Vishay Intertechnology, Inc. Net Income surged on 1,800% and EBITDA Margin increased on 2.6 pp from 18.7% to 21.3%

02/05/2019 • About Vishay Intertechnology, Inc. ($VSH) • By InTwits

Vishay Intertechnology, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:

• EBITDA Margin is expanding: 21.3% in 2018 vs. 18.7% in 2017 vs. 14.8% in 2014
• Vishay Intertechnology, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.5%. At the same time it's in pair with industry average of 3.1%
• CAPEX is quite volatile: $7m in FY2018, $6m in FY2017, $6m in FY2016, $6m in FY2015, $67m in FY2014
• The company has highly profitable business model: ROIC is 27.8%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Vishay Intertechnology, Inc.'s Revenue surged on 16.7%. Revenue growth showed small slowdown in 18Q4 - it was 15.2% YoY. During the last 5 years Revenue growth bottomed in 2015 at -7.7% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.6 pp from 18.7% to 21.3% in 2018. During 2014-2018 EBITDA Margin bottomed in 2015 at 11.9% and was growing since that time.

Gross Margin increased on 2.2 pp from 27.0% to 29.3% in 2018. Gross Margin followed a growing trend at 1.3 pp per annum in the last 5 years. SG&A as a % of Revenue decreased slightly on 0.68 pp from 11.6% to 10.9% in 2018. SG&A as a % of Revenue stuck to a declining trend at -0.53 pp per annum in 2014-2018.

Net Income margin surged on 12.2 pp from -0.78% to 11.4% in 2018. The efficient tax rate was 16.9% in 2018.

Investments (CAPEX, working capital and M&A)

In 2018 Vishay Intertechnology, Inc. had CAPEX/Revenue of 7.6%. CAPEX/Revenue increased slightly on 1.2 pp from 6.4% in 2015 to 7.6% in 2018. Average CAPEX/Revenue for the last three years was 6.6%.

Accounts receivable as a % of Revenue showed almost no change in 2018. Inventories as a % of Revenue decreased slightly on 0.72 pp from 16.5% to 15.8% in 2018. Accounts payable as a % of Revenue decreased slightly on 1.6 pp from 11.7% to 10.2% in 2018.

Vishay Intertechnology, Inc. has spent $15m on M&A in 2018 which accounts for 0.49% of revenue.

Return on investment

The company operates at high and attractive ROIC (27.8%) and ROE (24.6%). ROIC increased on 9.4 pp from 18.4% to 27.8% in 2018. ROE jumped on 25.9 pp from -1.4% to 24.6% in 2018. ROIC stuck to a growing trend at 5.3 pp per annum in 2014-2018.

Leverage (Debt)

Debt level is -0.3x Net Debt / EBITDA and 0.8x Debt / EBITDA. Debt surged on 33.5% while cash decreased on 8.3%.

Vishay Intertechnology, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 13.2x. Vishay Intertechnology, Inc. has no short term refinancing risk: cash is higher than short term debt (3,811,288.9%).

Average interest expence paid by the company was 7.4% in 2018.

Valuation and dividends

The company's trades at EV/EBITDA 4.2x and P/E 8.4x.

The company paid 13.6% of Net Income as dividends in 2018. Dividends grew on average at 6.1% per annum in the last 5 years).

Management team

The company's CEO Gerald Paul is a founder and has spent 14 years with the company. CEO total compensation was $7,106,112 in 2018 which included $1,180,448 salary. Lori Lipcaman is a Vishay Intertechnology, Inc.'s CFO. Lori Lipcaman has spent 7 years at the company.

Insider ownership is 0.91%. Insider ownership didn't change in 2018.

At the end of financial year the company had 24,100 employees. The number of employees increased on 4.8%. Average revenue per employee in 2018 was $125,921 and it surged on 11.4%.

Financial and operational results

FY ended 12/31/2018

Vishay Intertechnology, Inc. ($VSH) key annual financial indicators

mln. $	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	2,493	2,300	2,317	2,599	3,035	16.7%
Gross Profit	611	542	574	703	889	26.4%
SG&A	320	298	289	301	331	9.9%
EBITDA	369	274	356	487	647	32.8%
EBIT	189	98	197	324	485	49.7%
Interest expence	24	26	26	28	37	31.7%
Tax	49	182	45	299	70	-76.5%
Net Income	118	-109	49	-20	346
Balance Sheet
Cash	592	476	472	748	686	-8.3%
Accounts Receivable	272	273	274	340	397	16.8%
Inventory	425	421	381	430	480	11.6%
Accounts Payable	174	157	174	222	218	-1.8%
Short Term Debt	0	0	0	0	0	350.0%
Long Term Debt	444	437	357	370	495	33.5%
Cash flow
Capex	157	147	135	170	230	34.9%
Dividends	35	35	37	37	47	27.0%
Acquisitions	198	7			15
Ratios
Revenue growth	5.2%	-7.7%	0.7%	12.2%	16.7%
EBITDA growth	0.2%	-25.7%	30.1%	36.7%	32.8%
Gross Margin	24.5%	23.6%	24.8%	27.0%	29.3%	2.2%
EBITDA Margin	14.8%	11.9%	15.4%	18.7%	21.3%	2.6%
EBIT Margin	7.6%	4.3%	8.5%	12.5%	16.0%	3.5%
SG&A, % of revenue	12.9%	13.0%	12.5%	11.6%	10.9%	-0.7%
Net Income Margin	4.7%	-4.7%	2.1%	-0.8%	11.4%	12.2%
CAPEX, % of revenue	6.3%	6.4%	5.8%	6.6%	7.6%	1.0%
ROIC	8.3%	4.5%	9.8%	18.4%	27.8%	9.4%
ROE	6.4%	-6.3%	3.1%	-1.4%	24.6%	25.9%
Net Debt/EBITDA	-0.4x	-0.1x	-0.3x	-0.8x	-0.3x	0.5x
Interest expence / Average debt	5.5%	5.8%	6.5%	7.7%	7.4%	-0.2%
People
Insider ownership	0.9%	0.9%	0.9%	0.9%	0.9%	0.0%
Employees	22,600	22,400	22,100	23,000	24,100	4.8%
Revenue/Employee, th. $	110	103	105	113	126	11.4%

Vishay Intertechnology, Inc. ($VSH) key quoterly financial indicators

mln. $	18Q1	18Q2	18Q3	18Q4		YoY change
P&L
Revenue	717	761	781	776		18.5%	18.3%	15.2%	15.2%
EBITDA	145	164	179	160		34.2%	30.9%	31.1%	35.5%
Net Income	62	103	78	102		69.8%	83.5%	20.9%
Balance Sheet
Cash	840	1,007	928	686		68.1%	79.5%	61.3%	-8.3%
Short Term Debt	0	0	0	0		409.1%	1,018.2%	-84.0%	350.0%
Long Term Debt	406	680	589	495		7.3%	94.0%	64.9%	33.5%
Ratios
Gross Margin	28.6%	29.9%	30.3%	28.3%		1.9%	2.8%	2.2%	2.0%
EBITDA Margin	20.2%	21.5%	22.9%	20.6%		2.4%	2.1%	2.8%	3.1%
Net Income Margin	8.7%	13.5%	10.0%	13.2%		2.6%	4.8%	0.5%	39.6%

Peers in Electronic Components

Below you can find Vishay Intertechnology, Inc. benchmarking vs. other companies in Electronic Components industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Superconductor Technologies Inc. ($SCON)		-61.4%	-46.3%	240.5%	248.9%
Akoustis Technologies, Inc. ($AKTS)					148.3%
CPS Technologies Corp. ($CPSH)		-5.9%	-29.5%	-5.0%	48.0%
Littelfuse, Inc. ($LFUS)		1.9%	21.7%	15.7%	40.7%
Cavitation Technologies Inc ($CVAT)		-73.6%	267.5%	-40.9%	22.6%
Median (22 companies)		0.0%	2.1%	7.7%	14.1%
Vishay Intertechnology, Inc. ($VSH)		-7.7%	0.7%	12.2%	16.7%

Top companies by Gross margin, %

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Cavitation Technologies Inc ($CVAT)	93.5%	85.0%	93.2%	93.5%	90.6%
Dolby Laboratories ($DLB)	92.7%	90.2%	89.4%	89.1%	87.9%
Flexpoint Sensor Systems Inc ($FLXT)	96.7%	95.2%	92.7%	87.9%	86.1%
Airgain, Inc. ($AIRG)	44.6%	41.9%	44.4%	47.1%	43.7%
II-VI Incorporated ($IIVI)	33.2%	36.6%	37.8%	40.0%	39.8%
Median (22 companies)	33.2%	36.7%	33.7%	38.3%	37.6%
Vishay Intertechnology, Inc. ($VSH)	24.5%	23.6%	24.8%	27.0%	29.3%

Top companies by EBITDA margin, %

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Corning Incorporated ($GLW)	32.2%	27.5%	27.9%	27.3%	25.4%
Dolby Laboratories ($DLB)	34.1%	29.1%	30.9%	30.8%	25.1%
Amphenol Corporation ($APH)	22.5%	22.9%	22.6%	23.6%	24.2%
IEH Corp ($IEHC)	18.4%	21.2%	18.0%	16.3%	20.2%
Littelfuse, Inc. ($LFUS)	20.6%	16.8%	17.4%	23.0%	19.1%
Median (22 companies)	8.6%	12.2%	13.6%	8.7%	9.3%
Vishay Intertechnology, Inc. ($VSH)	14.8%	11.9%	15.4%	18.7%	21.3%

Top companies by CAPEX/Revenue, %

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Akoustis Technologies, Inc. ($AKTS)				334.0%	574.7%
CBAK Energy Technology, Inc. ($CBAK)	8.0%	92.4%	57.2%	20.6%	30.1%
Corning Incorporated ($GLW)	11.1%	13.7%	12.0%	17.8%	19.9%
II-VI Incorporated ($IIVI)	4.3%	7.1%	7.0%	14.3%	13.2%
Superconductor Technologies Inc. ($SCON)	586.1%	57.8%	0.0%	34.1%	12.1%
Median (22 companies)	3.9%	2.7%	3.0%	4.2%	3.8%
Vishay Intertechnology, Inc. ($VSH)	6.3%	6.4%	5.8%	6.6%	7.6%

Top companies by ROIC, %

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
IEH Corp ($IEHC)	27.7%	28.2%	24.2%	19.2%	26.1%
Amphenol Corporation ($APH)	19.1%	18.5%	18.3%	19.2%	21.1%
Inrad Optics Inc ($INRD)	-26.7%	-5.2%	-9.2%	-10.4%	17.7%
Littelfuse, Inc. ($LFUS)	14.3%	11.1%	11.7%	15.8%	12.1%
Rogers Corporation ($ROG)	13.1%	11.0%	10.1%	14.5%	11.3%
Median (22 companies)	6.8%	6.1%	4.7%	6.0%	7.8%
Vishay Intertechnology, Inc. ($VSH)	8.3%	4.5%	9.8%	18.4%	27.8%

Top companies by Net Debt / EBITDA

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Belden Inc ($BDC)	3.9x	5.2x	2.1x	2.6x	2.3x
Inrad Optics Inc ($INRD)		9.9x			1.4x
Corning Incorporated ($GLW)	-0.7x	-0.0x	-0.5x	0.3x	1.3x
Bel Fuse Inc. ($BELFA)	4.6x	2.0x		1.4x	1.3x
Amphenol Corporation ($APH)	1.4x	0.8x	1.4x	1.1x	1.2x
Median (14 companies)	-0.6x	-0.3x	-0.5x	-0.0x	0.7x
Vishay Intertechnology, Inc. ($VSH)	-0.4x	-0.1x	-0.3x	-0.8x	-0.3x

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