VISHAY INTERTECHNOLOGY INC
For the period ended Jun 29, 2024. Filed Aug 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2024 · Filed Aug 7, 2024
VSH$23.28+5.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-30; filed 2024-05-08.
0000103730-24-000084
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-29; filed 2024-08-07.
0000103730-24-000102
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 135 previous paragraphs and 134 current paragraphs.
81 unchanged; 34 reworded; 18 added; 16 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 33 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Net revenues for the six fiscal months ended June 29, 2024 were $1,487.5 million, compared to $1,763.2 million for the six fiscal months ended July 1, 2023. The net earnings attributable to Vishay stockholders for the six fiscal months ended June 29, 2024 were $54.5 million, or $0.39 per diluted share, compared to $206.8 million, or $1.47 per diluted share for the six fiscal months ended July 1, 2023.
Current report
Our free cash results were significantly impacted by the installment payments of the U.S. transition tax of $37.6 million and $27.7 million in the second fiscal quarters of 2024 and 2023, respectively, and $15.0 million of payments of withholding taxes on foreign earnings for the $120.0 million that was repatriated to the U.S. in the second fiscal quarter of 2024.
Current report
Gross profit margin decreased versus the prior fiscal quarter and prior year periods. The decrease from the prior fiscal quarter is primarily due to costs associated with the Newport wafer fab. The decreases versus the prior year periods are primarily due to lower sales volume, decreased average selling prices, and costs associated with the Newport wafer fab.
Current report
The segment operating margin decreased versus the prior fiscal quarter and the prior year periods. The decreases are primarily due to gross profit margin decreases.
Current report
Average selling prices were flat versus the prior fiscal quarter, but decreased versus the prior year periods.
Current report
Gross profit margin decreased versus the prior fiscal quarter and prior year periods. The decreases are primarily due to lower sales volume and lower average selling prices. Higher labor costs also contributed to the decreases versus the prior year periods.
Current report
Average selling prices decreased versus the prior fiscal quarter and the prior year periods.
Current report
Gross profit margin increased versus the prior fiscal quarter and prior year quarter, but decreased versus the prior year-to-date period. The increase versus the prior fiscal quarter is primarily due to increased sales volume, increased average selling prices, manufacturing efficiencies, and cost containment initiatives. The increase versus the prior year quarter is due to cost containment initiatives and manufacturing efficiencies, partially offset by decreased sales volume and average selling prices. The decrease versus the prior year-to-date period is primarily due to decreased sales volume and average selling prices.
Current report
Average selling prices increased versus the prior fiscal quarter, but decreased versus the prior year periods.
Current report
We are now using our recently modernized and expanded wafer fab in Heilbronn, Germany.
Current report
Gross profit margin decreased versus the prior fiscal quarter and prior year periods. The decreases were primarily due to lower sales volume, lower average selling prices, increased labor costs, and increased logistics costs.
Current report
Gross profit margin was flat versus the prior fiscal quarter, but decreased versus the prior year periods. The decreases versus the prior year periods are primarily due to decreased average selling prices, higher logistics, materials, and labor costs, and start-up costs of a new manufacturing facility.
Current report
Segment operating margin was flat versus the prior fiscal quarter, but decreased versus the prior year periods. The decreases are primarily due to gross profit margin decreases.
Current report
Net revenues of the Capacitors segment decreased slightly versus the prior fiscal quarter and significantly versus the prior year periods. The decrease versus the prior fiscal quarter is primarily due to decreased sales to distribution customers and customers in the Americas and Asia regions. The decrease versus the prior year quarter is primarily due to decreased sales to distribution customers, industrial end market customers, and customers in the Europe and Americas regions. The decrease versus the prior year-to-date period is primarily due to decreased sales to industrial end market customers and customers in the Europe and Americas regions.
Current report
Gross profit margin decreased versus the prior fiscal quarter and prior year periods. The decreases are due to lower sales volume, lower average selling prices, increased labor costs, and production inefficiencies.
Current report
Our business is geographically diverse and our cash is generated by our subsidiaries around the world. Cash dividends to stockholders, share repurchases, and principal and interest payments on our debt instruments need to be paid by the U.S. parent company, Vishay Intertechnology, Inc. We continue to allocate capital responsibly between our business, our lenders, and our stockholders. The capital allocated to our business is further allocated between our subsidiaries to meet local operating cash needs, to fund capital expenditures as part of our growth plan, and to meet corporate funding needs while also aiming to minimize our tax expense.
Current report
During the second fiscal quarter of 2024, we repatriated $120 million of accumulated earnings to the United States and paid withholding taxes in Israel of $15 million. As of June 29, 2024, $73.4 million of our cash and cash equivalents and short-term investments were held by our U.S. subsidiaries. Based on expected cash payments pursuant to our Stockholder Return Policy and funding of the Newport expansion, we expect to be in a net borrowing position in the U.S. before year-end 2024. As of June 29, 2024, we have approximately $495 million of German and Israeli earnings that are deemed not indefinitely reinvested. Based on the expected timing of future repatriations, we estimate that the tax liability to repatriate these unremitted earnings will be approximately $74 million, which has been accrued, but will only be paid upon repatriation of the unremitted earnings. Repatriating these unremitted earnings earlier than currently planned may not be possible and would incur additional tax expense. We also have amounts of unremitted foreign earnings held by subsidiaries in countries other than Israel and Germany, which continue to be reinvested indefinitely, that we have not accrued for the incremental foreign income taxes and withholding taxes payable to foreign jurisdictions that would be incurred to repatriate these amounts. Certain of these subsidiaries are located in countries with restrictive regulations and high tax rates for repatriating cash. Due to the uncertainties associated with the ability, timing, and method to repatriate these unremitted earnings and other complexities associated with its hypothetical calculation, determination of the amount of tax expense that would be incurred to repatriate the unremitted earnings is not practicable, but could be significant. Our substantially undrawn credit facility provides us with adequate operating liquidity in the United States.
Current report
Upon successful completion of our growth plan, we expect to generate increasingly higher levels of free cash that will be sufficient to meet our long-term financing needs related to normal operating requirements, regular dividend payments, share repurchases pursuant to our Stockholder Return Policy, while allowing us to manage our repatriation and financing activities to minimize tax and interest expense. During the current period of intensified capital expenditures to achieve our growth plans, we are considering a combination of additional and alternative sources of financing and our cash on hand to fund a portion of the capital expenditures that would conserve cash for future acquisitions while enabling us to minimize tax expense.
Removed paragraphs (16)
Previous report
Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter. The decreases are primarily due to lower average selling prices, costs associated with Newport wafer fab acquired in March 2024, and lower sales volume.
Previous report
The segment operating margin decreased versus the prior fiscal quarter and the prior year quarter. The decreases are primarily due to gross profit decreases.
Previous report
Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter. The increases are primarily due to lower sales volume and decreased average selling prices.
Previous report
The segment operating margin decreased versus the prior fiscal quarter and prior year quarter. The decreases are primarily due to decreased gross profit.
Previous report
Net revenues of our Optoelectronic Components segment decreased versus the prior fiscal quarter and the prior year quarter. The decrease versus the prior fiscal quarter is primarily due to decreased sales to distribution customers and industrial end market customers in all regions, particularly Asia, partially offset by increased sales to EMS customers and automotive and consumer product end market customers. The decrease versus the prior year quarter is due to decreased sales to all regions, distribution customers, and all end market customers.
Previous report
Gross profit margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter. The increase versus the prior fiscal quarter is primarily due to the positive impact of increased inventory and accelerated depreciation costs that negatively impacted the prior fiscal quarter. The decrease versus the prior year quarter is primarily due to lower sales volume, decreased average selling prices, and manufacturing inefficiencies.
Previous report
The segment operating margin decreased versus the prior fiscal quarter and the prior year quarter. The decreases are primarily due to gross profit decreases.
Previous report
The gross profit margin decreased versus the prior fiscal quarter and the prior year quarter. The decrease versus the prior fiscal quarter is primarily due to decreased sales volume. The decrease versus the prior year quarter is primarily due to decreased sales volume and manufacturing inefficiencies.
Previous report
The segment operating margin decreased versus the prior fiscal quarter and prior year quarter. The decreases are primarily due to decreased gross profit.
Previous report
Changes in Inductors segment net revenues were attributable to the following:
Previous report
The gross profit margin decreased versus the prior fiscal quarter, but increased versus the prior year quarter. The decrease versus the prior fiscal quarter is primarily due to decreased average selling prices and higher labor costs. The increase versus the prior year quarter is primarily due to higher sales volume and manufacturing efficiencies.
Previous report
The segment operating margin decreased versus the prior fiscal quarter, but was flat versus the prior year quarter. The fluctuations are primarily due to gross profit fluctuations. Cost inflation negatively impacted the segment operating margin versus the prior year quarter.
Previous report
Average selling prices decreased slightly versus the prior fiscal quarter and prior year quarter.
Previous report
The gross profit margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter. The increase versus the prior fiscal quarter is primarily due to higher sales volume, manufacturing efficiencies, and favorable sales mix. The decrease versus the prior year quarter is primarily due to lower sales volume, higher wage and tantalum costs, partially offset by favorable sales mix.
Previous report
Average selling prices decreased versus the prior fiscal quarter, but increased versus the prior year quarter.
Previous report
As of March 30, 2024, 89% of our cash and cash equivalents and short-term investments were held in countries outside of the United States. Cash dividends to stockholders, share repurchases, and principal and interest payments on our debt instruments need to be paid by the U.S. parent company, Vishay Intertechnology, Inc. A U.S.-domiciled subsidiary was the acquiring entity of Nexperia's wafer fabrication facility and operations in Newport, South Wales, U.K. Our U.S. subsidiaries also have cash operating needs. The recent distribution of earnings from Israel and Germany to the United States was used to fund the Nexperia transaction and will also be used to fund our Stockholder Return Policy. We expect that cash on-hand and cash flows from operations will be sufficient to meet our longer-term financing needs related to normal operating requirements, regular dividend payments, share repurchases pursuant to our Stockholder Return Policy, and our research and development and capital expenditure plans. Our substantially undrawn credit facility provides us with significant operating liquidity in the United States.
Reworded paragraphs (34)
Previous wording
We are focused on enhancing stockholder value by growing our business and improving earnings per share. Since 1985, we have pursued a business strategy of growth through focused research and development and acquisitions. We plan to continue to grow our business through intensified internal growth supplemented by opportunistic acquisitions, while maintaining a prudent capital structure. To drive growth and optimize stockholder value, we plan to capitalize on the mega trends of e-mobility, sustainability, and connectivity through initiatives. We are developing go-to-market strategies and investing in and expanding the key product lines for growth that we have identified. To increase our internal capacity, we plan to invest approximately $435 million in 2024, as part of our plan to invest approximately $1.4 billion in total capital expenditures for the period 2023 - 2025 and $2.6 billion in total capital expenditures for the period 2023 - 2028. In addition, we are strategically expanding our outsourced production of commodity products to subcontractors. At the same time, we are enhancing our channel management while investing in internal resources by adding customer-facing engineers and filling gaps in technology and market coverage. Taken together, each of these initiatives supports our Think Customer First organizational culture.
Current wording
We are focused on enhancing stockholder value by growing our business and improving earnings per share. Since 1985, we have pursued a business strategy of growth through focused research and development and acquisitions. We plan to continue to grow our business through intensified internal growth supplemented by opportunistic acquisitions, while maintaining a prudent capital structure. To drive growth and optimize stockholder value, we plan to capitalize on the mega trends of e-mobility, sustainability, and connectivity through initiatives. We are developing go-to-market strategies and investing in and expanding the key product lines for growth that we have identified. In addition, we are strategically expanding our outsourced production of commodity products to subcontractors. At the same time, we are enhancing our channel management while investing in internal resources by adding customer-facing engineers and filling gaps in technology and market coverage. Taken together, each of these initiatives supports our Think Customer First organizational culture. To increase our internal capacity, we had planned to invest approximately $435 million in 2024. At the midpoint of the year, the industry recovery is slower than expected. Accordingly, we have adjusted our timetable for investments for our new 12-inch wafer fab in Itzehoe, Germany beyond 2024, and now expect total capital expenditures for 2024 to be between $360 million and $390 million. We remain committed to spending a total of $2.6 billion in total capital expenditures for the period 2023 - 2028. We can adjust the timing of our capital expenditures and still fulfill our customer commitments because we now have intermediate capacity due to the qualification of a foundry partner and the acquisition of the Newport wafer fab.
Previous wording
On March 5, 2024, we completed the acquisition of Nexperia’s wafer fabrication facility and operations located in Newport, South Wales, U.K. for approximately $177.4 million in cash, net of cash acquired and subject to customary post-closing adjustments. The wafer fabrication facility is located on 28 acres and is an automotive-certified, 200mm semiconductor wafer fab with capacity to produce more than 30,000 wafers per month. We plan to position the facility as a manufacturing excellence center and use it as the home for MaxPower to further develop and scale our SiC MOSFETs and diodes capabilities. We expect the facility to initially generate a net loss while we invest in new equipment and qualify new products.
Current wording
On March 5, 2024, we completed the acquisition of Nexperia’s wafer fabrication facility and operations located in Newport, South Wales, U.K. for approximately $177.5 million in cash, net of cash acquired. The wafer fabrication facility is located on 28 acres and is an automotive-certified, 200mm semiconductor wafer fab with capacity to produce more than 30,000 wafers per month. We plan to position the facility as a manufacturing excellence center and use it as the home for MaxPower to further develop and scale our SiC MOSFETs and diodes capabilities. We expect the facility to initially generate a net loss while we invest in new equipment and qualify new products.
Previous wording
We utilize several financial metrics, including net revenues, gross profit margin, operating margin, segment operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business. See further discussion in “Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below. The key financial metrics decreased in the first fiscal quarter of 2024 primarily due to the negative impacts of an on-going distributor inventory correction that resulted in lower orders. Net revenues and margins decreased versus the prior periods primarily due to lower sales volume.
Current wording
We utilize several financial metrics, including net revenues, gross profit margin, operating margin, segment operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business. See further discussion in “Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below. The key financial metrics decreased slightly in the second fiscal quarter of 2024 primarily due to the negative impacts of an on-going distributor inventory correction. Net revenues and margins decreased versus the prior year periods primarily due to lower sales volume.
Previous wording
Net revenues for the fiscal quarter ended March 30, 2024 were $746.3 million, compared to $785.2 million and $871.0 million for the fiscal quarters ended December 31, 2023 and April 1, 2023, respectively. The net earnings attributable to Vishay stockholders for the fiscal quarter ended March 30, 2024 were $30.9 million, or $0.22 per diluted share, compared to $51.5 million, or $0.37 per diluted share for the fiscal quarter ended December 31, 2023, and $111.8 million, or $0.79 per diluted share for the fiscal quarter ended April 1, 2023.
Current wording
Net revenues for the fiscal quarter ended June 29, 2024 were $741.2 million, compared to $746.3 million and $892.1 million for the fiscal quarters ended March 30, 2024 and July 1, 2023, respectively. The net earnings attributable to Vishay stockholders for the fiscal quarter ended June 29, 2024 were $23.5 million, or $0.17 per diluted share, compared to $30.9 million, or $0.22 per diluted share for the fiscal quarter ended March 30, 2024, and $95.0 million, or $0.68 per diluted share for the fiscal quarter ended July 1, 2023.
Previous wording
Net earnings attributable to Vishay stockholders for the fiscal quarters ended March 30, 2024, December 31, 2023, and April 1, 2023 include no items affecting comparability.
Current wording
Net earnings attributable to Vishay stockholders for the fiscal quarters ended June 29, 2024, March 30, 2024, and July 1, 2023 and for the six fiscal months ended June 29, 2024 and July 1, 2023 include no items affecting comparability.
Previous wording
Our results have been negatively impacted by the distributor inventory correction that began in the fourth fiscal quarter of 2022 and continued through the first fiscal quarter of 2024. Our results for the first fiscal quarter of 2024 remain strong, although weaker than our prior fiscal quarter and prior year quarter results.
Current wording
Our results have been negatively impacted by the distributor inventory correction that began in the fourth fiscal quarter of 2022 and continued through the second fiscal quarter of 2024. Our results for the second fiscal quarter of 2024 remain strong, although weaker than our prior fiscal quarter and prior year results.
Previous wording
The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following table shows net revenues, gross profit margin, operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, and changes in ASP for our business as a whole during the five fiscal quarters beginning with the first fiscal quarter of 2023 through the first fiscal quarter of 2024(dollars in thousands):
Current wording
The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following table shows net revenues, gross profit margin, operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, and changes in ASP for our business as a whole during the five fiscal quarters beginning with the second fiscal quarter of 2023 through the second fiscal quarter of 2024(dollars in thousands):
Previous wording
Revenues decreased versus the prior fiscal quarter and the first fiscal quarter of 2023 primarily due to lower sales volume and lower average selling prices. The book-to-bill ratio increased slightly versus the prior fiscal quarter, but orders and backlog continued to be negatively impacted by the distributor inventory correction that continued in the first fiscal quarter of 2024. We continue to increase manufacturing capacity for critical product lines. Average selling prices decreased versus the prior fiscal quarter and prior year quarter.
Current wording
Revenues decreased versus the prior fiscal quarter and the second fiscal quarter of 2023 primarily due to lower sales volume and lower average selling prices. The book-to-bill ratio increased slightly versus the prior fiscal quarter, but orders and backlog continued to be negatively impacted by the distributor inventory correction that continued in the second fiscal quarter of 2024. We continue to increase manufacturing capacity for critical product lines. Average selling prices decreased versus the prior fiscal quarter and prior year quarter.
Previous wording
Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter primarily due to lower sales volume, decreased average selling prices, and the impact of the Newport acquisition. Cost inflation also contributed to the decrease versus the prior year quarter.
Current wording
Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter primarily due to decreased average selling prices and the impact of the Newport acquisition. Lower sales volume and cost inflation also contributed to the decrease versus the prior year quarter.
Previous wording
The book-to-bill ratio in the first fiscal quarter of 2024 increased to 0.82 versus 0.75 in the fourth fiscal quarter of 2023.
Current wording
The book-to-bill ratio in the second fiscal quarter of 2024 increased to 0.86 versus 0.82 in the first fiscal quarter of 2024.
Previous wording
The following table shows net revenues, book-to-bill ratio, gross profit margin, and segment operating margin broken out by segment for the five fiscal quarters beginning with the first fiscal quarter of 2023 through the first fiscal quarter of 2024(dollars in thousands):
Current wording
The following table shows net revenues, book-to-bill ratio, gross profit margin, and segment operating margin broken out by segment for the five fiscal quarters beginning with the second fiscal quarter of 2023 through the second fiscal quarter of 2024(dollars in thousands):
Previous wording
Despite the distributor inventory correction that we continue to experience, the long-term prospects for our business remain favorable, and we continue to increase manufacturing capacities for critical product lines. The decrease in net revenues versus the prior fiscal quarter and prior year quarter are primarily due to decreased sales volume and average selling prices.
Current wording
Despite the distributor inventory correction that we are experiencing, the long-term prospects for our business remain favorable, and we continue to increase manufacturing capacities for critical product lines. The decrease in net revenues versus the prior fiscal quarter and prior year quarter are primarily due to sales volume and average selling prices.
Previous wording
Gross profit margins for the fiscal quarter ended March 30, 2024 were 22.8%, versus 25.6% and 32.0% for the comparable prior fiscal quarter and prior year period, respectively. Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter primarily due to lower sales volume, decreased average selling prices, and the impact of the Newport acquisition. Cost inflation also contributed to the decrease versus the prior year quarter.
Current wording
Gross profit margins for the fiscal quarter ended June 29, 2024 were 22.0%, versus 22.8% and 28.9%, for the comparable prior quarter and prior year period, respectively. Gross profit margins for the six fiscal months ended June 29, 2024 were 22.4%, versus 30.4% for the comparable prior year period. The decreases versus the prior year periods are primarily due to lower sales volume and cost inflation. Decreased average selling prices and the impact of the Newport acquisition contributed to the decreases versus the prior periods.
Previous wording
The MOSFET segment net revenues decreased versus the prior fiscal quarter and the prior year quarter. The decreases were primarily due to decreased sales to distributor customers and customers in all regions. An increase in sales to automotive end market customers partially offset the decrease versus the prior fiscal quarter.
Current wording
Net revenues of the MOSFETS segment increased slightly versus the prior fiscal quarter, but decreased significantly versus the prior year periods. The increase versus the prior fiscal quarter is primarily due to the Newport wafer fab acquisition, partially offset by decreased sales to automotive end market customers. The decrease versus the prior year quarter is primarily due decreased sales to distributor customers and customers in all regions. The decrease versus the prior year-to-date period is due decreased sales to all end market customers and customers in all regions, partially offset by the Newport wafer fab acquisition.
Previous wording
We continue to invest to expand mid- and long-term manufacturing capacity for strategic product lines. We have begun building a 12-inch wafer fab in Itzehoe, Germany adjacent to our existing 8-inch wafer fab, which we expect will increase our in-house wafer capacity by approximately 70% within 3-4 years and allow us to balance our in-house and foundry wafer supply.
Current wording
We continue to invest to expand mid- and long-term manufacturing capacity for strategic product lines. We have begun building a 12-inch wafer fab in Itzehoe, Germany adjacent to our existing 8-inch wafer fab, which we expect will increase our in-house wafer capacity by approximately 70% by 2028 and allow us to balance our in-house and foundry wafer supply.
Previous wording
Net revenues of the Diodes segment decreased versus the prior fiscal quarter and the prior year quarter. The decreases are primarily due to decreased sales to distribution customers and industrial and automotive end market customers in all regions.
Current wording
Net revenues of the Diodes segment decreased slightly versus the prior fiscal quarter and significantly versus the prior year periods. The decrease versus the prior fiscal quarter was primarily due to decreased sales to automotive and industrial end market customers and customers in the Europe region. The decreases versus the prior year periods are due to decreased sales to nearly all end market customers and customers in all regions.
Previous wording
Net revenues of the Capacitors segment increased versus the prior fiscal quarter, but decreased versus the prior year quarter. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers, industrial end market customers, and customers in the Asia region. The decrease versus the prior year quarter is primarily due to decreased sales to distribution customers, industrial end market customers, and customers in the Americas and Europe regions.
Current wording
Net revenues of the Optoelectronic Components segment increased versus the prior fiscal quarter, but decreased versus the prior year periods. The increase versus the prior fiscal quarter is due to increased sales to distribution customers and industrial end market customers and customers in the Asia region. The decreases versus the prior year periods are primarily due to distribution customers, all end market customers, and customers in the Europe and Americas regions.
Previous wording
The segment operating margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter. The fluctuations are primarily due to gross profit fluctuations.
Current wording
Segment operating margin increased versus the prior fiscal quarter, but decreased versus the prior year periods. The fluctuations are primarily due to gross profit margin fluctuations.
Previous wording
Net revenues of the Resistors segment decreased versus the prior fiscal quarter and prior year quarter. The decrease versus the prior fiscal quarter is primarily due to decreased sales to distribution customers, military and aerospace and industrial end market customers, and customers in the Asia region, partially offset by increased sales to EMS customers, medical end market customers, and customers in the Americas region. The decrease versus the prior year quarter is primarily due to decreased sales to distribution and EMS customers, industrial end market customers, and customers in all regions, particularly Asia.
Current wording
Net revenues of the Resistors segment decreased slightly versus the prior fiscal quarter and significantly versus the prior year periods. The decrease versus the prior fiscal quarter is primarily due to decreased sales to industrial and automotive end market customers and customers in the Europe region. The decreases versus the prior year periods were due to decreased sales to nearly all end market customers and customers in all regions.
Previous wording
Net revenues of the Inductors segment increased slightly versus the prior fiscal quarter and significantly versus the prior year quarter. The increase versus the prior fiscal quarter is primarily due to increased sales to EMS customers, automotive and military and aerospace end market customers and customers in the Europe and Americas regions, partially offset by decreased sales to distribution customers, industrial end market customers, and customers in the Asia region. The increase versus the prior year quarter is primarily due to increased sales to automotive and military and aerospace end market customers and customers in all regions, particularly the Americas region, partially offset by decreased sales to distribution customers and industrial end market customers.
Current wording
Net revenues of the Inductors segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter was primarily due to increased sales to distribution and EMS customers, medical end market customers, and customers in the Americas region. The increase versus the prior year quarter was primarily due to increased sales to distribution customers, military and aerospace and medical end market customers, and customers in the Americas region. The increase versus the prior year-to-date period was primarily due to increased sales to distribution customers, automotive, military and aerospace, and medical end market customers, and customers in the Americas and Asia regions.
Previous wording
Selling, general, and administrative expenses are summarized as follows(dollars in thousands):
Current wording
Selling, general, and administrative (“SG&A”) expenses are summarized as follows(dollars in thousands):
Previous wording
The sequential increase in SG&A expenses is primarily attributable to uneven attribution of stock-based compensation expense and cost inflation. SG&A expenses increased versus the prior year quarter due to higher stock-based compensation expense and general cost inflation.
Current wording
The sequential decrease in SG&A expenses is primarily attributable to uneven attribution of stock-based compensation expense and lower bonus compensation. SG&A expenses increased versus the prior year periods due to higher stock-based compensation expense and general cost inflation.
Previous wording
Interest expense for the fiscal quarter ended March 30, 2024 was flat versus the fiscal quarter ended December 31, 2023 and increased by $1.4 million versus the fiscal quarter ended April 1, 2023. The increase versus the prior year fiscal quarter is due to the issuance of the convertible senior notes due 2030 in the third fiscal quarter of 2023.
Current wording
Interest expense for the fiscal quarter ended June 29, 2024 increased $0.2 million versus the fiscal quarter ended March 30, 2024 and increased $0.3 million versus the fiscal quarter ended July 1, 2023. Interest expense for the six fiscal months ended June 29, 2024 increased by $1.6 million versus the six fiscal months ended July 1, 2023. The increase versus the prior fiscal quarter is due to higher average outstanding balances on the revolving credit facility. The increases versus the prior year periods are due to the issuance of the convertible senior notes due 2030 in the third fiscal quarter of 2023.
Previous wording
For the fiscal quarter ended March 30, 2024, our effective tax rate was 29.0%, as compared to 35.6% and 28.4% for the fiscal quarters ended December 31, 2023 and April 1, 2023, respectively. We expect that our effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions.
Current wording
For the fiscal quarter ended June 29, 2024, our effective tax rate was 34.2%, as compared to 29.0% and 28.5% for the fiscal quarters ended March 30, 2024 and July 1, 2023, respectively. For the six fiscal months ended June 29, 2024, our effective tax rate was 31.3%, as compared to 28.5% for the six fiscal months ended July 1, 2023. We expect that our effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions.
Previous wording
During the three fiscal months ended March 30, 2024, the liabilities for unrecognized tax benefits did not materially change.
Current wording
During the six fiscal months ended June 29, 2024, the liabilities for unrecognized tax benefits decreased $0.7 million on a net basis, primarily due to statute expirations, partially offset by accruals for the current period.
Previous wording
Our financial condition as of March 30, 2024 continued to be strong. Cash and short-term investments exceed our long-term debt balances, and we have historically been a strong generator of operating cash flows. The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of our capital expenditure needs is available to fund our acquisition strategy, fund our Stockholder Return Policy, and to reduce debt levels.
Current wording
Our financial condition as of June 29, 2024 continued to be strong. We have historically been a strong generator of operating cash flows. The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of our capital expenditure needs is available to fund our acquisition strategy, fund our Stockholder Return Policy, and to reduce debt levels.
Previous wording
Cash flows provided by operating activities were $80.2 million for the three fiscal months ended March 30, 2024, as compared to cash flows provided by operations of $129.9 million for the three fiscal months ended April 1, 2023.
Current wording
Cash flows provided by operating activities were $55.5 million for the six fiscal months ended June 29, 2024, as compared to cash flows provided by operations of $237.1 million for the six fiscal months ended July 1, 2023.
Previous wording
In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle. The following table presents the components of our cash conversion cycle during the five fiscal quarters beginning with the first fiscal quarter of 2023 through the first fiscal quarter of 2024:
Current wording
In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle. The following table presents the components of our cash conversion cycle during the five fiscal quarters beginning with the second fiscal quarter of 2023 through the second fiscal quarter of 2024:
Previous wording
Cash paid for property and equipment for the three fiscal months ended March 30, 2024 was $53.1 million, as compared to $45.6 million for the three fiscal months ended April 1, 2023. To be well positioned to service our customers and to fully participate in growing markets, we have increased and expect to maintain a relatively high level of capital expenditures for expansion in the mid-term. To increase our internal capacity, we plan to invest approximately $435 million in 2024, as part of our plan to invest approximately $1.4 billion in total capital expenditures for the period 2023 to 2025 and $2.6 billion for the period 2023 to 2028.
Current wording
Cash paid for property and equipment for the six fiscal months ended June 29, 2024 was $115.6 million, as compared to $117.3 million for the six fiscal months ended July 1, 2023. To be well positioned to service our customers and to fully participate in growing markets, we have increased and expect to maintain a relatively high level of capital expenditures for expansion in the mid-term. To increase our internal capacity, we had planned to invest approximately $435 million in 2024. At the midpoint of the year, the industry recovery is slower than expected. Accordingly, we have adjusted our timetable for investments for our new 12-inch wafer fab in Itzehoe, Germany beyond 2024, and now expect total capital expenditures for 2024 to be between $360 million and $390 million. We remain committed to spending a total of $2.6 billion in total capital expenditures for the period 2023 - 2028.
Previous wording
Free cash flow for the three fiscal months ended March 30, 2024 decreased versus the three fiscal months ended April 1, 2023 primarily due to decreased net earnings. We expect that free cash flow will be negatively impacted by the expected high level of capital expenditures for expansion in 2023 - 2025 after which we expect to generate increasingly higher levels of free cash. There is no assurance, however, that we will be able to continue to generate cash flows from operations and free cash at our historical levels, or at all, going forward if the economic environment worsens.
Current wording
Free cash flow for the six fiscal months ended June 29, 2024 decreased versus the six fiscal months ended July 1, 2023 primarily due to decreased net earnings and withholding taxes paid for the repatriation of cash to the U.S. We expect that free cash flow will be negatively impacted by the expected high level of capital expenditures for expansion in 2023 - 2025 after which we expect to generate increasingly higher levels of free cash. There is no assurance, however, that we will be able to continue to generate cash flows from operations and free cash at our historical levels, or at all, going forward if the economic environment worsens.
Previous wording
We had no amount outstanding on our revolving credit facility at December 31, 2023 and March 30, 2024. We expect to use the revolving credit facility from time-to-time to meet short-term financing needs.
Current wording
We had no amount outstanding on our revolving credit facility at December 31, 2023 and June 29, 2024. We borrowed and repaid $52 million on the revolving credit facility during the six fiscal months ended June 29, 2024. No amounts were outstanding on our revolving credit facility at any fiscal month-end. We expect to use the revolving credit facility from time-to-time to meet short-term financing needs.
Previous wording
We were in compliance with all financial covenants under the credit facility at March 30, 2024. Our interest coverage ratio and net leverage ratio were 11.78 to 1 and 0.99 to 1, respectively. We expect to continue to be in compliance with these covenants based on current projections.
Current wording
We were in compliance with all financial covenants under the credit facility at June 29, 2024. Our interest coverage ratio and net leverage ratio were 8.60 to 1 and 1.15 to 1, respectively. We expect to continue to be in compliance with these covenants based on current projections.
Previous wording
Borrowings under the credit facility bear interest at variable reference rates plus an interest margin. The applicable interest margin is based on our total leverage ratio. We also pay a commitment fee, also based on our total leverage ratio, on undrawn amounts. U.S. dollar borrowings under the credit facility are based on SOFR (including a customary spread adjustment). Borrowings in foreign currencies bear interest at currency-specific reference rates plus an interest margin. Based on our current total leverage ratio of 1.41 to 1, any new U.S. dollar borrowings will bear interest at SOFR plus 1.60% (including the applicable credit spread), and the undrawn commitment fee is 0.25% per annum.
Current wording
Borrowings under the credit facility bear interest at variable reference rates plus an interest margin. The applicable interest margin is based on our total leverage ratio. We also pay a commitment fee, also based on our total leverage ratio, on undrawn amounts. U.S. dollar borrowings under the credit facility are based on SOFR (including a customary spread adjustment). Borrowings in foreign currencies bear interest at currency-specific reference rates plus an interest margin. Based on our current total leverage ratio of 1.63 to 1, any new U.S. dollar borrowings will bear interest at SOFR plus 1.85% (including the applicable credit spread), and the undrawn commitment fee is 0.30% per annum.
Previous wording
The convertible senior notes due 2025 and due 2030 are not currently convertible. Pursuant to the indenture governing the convertible senior notes due 2030, we will cash-settle the principal amount of $1,000 per note and settle any additional amounts in cash or shares of our common stock. Pursuant to the indenture governing the convertible senior notes due 2025 and the amendments thereto incorporated in the Supplemental Indenture dated December 23, 2020, we will cash-settle the principal amount of $1,000 per note and settle any additional amounts in shares of our common stock. We intend to finance the principal amount of any converted notes using borrowings under our credit facility. No conversions have occurred to date.
Current wording
The convertible senior notes due 2025 and due 2030 are not currently convertible. Pursuant to the indenture governing the convertible senior notes due 2030, we will cash-settle the principal amount of $1,000 per note and settle any additional amounts in cash or shares of our common stock. Pursuant to the indenture governing the convertible senior notes due 2025 and the amendments thereto incorporated in the Supplemental Indenture dated December 23, 2020, we will cash-settle the principal amount of $1,000 per note and settle any additional amounts in shares of our common stock. We intend to finance the principal amount of any converted notes using borrowings under our credit facility. No conversions have occurred to date. We have the intent and ability to finance the principal amount of the convertible senior notes due 2025 using borrowings under our credit facility upon maturity of the notes.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Changes in net revenues were attributable to the following:
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Average selling prices decreased significantly versus the prior fiscal quarter and the prior year quarter.
Previous report — wording carried elsewhere
Average selling prices decreased versus the prior fiscal quarter and prior year quarter.
Previous report — wording carried elsewhere
Average selling prices decreased versus the prior fiscal quarter and prior year quarter.
Previous report — wording carried elsewhere
Average selling prices decreased versus the prior fiscal quarter and the prior year quarter.