and corporate colleagues do everything they can to show Bichet customers that Bichet 3.0 is a transforming company, creating opportunities to satisfy new customers while re-engaging previously underserved customers. Thank you to all the Bichet employees and our reps to show Bichet is a reliable supplier. I'll now turn the call over to Dave for a review of the third quarter financial results. Thank you, Joel. Good morning, everyone.