Good day, and thank you for standing by. Welcome to the Vishay Intertechnology, Inc. Fourth Quarter 2025 Earnings Call. At this time, all after the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will 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 call over to your speaker today, Peter Henrici. Please go ahead.

Thank you, Kevin. Good morning, and welcome to Vishay Intertechnology, Inc.'s Fourth Quarter and Year 2025 Earnings Call. I am joined today by Joel Smejkal, our President and Chief Executive Officer, and by David E. McConnell, our Chief Financial Officer. This morning, we reported results for our fourth quarter and year 2025. A copy of our earnings release is available in the Investor Relations section of our website at ir.vishay.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.vishay.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 Vishay's 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 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.vishay.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 Smejkal.

Thank you, Peter. Morning, everyone. I will start my remarks with a review of the fourth quarter revenue and business performance, and then turn the call over to Dave, who will take you through a review of the fourth quarter financial results and our guidance for 2026. Then I will update you on the strategic levers we are pulling under our five-year strategic plan. After that, we will be happy to answer any of your questions. For the fourth quarter, we generated revenue of $801 million, slightly above the midpoint of our guidance of $790 million and 1.3% higher than the third quarter. A growing broad-based business in industrial power and AI-related power applications drove this sequential increase. Revenue in all channels grew, led by distribution. Once again, Asia dominated the revenue growth. We executed well, still in an environment of shortages and escalations, by putting our expanded capacity to work to get backlog out the door while generally maintaining competitive lead times. We met urgent supply needs of automotive OEMs and tier ones toward the end of last year. Exercising our capacity readiness, our work under Vishay 3.0 is becoming visible in our revenue generation. Orders for the fourth quarter are at a three-year high across all main product technologies, except capacitors, which reached their three-year high already in '25. Orders from the channels of OEM, distribution, and EMS are also at three-year highs. Prior to Vishay 3.0, EMS customers ordered much less from Vishay because of our long lead times. Now we have an EMS business as a consistent and growing customer to support our accelerated growth. Overall, our order growth was broad-based in each region, each channel, each of our technologies, and each of our growth end markets: automotive, industrial power, aerospace defense, AI computing, and healthcare.…

Excuse me.

In The Americas, Vishay 3.0 is gaining previously lost and underserved customers who designed us into the bill of materials years ago, and now we are gaining orders to drive their further volumes. Design supporting AI infrastructure are moving to mass production. These are all positive indications that for Vishay, industrial is back. Our design activity remains focused on power supplies for industrial servers, power monitoring and control systems, next-generation AI power structures, smart meters, and humanoid robots. In addition, many customers are launching new versions of their core product lines. The aerospace defense end markets revenue was slightly down 1.2%, reflecting the impact of the US government shutdown on billings and some projects with delayed timing in Europe. Orders increased with strong demand, particularly for capacitors, as funding is approved for military programs and in anticipation of production ramps forecasted in 2026. Design activity in The Americas and Europe remains focused on low Earth orbit satellites, drones, missile defense systems, as well as munitions. Revenue in healthcare was flat compared to the third quarter, with shipments tied to program customer program milestones, sales will fluctuate. And for this quarter, revenue declined in The Americas and Asia. Europe, on the other hand, had its strongest quarter in three years on demand for hearing aids, implantables, and diagnostic equipment. Bookings increased. In The Americas, we are supplying new programs, are ramping up in Q1, and winning new business for capacitors to complement our custom magnetics business as we continue to fully leverage the breadth of Vishay's portfolio. In addition to continuing design activity on drug delivery systems, defibrillation, and advanced patient monitoring, we are now seeing opportunities emerge in the wearable space and are working with customers on heart rate and oxygen monitoring applications. Lastly, in the other category, revenue grew…

Thanks, Joel, and good morning, everyone. Let's start a review of the fourth quarter results with highlights on Slide six. Fourth quarter revenue was $801 million, exceeding the midpoint of our guidance and increasing 1% sequentially. The improvement was driven by a 2% increase in volume, partially offset by a modest decline in average selling prices. Compared to 2024, revenue increased 12%, driven by an 11% increase in volume. Favorable foreign currency, mainly from the euro, provided an additional 3% benefit, partially offset by a 1% decline in average selling prices, which includes tariff factors. Moving on to the next slide, presenting the income statement highlights. Gross profit was $157 million, resulting in a gross margin of 19.6%, modestly above both the midpoint of our guidance and the third quarter. Margin performance was driven primarily by higher volumes, which helped offset continued pressure from elevated metals and material costs. The negative impact from our Newport fab was approximately 130 basis points. Depreciation expense was $54 million and flat versus quarter three. SG&A expenses were $142 million, compared to $135 million for the third quarter and to $138 million, the midpoint of our guidance. SG&A was higher, primarily reflecting higher compensation costs, higher R&D spending, and legal costs and fees related to accounts receivable securitization transactions, which I will discuss as part of our cash flow review in a moment. GAAP operating margin was 1.8%, compared to 2.4% in the third quarter and a negative 7.9% in 2024, which included a goodwill impairment charge. EBITDA for the quarter was $70 million for an EBITDA margin of 8.8%, down from 9.6% in the third quarter. Our GAAP effective tax rate remains unmeaningful at these low levels of pretax income or loss, as relatively small items such as foreign currency and repatriation taxes…

Alright. Thank you, Dave. Let's turn to slide 12 for an update on the strategic levers we are pulling as we execute our five-year strategic plan to drive faster revenue growth, raise our profitability, and enhance capital returns. For CapEx, we expect to spend between $400 million and $440 million during 2026. A bit more than half of the 2026 plan is allocated for investments at our 12-inch fab, including a carryover from 2025 related to equipment delays. Nearly all of the CapEx at our 12-inch fab will be spent during the first half of the year and will represent the peak of our five-year capacity expansion plan. In the second half of the year, CapEx is expected to be coming down from the first half. To put the 2026 CapEx into perspective, the average of our 2025 spend at the midpoint of our 2026 plan comes to about $350 million, in line with our annual CapEx spend since we began to invest in capacity expansions in 2023. At our Newport facility, we continue to ramp up wafer production in the fourth quarter, and automotive customers continue to audit the site. We have four audits planned for Q1, including two new customers. We are also continuing to ramp up production at our Taiwan and Turin, Italy facilities and getting more products qualified there. We have released well over 100 automotive part numbers for production, completed site audits with automotive customers, and scheduled others for 2026. We continue to execute our subcontractor initiative, which is freeing up capacity for our high-growth products and also broadening our product portfolio to increase our share of the customer's bill of materials. During the quarter, we qualified additional diodes, inductors, and capacitor products. Since we began this initiative two years ago, we have qualified over…

Thank you. Ladies and gentlemen, if you have a question, please press star 11 on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press 11 again. One moment for our first question. Our first question comes from Peter Peng with JPMorgan. Your line is open.

Hey, guys. Thanks for taking my question. I think last quarter, when you were engaged with your customers, you guys were hearing expectations of mid to high single digits for the industry. Just given that it looks like your book-to-bill has been doing pretty well, bookings are increasing. I guess, what's that view now versus ninety days ago?

Peter. Thanks for the question. The view is still mid to high single digits. If we would divide it up by market segment, we have got the five market drivers we speak about: industrial power, we see as mid to high single digit growth. Automotive, a lot of electronic content. Car count seems to be flattish, but we will say automotive is flat to mid single digit for Vishay because of semis as well as passives. Aerospace defense, we are saying mid to high single digit because we think there will be much more consistent purchasing and program runs in 2026. AI, mid to high single digit. And healthcare, we are saying mid single digits. So we are still in that market of mid to high single digit, and we are pushing to outperform the rate of growth of the market. Got it.

And then a follow-up, if I may. Just on the gross margins, I know you guys are kind of facing some higher material costs and FX pressures. Have you tried to rework that into your annual negotiations? And then what's the right way to think about your gross margins kind of going forward as we progress through the year?

You want to take the second one, or you want to take the I'll take the first one. And Dave will take the second one. Yeah. We had a lot of annual contractual negotiations happen October through December. The resulting price decrease is much less than what was historical. We still have a price decrease because we were able to gain volume by positioning Vishay for greater share. So in the contractual agreements, less than historical ASP decline. We also went out in October and started increasing prices due to metals. We were one of the first to do it. Initially, got some pushback, but then it was realized across the industry that it is inevitable for everyone. So we raised prices on quite a few products in the fourth quarter. That starts to become effective in early Q1 depending on some contractual terms. And now we look at the metals today, and we continue to polish this. And in some product lines, we will come back with the second price increase. So metals is an important item that we evaluate every day. We have made the adjustments. And we see our ASP decline lower than historical for 2026. Dave, do you want to take the second part?

Yeah. Yeah. Sure. Sure. So, Peter, just to give you some our thought process on the guidance of the '28 on the margin, so as Joel just mentioned, obviously, the annual contracts all hit in the first quarter. Right? So if ASP push against our volume increase basically cancel each other out. As you on my commentary, you will see the Newport drag has lessened, and it is going to lessen in the first quarter. So we get some benefit from that. And then the metals is fighting is this is the fourth component that is fighting against that. So when you add those four up, we get to the nineteen nine. How that progresses through the rest of the year, obviously, the ASP declines are mostly front-loaded with the annual contracts. Wage increases and such are already built into the first quarter. The book is still, so we have book-to-bill 1.2. So with volume efficiencies, we should be generating. We can see improvement in the margin as we move through the year. And the Newport and as well as the Newport fab continues to ramp up. Got it. Thank you.

One moment for our next question. Our next question comes from Neil Young with Needham and Company. Your line is open.

Hey, guys. This is Shadi Mottwali on for Neil Young. Thanks for letting us ask a question. To start off, I know you guys mentioned auto orders have increased as your guys' capacity has increased. But I was wondering what the company is seeing in the overall automotive demand environment.

Hi, Shadi. We have seen gain of share for Vishay. Through the negotiations in the quarter, in particular gaining MOSFET share in diode share. Because of the geopolitical issue that happened in the fourth quarter. We have seen increasing volumes going into 2026 with the large contractual customers. If we look at automotive overall, automotive, we see technology development in four areas. Battery management continues to be one. Infotainment in the car is two. Electrification is three. And ADAS is four. So we are seeing these four technology applications really driving a lot of design activity. Car count, people say car count generally flat. But we are excited about platform changes with customers as well as those four applications. Continuing to need the Vishay semis as well as passives. So we see automotive as mid flat to mid single digit depending on program start.

Got it. Thank you. And then my follow-up is more of a broad-based question. But have customer conversations changed given the recent increases in pricing for memory?

For memory? Yes. It is always a discussion of where will the memory supply land. When you look at the segments that we serve, AI, memory and AI for sure, memory in consumer products. Consumer is quite small for us. Automotive has some memory. Not as much of a consumer as AI and compute. So people are watching it closely. When I was in CES memory, where is the memory going to be delivered to was a concern. We look at the applications we are in industrial power. The automotive, aerospace defense, the memory of those is lower in consumption than computer. It is going to be dependent on where the memory lands for sure, but we, at this point, are not forecasting a negative impact to revenue. Because of the segments we are serving, we believe they will get the small amount of memory that they need.

Great. Thank you.

Thanks, Shadi.

One moment for our next question. Next question comes from Ruplu Bhattacharya with Bank of America. Your line is open.

Hi. Thanks for taking my questions. Can you talk a little bit more about the automotive segment? Are you seeing any share gains against Nexperia? And Joel, can you talk about your content in different types of vehicles and gas cars versus EVs, and how do you see that content trending over the next couple of years?

Yep. Automotive, those four drivers that I mentioned: electrification, infotainment, battery management, and ADAS. Those are really nice development applications for us. Gaining share, we have done quite well to support the shortages that were in the marketplace in December. We were able to engage the OEMs as well as tier ones. We were given opportunities to cross part numbers. We crossed as many as we could with the equal equivalent matchup. And then we went through our wafer stock and any inventory that we might have found or expedited production to keep the automotive customer satisfied. But what also developed with that is the customer really became closer to Vishay. They learned a lot more about us. Because we were there to support a crisis, but then they wanted to learn more about future engagement. So we are gaining share. We continue to be looked at differently from the automotive OEMs than in the past. Positively, differently. And the tier ones gave us opportunities on part numbers and programs that we previously had no share. So we see it as positive, definitely positive. For the development and how Vishay responded, the feedback from customers was Vishay, we road-tested you. You were able to give us product. And we see that Vishay 3.0 is real. So let's talk about future engagement. Ruplu, regarding the different powertrains. Whether it is ICE or if it is hybrid, or EV, our content is pretty similar across all three. EV has the greatest content for sure because of redundant systems required. So there is more content there. Silicon carbide, as you know, we were not a player in silicon carbide on EV yet. But now the release of our trench product this month brings those samples to customer engineers to be able to now qualify Vishay into these next-generation automotive programs. So we are pretty excited about that. I think we will see our automotive content grow because we now are participating in the 400 volt, 800 volt systems of EV. That will be in the future.

Okay. Thanks for the details there. Can I just ask, so you talked about share gains? How much is that benefiting revenues in the March?

It is starting small. And we will see the ramping up beyond the March. Some automotive have to qualify the site. We did the part number cross on paper. And that they need to qualify the site. So I mentioned there are audits coming in Q1. Once those audits get done, the PCMs get approved. Then we will see the continued ramp up in later quarters.

Okay. Can I ask for some more details on CapEx spend and on OpEx? What are the areas of spend that you are going to have this year? And in the past, you have kind of put off or delayed the CapEx spending. With the spend that you are going to have this year, would you be caught up in terms of how you see demand and what CapEx and your manufacturing capacity be sufficient for future demand? So can you talk about, like, areas of investment and how you see your overall CapEx plan for the next couple of years?

Okay. The carryover that we talked about, we had intended to spend some of the money in 2025 on the equipment for the 12-inch fab. That is carried over into 2026. So that puts us in the range of $400 to $440 million. Around $230 million or so is for that. Aside from that, there are capacitor projects, the large DC power capacitor that we talk about for the smart grid. We are expanding production there because of projects that we are speaking about out to the year 2032. Tantalum polymer is another high order rate product. The tantalum polymer is used in AI, automotive, industrial, used in multimarket segments, so there will be expansion there. Our inductor product, the power inductors, we have the La Laguna facility. The inductors were the cornerstone of that site, and they will be expanding further in Mexico because customers are looking for regional supply as well as nontariff supply. So on the passive side, it is very targeted and selective. There is always there is also small spending on semiconductor projects where there may be a tooling requirement for a few million dollars here and there. But I think we come over the peak of our CapEx spending in 2026, and we start to return to a more normal type of spending where we do not have a project that is $100 million, $200 million, those projects would be behind us. Dave, do you have any Yeah. No. I was going to say, Ruplu, yeah, we are the days of the nine and ten percent cash capital intensity will be done. Yes. We will be back down to more normal levels. Obviously, we will have a higher revenue base, so the absolute dollar CapEx may be higher, but we will be back to the five and six percent levels.

Great. Can I ask just one last question, Dave? Just in terms of capital allocation and buybacks, how are you guys thinking about that? And Joel, is this time for any M&A, you know, either on the passive side or on the active side? Thank you for taking my questions.

So the capital allocation, we have our you know, we have our return policy shareholder return policy, which is 70% of free cash flow. And we are predicting because of the 12-inch fab expenditures, our free cash flow will be negative for the year. Or down to zero, then you can ballpark it. So we are going to maintain the dividend. So I think that is the answer from the capital allocation side. I will let Joel answer the M&A side.

Yeah. Ruplu, M&A is always on the table. We look across passives and we look across semis with select technology. So it is on the table. We continue to look at it. Nothing to share at this point about a specific technology. But getting over the peak of this capital spending allows Vishay to then get into M&A at a deeper rate as well as continued restructuring of our footprint. We have got manufacturing locations that we still have as the next step to do an optimization and restructuring. So M&A for later spending plus optimization of our footprint.

Okay. Alright. Thank you for all the details. Appreciate it.

Thanks for the questions.

And I am not showing any further questions at this time. I turn the call back to Joel for any further remarks.

Thank you, Kevin. Thank you, everyone, for joining our call in the fourth quarter. We have made tremendous efforts over the last three years to have the capacity ready to assure our customers of reliable supply, and I think it is really coming together now with the amount of interaction we have with customers plus the book-to-bill. The book-to-bill in January '26 is really building our momentum and setting this for a really successful year of Vishay 3.0 takeoff. We look forward to talking to you again in May, where we will report the first quarter results. Thank you very much. Have a great day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.