Vishay Intertechnology crushes analyst predictions by 90 percent in Q1

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Vishay Intertechnology beats analyst predictions by 90 percent in Q1.
Image: Vishay Intertechnology

Vishay Intertechnology reported net income of $27.2 million, or adjusted earnings of $.21 per share in the first quarter of 2020. As a result, the company beat Zacks Equity Research’s consensus estimate of $0.11 adjusted per share by 90.9 percent.

However, due to extreme market volatility generated by the coronavirus pandemic, the Malvern, Pennsylvania-based semiconductor maker expects a downturn in Q2 revenue.

Vishay’s Q1 Financial Results

Vishay exited the March period with revenue of $612.8 million, down from the $745.1 million it made in the first quarter of 2019. However, the company’s sales exceeded the bottom end of its Q4 guidance by $7.8 million. The firm also brought its gross margin up to 24 percent, an increase of 1.8 percent from the holiday season.

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In addition, Zacks stated the chipmaker’s Q1 earnings per share outcomes had beaten its estimates in three of the last four quarters.

Vishay CEO Dr. Gerard Paul highlighted some of his firm’s other first-quarter achievements in a press statement. The executive noted the corporation maintained a 1.17 bill-to-book ratio in Q1 and reduced its inventory by $63 million. Paul also explained his company hit its internal sales expectations despite the temporary shutdown of its Chinese production capacity.

Overcoming Uncertainty

Before the coronavirus pandemic occurred, Vishay expected it would recover from a downturn in sales experienced in the latter half of 2019. However, COVID-19 has introduced significant uncertainty to the global economy, which prompted the firm to downshift its outlook. Accordingly, the chipmaker offered a second-quarter revenue forecast of $540 million to $580 million, with a 21 percent gross margin.

Echoing sentiments by ON Semiconductor and STMicroelectronics, Vishay expects the global health crisis will have a significant negative impact on its automotive component revenue.

Nevertheless, the corporation’s chief executive declared his team is ready to react quickly to forthcoming headwinds generated by the pandemic. Paul also said the company is closely examining its fixed costs and capital expenditures to minimize potential inefficiencies without compromising its long-term roadmap.

As of April 4, the firm had a war chest of $680.7 in cash and equivalents with an additional $140.70 million in short-term investments. The chipmaker also paid down its revolving line of credit by $54 million in the first three months of the year. Although it is facing unprecedented market uncertainty, Vishay possesses the resources and tenacity to overcome its current challenges.

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