Vishay Intertechnology, Inc.

Good day and thank you for standing by. Welcome to the Vache Intertechnology first quarter 2026 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, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today. Peter Henrici, head of investor relations, please go ahead.

Thank you, Kevin. Good morning and welcome to Vishay Intertechnology's first quarter 2026 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 first quarter 2026 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 refer to a slide presentation, which we also posted on ir.pichet.com. You should be aware that during 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 form 10-K and form 10-Q filing 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 and in the presentation posted on ir.cche.com, which we believe will be 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 the President and Chief Executive Officer, Joel Smichel.

Thank you, Peter. Good morning, everyone. We are excited that you have joined our Q1 earnings call to hear the further progress of Bichet 3.0. On today's call, I'll begin with a review of our first quarter revenue and business performance, and Dave will take you through a detailed review of our first quarter financial results and our guidance for the second quarter of 2026. After that, I'll update you on the strategic levers we are pulling under our five-year strategic plan, and then we'll open it up for questions. For the first quarter, we are reporting revenue of $839 million above our guidance range of 800 to 830 million, 4.8% higher than the fourth quarter, excuse me, and 17.3% higher than last year's first quarter. Revenue is growing across the board in all of our end markets, in all of our channels, and in all three regions. Increased consumption, Inventory replenishment and Vichet market share gain drove a 5.8% increase in volume with gains in both semis and passives. Many customer programs in multiple end markets have now started to ramp while demand for AI-related applications remains strong. Industrial demand is accelerating. Order growth momentum was also broad-based, covering all regions, all channels, and in each of our technologies and in all end markets. Clearly the Bechet 3.0 transformation and our growth strategy is working. The growth initiatives that began three years ago are paying off. To expand capacity of high growth, high margin product lines, we put heavy CapEx investment in place and added subcontractors for many technologies to increase our manufacturing flexibility and also to add part numbers to our product portfolio in semiconductors and passives. To move more closer to the customer, to listen to their product technology needs and their growth direction for Boucher to scale with them and to gain market share. To become a more technically supporting supplier with increased FAE involvement for design support and also to offer Boucher reference designs and solutions. Total company book-to-bill at quarter-end was 1.34, up from 1.2 at quarter-end. For semis, book-to-bill was 1.47, and for passives, it was 1.23. As a result, backlog increased 21% to $1.6 billion at quarter-end, or 5.7 months. Customers are beginning to proactively place orders based on longer visibility. Some one-year forecasts for Bechet to scale with them. We're also seeing customers building safety stock, like in Asia for AI-related applications, as well as in all regions for automotive and industrial demand. Having positioned Bechet 3.0 to be a reliable supplier to more customers, to be a supplier with expanded capacity ready to scale with them, we intend to live up to our commitment of being a leading growth supplier. For this reason, we are intently focused on turning the backlog faster so that we participate in the market upcycle much more substantially and aggressively than in the past, while also maintaining competitive lead times. We have no intention of backsliding to the business approach of Bichet 2.0. Historically, at this point in the business upcycle, much of Bichet 2.0 capacity would have been sold out on allocation and with lead times longer than one year and because it took too long to fulfill orders Bichet missed repeat opportunities and we were no longer a reliable supplier to the customers today as the market up cycle takes hold we are increasing quarter revenue at a steeper rate to drive margin improvement and realize enhanced returns on our capital investment. Today, OEMs and Tier 1s are collaborating with Vichy on technology roadmaps and forward demand planning and giving us the opportunity to scale with them. Previously inactive and underserved automotive and industrial customers are placing orders with us, following our efforts to reconnect with them. So now let's turn to a review of the Q1 revenue, starting with Revenue by end market on slide three. Automotive revenue increased 2.7% quarter over quarter, mostly reflecting solid OEM demand in the Americas and Europe as customers continue to increase electronic content and start hybrid and EV programs. In Asia, revenue was weighed down a bit by Lunar New Year, and also customers had started to increase production in the second half of last year to get ahead of the US tariffs. Order intake increased due to our Vishay 3.0 business approach to support the production ramp up of new vehicle programs in Europe and China, and to be responsive to customer concerns about industry leading lead time. We're seeing a lot of success from our efforts to position Vishay with automotive OEMs and tier one. For example, Bechet is now the top supplier of resistors to multiple OEMs launching new EV platforms, and we are committed to supplying these customers as they step up production each year through the planned peak in 2028. Design activity continue to focus on drive trains for hybrid EV and ICE vehicles, ADAS, battery management, and electronic power steering systems, also smart cockpits. Industrial power revenue increased by 6.5% for the fifth consecutive quarter of sequential gains. Demand continued to grow primarily for electrical power transmission and power management, renewable energy and smart metering, factory automation, and security systems. In the Americas, customers are ramping up production for new projects, supporting AI infrastructure. And in Europe and China, we continue to supply smart grid programs. Bookings were up sharply in the Americas and Europe due to greater consumption and due to lower inventories, while customers increased efforts to establish supply assurance. In Europe, orders were exceptionally strong from smart grid customers for capacitors, and we won two new grid development projects in the UK. Design activity remained focused on power, power transmission, power management, power supplies for industrial servers, next-generation AI power supplies, power monitoring and control systems, high-voltage energy infrastructure, energy storage, and also smart meters. We're also working on designs for 800-volt power management for data centers and other applications. Aerospace defense revenue increased 14.1% versus Q4 and 16.8% versus last year's Q1, on strong demand from the U.S. government with spending approved to replenish munitions programs and with production ramping up in allied countries in Asia. With funding now available, U.S. defense contractors have just began to increase orders to support their higher demand, in particular for resistors, capacitors, and custom magnetics. Book to build in the Americas at quarter end was 1.4 and has continued to build in Q2. Design activity and the first production ramp-ups are beginning to drive an increase in orders from Europe and continued order intake in Asia. As countries expand defense budgets and as new multi-year programs start this year, we see a long run to drive growth in this end market. On the design front, We are focused on US Department of Defense programs involving drones, low Earth orbit satellites, radar systems, next generation communications, and hypersonic missiles. Healthcare sales increased 4.5% quarter over quarter and 11.1% year over year on demand from longstanding customers, particularly the Americas. We are continuing to see success from our efforts to leverage the breadth of our portfolio cross-selling semis and passives to these customers. Much of the design work here during the quarter remained around wearables, patient monitoring and implantables, such as cardioverter defibrillators and microimplantables for glucose and temperature monitoring. In the other category, which includes telecom, computing, and consumer, revenue overall was flat versus Q4. but up 25.8% versus last year's Q1. Demand in China for AI-related applications was flat, reflecting the impact of the Lunar New Year and some shipments that were pulled in into Q4. However, we did continue to receive orders for quick delivery in Asia, mainly for high-voltage MOSFETs used in AI power applications. Customers are continuing to add our passive technologies in AI power management solutions, including polymer capacitors, power inductors, and current sense resistors. We keep sharpening our design components while continuing to work on the next generation design opportunities in the areas of server power, optical communication modules, and in high bandwidth network switches. With the Vishay 3.0 expanded capacity, we are seeing demand from telecom and consumer customers, which Vishay did not historically support in volume. For example, in the Americas, we are seeing increasing activity from telecom customers supporting AI optical communication network switches, both 800 gigabits and 1.6 terabits. In Europe, telecom sales increased 33%. with customers forecasting higher demand for 2026 versus 2025. Demand is also tied to 5G expansion, and we're starting to receive requests for components for 6G networks. Let's turn to slide four for review of Q1 revenue by channel. OEM revenue increased 7.1% and 14.4% over Q1 last year. Strong shipments to large automotive, medical, aerospace defense customers were the primary drivers of this increase, along with some high demand from industrial OEMs in Europe. Sales from OEMs in China declined due to the impact of Lunar New Year and shipments again that were pulled into Q4. EMS sales grew 14% versus Q4 and 21.6% versus Q1 last year. This increase demonstrates the success of our strategy to leverage our expanded capacity to maintain competitive lead times and reliable supply. Then we can enjoy demand momentum from more aerospace defense and industrial and customer business. EMS is now the fastest growing channel in Europe and booked a bill in the Americas through 1.45 at quarter end. Sales to distribution were up 2.2% on volume gains in each region, while up 18.9% year over year. Distribution is seeing higher consumption from industrial, transportation, and aerospace defense customers. They also see inventory replenishment by some of their end customers. The pace of bookings growth picked up in the Americas and Europe. In Asia, distributors are increasing backlogs. in anticipation of further demand growth, lead time extensions, especially for AI-related products. Distribution inventory overall decreased to 20 weeks at quarter end from 22 weeks, and POS increased 10.7% and 24.9% versus Q1 last year, with growth in each region. You may recall over the last two years, we were deliberately increasing our SKU count and inventory levels at the distributors, resulting in an increase in inventory to our target of 26 weeks in Q1 of 2025. This inventory has supported strong demand, led by Europe, with some customers now replenishing inventories as business conditions improve. The Americas saw a sharp increase in POS as consumption increased in industrial, automotive, aerospace defense, and medical segments. In Asia, POS increased for industrial power and strong demand for AI products. Customers are increasingly turning to distribution for supply assurance and to meet short-term needs. Turning to our geographical mix on slide five, Europe led revenue growth for the quarter, increasing 15.3%, and the Americas grew 8.6% due to significant aerospace defense demand for capacitors, in addition to strengthening industrial demand. In Asia, revenue fell 4.9%, primarily during the impact of Lunar New Year, offset in part by strong AI product demand. Before turning the call over to Dave, I'd like to thank the Bechet employees for their hard work to achieve the quarter's strong results and for their commitment to driving revenue and profitable growth as the industry's recovery continues to gain momentum. Bechet 3.0 has firmly taken hold across the organization and with our external reps. Everyone is aligned with our new business approach and energized to increase customer engagement Dave, I'll now pass it over to you.