Vishay Intertechnology, Inc. (NYSE:VSH) Q1 2024 Earnings Call Transcript

will be some increase in the SG&A expense, but I think the value of the engagement with the customer and driving their projects forward is going to pay off for us. These opportunities, which previously did not have. And I think the customer highlights this quite clearly, Vishay because you’re investing to scale. You’re investing to scale now. We see it beneficial closer together. Can be there when the volume production increases, then you can support it.

Operator: And our next question coming from the line of Joshua Buchalter with TD Cowen.

Joshua Buchalter: Let me echo the welcome to Dave to the earnings call fun. Could you maybe provide some guidance on how long or the shape of the Newport gross margin headwinds? And is there sort of a revenue level that we need to get to, to have that start to abate? Or is it sort of fixed from here because of the foundry arrangement at least over the next couple of years? .

Joel Smejkal: I could start off with it and then Dave can echo. We have now a fab, which is partially full. And when I say it’s partially full, the previous owner is exiting their volume that they committed to us will be declining quarter-on-quarter. The volume in the second quarter is in place, and we’re building towards that. We start to see their volumes diminishing in Q3 and Q4. This is going to impact the margins as we see lower production volumes and in parallel, we’re expediting our technology transfers, which we mentioned will start to be qualified in Q4. And and then production will begin in the first half of 2025. So we’re trying to offset an exit of the previous owner. Diminishing business there with then Vishay stepping in. So we’re going to see second half impact. Dave, do you want to comment at all?

David McConnell: Yes, sure. So for the second quarter, we’re guiding the 160 basis points impact on the margin for Newport. That’s one $15 million approximately of sales. Q3 and Q4, that sales number is going to drop again to roughly $5 million. So it’s negligible revenue. So the total impact on the margin, we think Q3 and Q4 is closer to 170 basis points, Josh. .

Operator: And I’m showing no further questions in the queue at this time. I will now turn the call back over to Mr. Joel Smejkal for any closing.

Joel Smejkal: Thank you, Olivia. Again, thank you, everyone, for joining us this morning and for a review of our first quarter performance. We look forward to talking to you in early August, and we will then report our second quarter results. Thank you again. Have a good day.

Operator: Ladies and gentlemen, that conclude the conference for today. Thank you for your participation, and you may now disconnect.