VISHAY INTERTECHNOLOGY INC
For the period ended Dec 31, 2024. Filed Feb 14, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 14, 2025
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-K
Period ended 2023-12-31; filed 2024-02-16.
0000103730-24-000034
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-14.
0000103730-25-000017
Item 7. 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 226 previous paragraphs and 220 current paragraphs.
133 unchanged; 56 reworded; 31 added; 33 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 34 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 (31)
Current report
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. The facility has generated a net loss and we expect the facility to continue to generate a net loss while we invest in new equipment and qualify new products.
Current report
See the eight strategic levers being used to achieve our goals in "Key Business Strategies" in Item 1.
Current report
(1) Operating margin for the third fiscal quarter of 2024 includes $40.6 million of restructuring and severance expenses (see Note 3 to our consolidated financial statements). Operating margin for the fourth fiscal quarter of 2024 includes $66.5 million of goodwill impairment charges (see Note 19 to our consolidated financial statements).
Current report
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. The facility is currently generating a net loss and we expect the facility to continue to generate a net loss while we invest in new equipment and qualify new products.
Current report
As the Company transforms, we are incurring certain costs which are reducing current profitability while positioning the Company for future long-term profitable growth.
Current report
In 2024, we revised our short-term incentive compensation structure to better align with our growth objectives. The revised structure incentivizes daily behaviors and actions of our organizational leaders to create immediate growth in line with our cross-functional business objectives. Under the new structure, organizational leaders will be rewarded annually for meeting determined targets in revenue, operating margin, gross margin, and variable margin. Managers will be able to earn up to 130% of their former STI bonus targets for results which exceed expectations. The better alignment of the STI program with business results creates higher volatility in costs. The industry downturn that led to results that were below expectations in 2024 led to relatively low bonus accruals and thus lower reported SG&A expenses. Such costs are expected to be significantly higher if business results meet or exceed expectations.
Current report
In September 2024, we announced restructuring actions designed, in part, to optimize our manufacturing footprint and streamline business decision making. We recognized restructuring expense pursuant to on-going benefit arrangements of $40.6 million in 2024. The actions are expected to generate annualized cost savings of approximately $23 million (annualized), including $12 million of selling, general and administration expenses, when the actions are fully implemented by the end of 2026.
Current report
Goodwill represents the excess of the cost of businesses acquired over the fair value of the related net assets at the date of acquisition. Goodwill is not amortized but rather is tested for impairment at least annually. These tests are performed more frequently whenever events or changes in circumstances indicate that the assets might be impaired. We perform our annual goodwill impairment test as of the first day of the fourth fiscal quarter. When performing a quantitative assessment of our reporting units, we use an equal weighting of income (discounted cash flow) and market approaches to determine fair value. There are certain execution risks to our strategic plan. These execution risks, as well as the current market price of our common stock, result in the use of a relatively high discount rate in our discounted cash flow analysis.
Current report
The acquisitions of MaxPower Semiconductor, Inc. and the Newport wafer fab, as well as the planned capacity expansions at Itzehoe and Newport, are long-term investments which were not expected to generate significant income or cash flows in the near-term, but should greatly enhance the long-term position of our MOSFETs business. Such investments have significantly increased the net asset base of our MOSFETs business without a corresponding increase in current income or cash flows. We continue to be committed to these long-term projects.
Current report
During the third fiscal quarter of 2024, we identified the decrease in our share price in combination with the increase in the book value of our assets as a result of our acquisition and capital spending activities as potential indicators of impairment requiring an interim goodwill impairment test. The interim goodwill impairment test was performed as of September 28, 2024. We performed a quantitative assessment of each of our reporting units and determined that the estimated fair value of each reporting unit exceeded its carrying value, although the MOSFETs reporting unit’s fair value exceeded its carrying value by less than 10%. No goodwill impairment charges were recognized in the third fiscal quarter of 2024 as a result of the goodwill impairment test.
Current report
During the fourth fiscal quarter of 2024, we identified the further decrease in our share price in combination with the further increase in the book value of our assets as a result of our capital spending activities as well as certain internal and external factors as potential indicators of impairment requiring an interim test of our MOSFETs reporting unit. The interim goodwill impairment test was performed as of December 31, 2024. As a result of the assessment, we determined that the estimated fair value of the MOSFETs reporting unit was less than its carrying value. As a result, we recorded a goodwill impairment charge of $66.5 million. The goodwill impairment charge is noncash in nature and does not affect our liquidity, cash flows from operating activities, or debt covenants, and will not have a material impact on future operations.
Current report
If we are not able to achieve our anticipated results and/or if our discount rate were to increase, the fair value of our other reporting units would be adversely affected, which may result in future impairment. There is $179.0 million of goodwill remaining on the balance sheet as of December 31, 2024. We will continue to monitor our reporting units and related goodwill for any possible future noncash impairment charges.
Current report
See Notes 1 and 19 to the consolidated financial statements for additional information.
Current report
Goodwill
Current report
Goodwill represents the excess of the cost of businesses acquired over the fair value of the related net assets at the date of acquisition. We do not amortize goodwill, but test it at least annually for impairment at the reporting unit level. Impairment tests must be performed more frequently if there are indicators of impairment. A reporting unit is an operating segment, or one level below an operating segment, if it constitutes a business for which discrete financial information is available and regularly reviewed by segment management. Our business segments represent our reporting units for goodwill impairment testing purposes. See Note 15 to our consolidated financial statements for a description of our business segments.
Current report
When performing a quantitative goodwill impairment test, we determine fair values generally based on a weighting of income and market approaches. For purposes of the income approach, fair values are determined based upon the present value of the reporting unit’s estimated future cash flows, discounted at appropriate risk-adjusted rates. We use our internal forecasts to estimate future cash flows, which may include estimates of long-term future growth rates based upon our most recent reviews of the long-term outlook for each reporting unit. Cash flow estimates used to establish fair values under our income approach involve management judgments based on a broad range of information and historical results. In addition, external economic and competitive conditions can influence future performance. For purposes of the market approach, we use valuation multiples for companies comparable to our reporting units.
Current report
The gross profit margin in 2024 decreased versus the prior year primarily due to lower sales volume and decreased average selling prices. Costs associated with the Newport wafer fab also contributed to decreases versus the prior year.
Current report
Segment operating margin decreased significantly versus the prior year primarily due to decreased gross profit and increased SG&A costs.
Current report
Net revenues of the Optoelectronic Components segment decreased versus the prior year. The decrease was primarily due to decreased sales to distribution customers and customers in the industrial and automotive end markets. Sales significantly decreased in the Europe and Americas regions, partially offset by an increase in sales in the Asia region.
Current report
The gross profit margin decreased versus the prior year. The decrease is primarily due to lower sales volume, higher materials prices, and inventory obsolescence.
Current report
Net revenues of the Resistors segment decreased significantly versus the prior year. The decrease was primarily due to decreased sales to distribution customers and customers in the industrial and automotive end markets. Sales decreased in the Europe and Americas regions, partially offset by an increase in sales in the Asia region.
Current report
The gross profit margin decreased versus the prior year. The decrease is primarily due to lower average selling prices and higher logistics and labor costs.
Current report
Average selling prices have decreased slightly versus the prior year.
Current report
A large portion of expected growth of our Capacitors segment is in high voltage high power film capacitors used for smart grid infrastructure projects. Accordingly, we acquired Birkelbach, which is being vertically integrated, to ensure we have adequate metalized film material required to fulfill this growing demand.
Current report
In September 2024, we announced restructuring actions designed, in part, to streamline business decision making. The actions are expected to generate annualized cost savings of approximately $12 million of selling, general and administration expenses, when the actions are fully implemented by the end of 2026. However, we are also incurring additional SG&A costs associated with our strategic initiatives. See "Cost Management" above.
Current report
Interest expense for the year ended December 31, 2024 increased by $2.3 million versus the year ended December 31, 2023. Theincrease is primarily due to the issuance of the convertible senior notes due 2030 in the third fiscal quarter of 2023.
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 December 31, 2024, $17 million of our cash and cash equivalents and short-term investments were held by our U.S. subsidiaries. As of December 31, 2024, we are in a net borrowing position in the U.S. and we expect to continue to be at least through the first half of 2025 based on expected cash payments pursuant to our Stockholder Return Policy and funding of the Newport expansion. As of December 31, 2024, we have approximately $515 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 $77 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 may 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 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.
Current report
On August 15, 2024, we entered into an amendment to the credit facility that redefined the Interest Coverage Ratio to remove Capital Expenditures from the calculation and increased the minimum Interest Coverage Ratio to 3.25 to 1.00, among other changes.
Current report
We will pay the final increment of the TCJA transition tax in 2025.
Removed paragraphs (33)
Previous report
On November 8, 2023, we and Nexperia BVannounced that we have entered into an agreement whereby we will acquire Nexperia’s wafer fabrication facility and operations located in Newport, South Wales, U.K. for approximately $177 million in cash, subject to customary post-closing adjustments. The closing of the transaction is subject to U.K. government review and customary closing conditions, and is expected to occur in the first quarter of 2024.
Previous report
On September 12, 2023, we issued $750 million convertible senior notes due 2030. We used the net proceeds from the issuance of these notes to repurchase $370.2 million principal amount of convertible senior notes due 2025, $94.2 million to enter into capped call transactions intended to mitigate the dilution risk of convertible senior notes due 2030 by synthetically increasing the conversion price of the notes to approximately $43.98 per share, to repay amounts outstanding on our amended and restated credit facility, and for other general corporate purposes. We recognized a loss of $18.9 million due to the early extinguishment of the repurchased convertible senior notes due 2025.
Previous report
On May 8, 2023, we amended and restated our $750 million revolving credit agreement, which replaced our credit agreement that was scheduled to mature in June 2024. The amendment and restatement extended the maturity date of the revolving credit agreement until May 8, 2028, replaced the previous total leverage ratio used for financial covenant compliance measurement with a net leverage ratio, and replaced the LIBOR-based interest rate and related LIBOR-based mechanics applicable to U.S. dollar borrowings under the revolving credit agreement with an interest rate based on the Secured Overnight Financing Rate ("SOFR") (including a customary spread adjustment) and related SOFR-based mechanics. The maturity date of the credit facility will accelerate if within ninety-one days prior to the maturity of our convertible senior notes due 2025, the outstanding principal amount of such notes exceeds a defined liquidity measure as set forth in the credit facility. The repurchase of $370.2 million principal amount of convertible senior notes due 2025 in September 2023 substantially reduces the risk of maturity date acceleration. Other terms and conditions are substantially unchanged.
Previous report
To be ready for this next phase of growth, we intend to invest a total of about $1.2 billion between 2023 and 2025. These projects include our new power inductor site in Mexico; a resistor manufacturing expansion in Mexico; expanded 8" diode manufacturing in Taiwan and Turin, Italy; and the new MOSFET 12” fab in Itzehoe, Germany. Our plan was to invest approximately $385 million in 2023; however, capital spending for 2023 came in at $329 million due to some delays in delivery and installing equipment. We intend to carry over the remaining $56 million into 2024.
Previous report
We have also expanded our external capacity, engaging in developing partnerships with subcontractors to outsource some commodity products and create incremental capacity for our higher growth and higher return products. Each reportable segment is evaluating subcontractors, including supporting front-end capacities for our semiconductor segments.
Previous report
By growing capacity and capabilities, we are also enhancing our ability to support all the business channels of OEM, distribution, and EMS, while maximizing the profitability of each one through a focus on higher margin customers.
Previous report
The acquisition of MaxPower and its silicon carbide technology in 2022 is an illustration of this increased investment. During the fourth fiscal quarter, we released our 1,200-volt silicon carbide ("SiC") planar MOSFETs. We are planning to have the SiC package types for three different resistance and current capabilities available during the first half of 2024. In parallel, we continue to advance the development of the 1,200-volt dual-trench technology, the 1,700-volt planar technology, and the 650-volt planar technology. We plan to utilize our pending acquisition of the Newport wafer fab as the home for MaxPower to further develop and scale our SiC capabilities.
Previous report
Another area of focus is our introduction of solution selling, speaking to customer engineers about applications and the performance improvement that Vishay components can bring, from the full array of our portfolio. Customer engineers look for suppliers who can provide solutions to advance their technologies. Vishay’s semiconductors and passive components can populate greater than 80% of the components on the circuit board in many applications.
Previous report
On November 8, 2023, we and Nexperia BV announced that we have entered into an agreement whereby we will acquire Nexperia’s wafer fabrication facility and operations located in Newport, South Wales, U.K. for approximately $177 million in cash, subject to customary post-closing adjustments. The closing of the transaction is subject to U.K. government review and customary closing conditions, and is expected to occur in the first quarter of 2024.
Previous report
On October 28, 2022, we acquired MaxPower, a San Jose, California-based fabless power semiconductor provider dedicated to delivering innovative and cost-effective technologies that optimize power management solutions. MaxPower's proprietary device structures and process techniques provide leading edge silicon and SiC MOSFET products. Its SiC product development targets automotive and industrial applications. We paid cash of $50.0 million, net of cash acquired, at closing. The transaction also included possible contingent payments of up to $57.5 million, which would be payable upon the achievement of certain technology milestones, upon favorable resolution of certain technology licensing matters with a third party, and upon the disposition of MaxPower's investment in an equity affiliate. One of the contingencies was resolved in the fourth fiscal quarter of 2023, which resulted in no additional payments to the former employees and stockholders of MaxPower. Significant developments occurred in another of the contingencies in January 2024. Our estimate of the maximum possible contingent payments is $17.5 million. MaxPower is included in our MOSFETs segment. The inclusion of this acquisition did not have a material impact on the Company's consolidated results for the years ended December 31, 2023 and 2022.
Previous report
Occasionally, our ongoing cost containment activities are not adequate and we must take actions to maintain our cost competitiveness. We incurred significant restructuring expenses in our past to reduce our cost structure. Historically, our primary cost reduction technique was through the transfer of production to the extent possible from high-labor-cost countries to lower-labor-cost countries. We believe that our manufacturing footprint is suitable to serve our customers and end markets, while maintaining lower manufacturing costs. Since 2013, our cost reduction programs have primarily focused on reducing fixed costs, including selling, general, and administrative expenses.
Previous report
We do not anticipate any material restructuring activities in 2024. However, a worsening business environment for the electronics industry or a significant economic downturn may require us to implement additional restructuring initiatives.
Previous report
The gross profit margin in 2023 decreased versus the prior year primarily due to higher utilities, labor, and repair and maintenance costs.
Previous report
Net revenues of the Optoelectronic Components segment decreased significantly versus the prior year. The decrease was primarily due to general consumer weakness that impacted many of the products we sell. The result was decreased sales to distribution customers and customers in all regions. We expect long-term growth for this segment.
Previous report
The gross profit margin decreased versus the prior year. The decrease is primarily due to lower sales volume, higher materials, services, labor, and utilities costs, and inventory and higher depreciation expense.
Previous report
We are now using our recently modernized and expanded wafer fab in Heilbronn, Germany.
Previous report
Net revenues of the Resistors segment increased slightly versus the prior year. The increase was primarily due to increased sales to military and aerospace, automotive, and industrial end market customers and customers in the Europe region, partially offset by decreased sales to distribution customers.
Previous report
The gross profit margin increased versus the prior year. The increase is primarily due to increased average selling prices, higher sales volume, lower logistics and metals prices, and positive foreign currency impacts, partially offset by higher labor and materials costs, other inflationary impacts, and start-up costs of a new manufacturing facility.
Previous report
Segment operating margin increased versus the prior year. The increase is primarily due to increased gross profit.
Previous report
Segment operating margin increased versus the prior year. The increase is primarily due to increased gross profit.
Previous report
Average selling prices have increased versus the prior year.
Previous report
Interest expense for the year ended December 31, 2022 decreased by $0.4 million versus the year ended December 31, 2021.
Previous report
The effective tax rate for the year ended December 31, 2021 was impacted by $53.3 million of tax expense recognized upon a change in Israeli tax law that was enacted on November 15, 2021. We have historically benefited from tax incentive programs offered by the Israeli government, including the generation of income not subject to current income tax. Any tax-exempt earnings generated under these programs would incur an additional “claw-back” tax at approximately 11.1% if they were distributed or invested outside of Israel, in addition to normal withholding taxes on earnings distributed from Israel. Otherwise, taxes on such earnings were indefinitely deferred.
Previous report
The change in Israeli tax law provided companies with an election to currently pay a reduced claw-back rate of as low as 6% upon meeting certain conditions, with the ability to distribute or invest those amounts outside of Israel at any time in the future. We elected to pay taxes on all previously untaxed earnings at the reduced 6% claw-back rate. As a direct result of this change in tax law, we made the determination during the fourth fiscal quarter of 2021 that substantially all unremitted foreign earnings in Israel are no longer permanently reinvested. We recorded the additional tax expense during the fourth fiscal quarter of 2021 to accrue the claw-back tax on applicable earnings and withholding taxes necessary to distribute these approximately $385.0 million of accumulated earnings to the United States. We repatriated $81.2 million (net of taxes) to the United States in 2022 pursuant to this repatriation program. We paid withholding taxes, foreign taxes, and Israeli clawback taxes of $25.2 million due to the repatriation.
Previous report
The effective tax rate for the year ended December 31, 2021 was also impacted by a $5.7 million tax benefit recognized upon the release of a valuation allowance and $8.3 million of tax benefits recognized due to changes in tax regulations.
Previous report
As of December 31, 2023, 65.5% 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 is expected to be 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 will be used to fund our Stockholder Return Policy and the Nexperia transaction. 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.
Previous report
On May 8, 2023, we amended and restated our $750 million revolving credit agreement, which replaced our credit agreement that was scheduled to mature in June 2024. The amendment and restatement extended the maturity date of the revolving credit agreement until May 8, 2028.
Previous report
The amendment and restatement of the facility replaced the leverage ratio used for compliance measurement with a net leverage ratio, reducing the measure of outstanding debt by up to $250 million of unrestricted cash. Measurements prior to the amendment and restatement were based on a total leverage ratio.
Previous report
Pursuant to the credit facility, the financial maintenance covenants include (a) an interest coverage ratio of not less than 2.00 to 1; and (b) a net leverage ratio of not more than 3.25 to 1 (and a pro forma ratio of 3.00 to 1 on the date of incurrence of additional debt). The computation of these ratios is prescribed in Article VI of the Credit Agreement between Vishay Intertechnology, Inc. and JPMorgan Chase Bank, N.A., which was filed with the SEC as Exhibit 10.1 to our current report on Form 8-K filed May 8, 2023.
Previous report
On September 12, 2023, we issued $750 million convertible senior notes due 2030. We used the net proceeds from the issuance of these notes to repurchase $370.2 million principal amount of convertible senior notes due 2025, to pay $94.2 million to enter into capped call transactions intended to mitigate the dilution risk of convertible senior notes due 2030 by synthetically increasing the conversion price of the notes to approximately $43.98 per share, to repay amounts outstanding on our amended and restated credit facility, and for other general corporate purposes.
Previous report
The transactions effectively refinanced the majority of the convertible senior notes due 2025 for five additional years at the same coupon interest rate, reduced future interest expense due to the paydown of the revolving credit facility, and enhanced our U.S. liquidity position to execute our growth initiatives.
Previous report
The TCJA imposed a one-time transition tax on deferred foreign earnings, payable in defined increments over eight years through 2025.
Previous report
On November 8, 2023, Vishay and Nexperia BV announced that we have entered into an agreement whereby we will acquire Nexperia’s wafer fabrication facility and operations located in Newport, South Wales, U.K. for approximately $177.0 million in cash. On November 8, 2023, we remitted $8.75 million to an escrow account as a deposit for this agreement. The closing of the transaction is subject to U.K. government review and customary closing conditions, and is expected to occur in the first quarter of 2024.
Reworded paragraphs (56)
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. We have increased our capacity internally by investing approximately $329 million in 2023 and plan to invest approximately $1.2 billion in total from 2023 - 2025 primarily for capital expansion projects outside of China. 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 structure. To increase our internal capacity, we had planned to invest approximately $435 million in 2024. The industry recovery has been slower than expected. Accordingly, we adjusted our timetable for investments for our new 12-inch wafer fab in Itzehoe, Germany beyond 2024 and invested $320 for capital expenditures in 2024. We remain committed to our long-term plan of increasing Vishay's capacity, to assure our customers of reliable volume as they scale. We have and will continue to modulate the amount and timing of our capital expenditures in response to order flow and the timing of customer demand and qualifications. The decreased lead time for equipment and the increased subcontractor capacity are also variables that allow us to adjust our capacity spending.
Previous wording
Our business and operating results have been and will continue to be impacted by worldwide economic conditions. Our revenues are dependent on end markets that are impacted by consumer and industrial demand, and our operating results can be adversely affected by reduced demand in those global markets. In this volatile economic environment, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure we have the management, business processes, and resources to meet our future needs. We will react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess inventory build in periods of decline and maximize opportunities in periods of growth. We believe we have sufficient liquidity to withstand temporary disruptions in the economic environment. See additional information regarding our competitive strengths and key challenges as disclosed in Part I.
Current wording
Our business and operating results have been and will continue to be impacted by worldwide economic conditions. Our revenues are dependent on end markets that are impacted by consumer and industrial demand, and our operating results can be adversely affected by reduced demand in those global markets. In this volatile economic environment, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure we have the management, business processes, and resources to meet our future needs. We believe we can react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess inventory build in periods of decline and maximize opportunities in periods of growth. We implemented restructuring actions in the third fiscal quarter of 2024 designed to optimize our manufacturing footprint and streamline business decision making. We believe we have significant liquidity to withstand temporary disruptions in the economic environment. See additional information regarding our competitive strengths and key challenges as disclosed in Part I.
Previous wording
We utilize several financial metrics, including net revenues, gross profit margin, segment operating income, 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 fourth fiscal quarter of 2023 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 year period primarily due to lower volume.
Current wording
We utilize several financial metrics, including net revenues, gross profit margin, segment operating income, 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 fourth 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 year period primarily due to lower volume and decreased average selling prices.
Previous wording
Net revenues for the year ended December 31, 2023 were $3.402 billion, compared to net revenues of $3.497 billion and $3.240 billion for the years ended December 31, 2022 and 2021, respectively. Net earnings attributable to Vishay stockholders for the year ended December 31, 2023 were $323.8 million, or $2.31 per diluted share, compared to $428.8 million, or $2.98 per diluted share, and $298.0 million, or $2.05 per share, for the years ended December 31, 2022 and 2021, respectively.
Current wording
Net revenues for the year ended December 31, 2024 were $2.938 billion, compared to net revenues of $3.402 billion and $3.497 billion for the years ended December 31, 2023 and 2022, respectively. The net loss attributable to Vishay stockholders for the year ended December 31, 2024 was $(31.2) million, or $(0.23) per share, compared to net earnings of $323.8 million, or $2.31 per diluted share, and $428.8 million, or $2.98 per diluted share, for the years ended December 31, 2023 and 2022, respectively.
Previous wording
We define adjusted net earnings as net earnings determined in accordance with GAAP adjusted for various items that management believes are not indicative of the intrinsic operating performance of our business. We define free cash as the cash flows generated from continuing operations less capital expenditures plus net proceeds from the sale of property and equipment. The reconciliations below include certain financial measures which are not recognized in accordance with GAAP, including adjusted net earnings, adjusted earnings per share, and free cash. These non-GAAP measures should not be viewed as alternatives to GAAP measures of performance or liquidity. Non-GAAP measures such as adjusted net earnings, adjusted earnings per share, and free cash do not have uniform definitions. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies. Management believes that adjusted net earnings and adjusted earnings per share are meaningful because they provide insight with respect to our intrinsic operating results. Management believes that free cash is a meaningful measure of our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends.
Current wording
We define adjusted net earnings as net earnings (loss) determined in accordance with GAAP adjusted for various items that management believes are not indicative of the intrinsic operating performance of our business. We define free cash as the cash flows generated from continuing operations less capital expenditures plus net proceeds from the sale of property and equipment. The reconciliations below include certain financial measures which are not recognized in accordance with GAAP, including adjusted net earnings, adjusted earnings per share, and free cash. These non-GAAP measures should not be viewed as alternatives to GAAP measures of performance or liquidity. Non-GAAP measures such as adjusted net earnings, adjusted earnings per share, and free cash do not have uniform definitions. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies. Management believes that adjusted net earnings and adjusted earnings per share are meaningful because they provide insight with respect to our intrinsic operating results. Management believes that free cash is a meaningful measure of our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends.
Previous wording
Orders are lower due to a distributor inventory correction that began in the fourth fiscal quarter of 2022 and continued throughout 2023. Our results for 2023 remained strong, although weaker than our 2022 results.
Current wording
Orders are lower due to a distributor inventory correction that took longer than expected and continued through 2024. The long-term outlook for our business remains strong, although our results are weaker than prior year results.
Previous wording
Our free cash results were significantly impacted by the installment payments of the U.S. transition tax of $27.7 million in 2023 and $14.8 million in 2022 and 2021, respectively, and $63.6 million and $25.2 million of payments of foreign, withholding, and claw-back cash taxes on foreign earnings for the $276.8 million and $81.2 million (net of taxes) that were repatriated to the U.S. in 2023 and 2022, respectively.
Current wording
Our free cash results were significantly impacted by the installment payments of the U.S. transition tax of $37.6 million in 2024, $27.7 million in 2023, and $14.8 million in 2022, respectively, andpayments of foreign, withholding, and claw-back cash taxes of $15.0 million in 2024, $63.6 million in 2023, and $25.2 million in 2022 on foreign earnings of $105.0 million, $276.8 million, and $81.2 million (net of taxes) that were repatriated to the U.S. in 2024, 2023, and 2022, respectively.
Previous wording
Effective January 1, 2023, a new executive leadership team, promoted from within, embarked on a new era at Vishay. The new executive management team laid out a three-year plan to expand capacity to support our highest growth and highest return product lines and to position Vishay to be ready for the next phase of megatrends in e-mobility, sustainability, and connectivity. The year 2023 is generally seen as the staging year for this plan, and all elements of the plan are progressing throughout the organization. In 2024, we expect to advance many of these initiatives and begin to have increased manufacturing capacity available. Beginning in late 2024 and into 2025, we expect to be in a better position to capture the next step in the growing demand for electrification in our key end-markets.
Current wording
Effective January 1, 2023, a new executive leadership team, promoted from within, embarked on a new era at Vishay ("Vishay 3.0"). The new executive management team laid out a three-year plan to expand capacity to support our highest growth and highest return product lines and to position Vishay to be ready for the next phase of megatrends in e-mobility, sustainability, and connectivity. The year 2023 was generally seen as the staging year for this plan, and all elements of the plan have progressed throughout the organization. In 2024, many of these initiatives advanced and increased manufacturing capacity was available. Beginning in early 2025, we expect to be in a better position to capture the next step in the growing demand for electrification in our key end-markets.
Previous wording
To focus this growth, we have identified product lines for growth across each reportable segment Most of these product lines serve multiple end-market segments, applications, and business channels. We have developed go-to market strategies for each one of these product lines, concentrating our resources on improving the technical performance of non-commodity and custom products, to better position Vishay to support the mega trends toward electrification and data communications.
Current wording
To focus this growth, we have identified product lines for growth across each reportable segment. Most of these product lines serve multiple end-market segments, applications, and business channels. We have developed go-to market strategies for each one of these product lines, concentrating our resources on improving the technical performance of certified and custom products, to better position Vishay to support the mega trends toward electrification and data communications.
Previous wording
These initiatives are the foundation for our ambitions to unleash the potential at Vishay, realizing the full value of our broad product portfolio and becoming a customer-first company, and for our goals of driving top line growth, expanding margins and optimizing returns.
Current wording
These Vishay 3.0 initiatives are the foundation for our ambitions to unleash the potential at Vishay, realizing the full value of our broad product portfolio and becoming a customer-first company, and for our goals of driving top line growth, expanding margins and optimizing returns.
Previous wording
During the fourth quarters of 2022 and 2021, we determined that substantially all unremitted foreign earnings in Germany and Israel, respectively, are no longer indefinitely reinvested. The changes in these indefinite reinvestment assertions will provide greater access to our worldwide cash balances to fund our growth plan and our Stockholder Return Policy, but also increased our effective tax rate.
Current wording
We have determined that substantially all unremitted foreign earnings in Germany and Israel are no longer indefinitely reinvested. These indefinite reinvestment assertions provide greater access to our worldwide cash balances to fund our growth plan and our Stockholder Return Policy, but also negatively impact our effective tax rate.
Previous wording
Our chief operating decision maker makes decisions, allocates resources, and evaluates business segment performance based on segment operating income. Only dedicated, direct selling, general, and administrative ("SG&A") expenses of the segments are included in the calculation of segment operating income. We do not allocate certain SG&A expenses that are managed at the regional or corporate global level to our segments. Accordingly, segment operating income excludes these SG&A expenses that are not directly traceable to the segments. Segment operating income would also exclude costs not routinely used in the management of the segments in periods when those items are present, such as restructuring and severance costs, the direct impact of the COVID-19 pandemic, and other items affecting comparability. Segment operating income is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs. Segment operating margin is segment operating income expressed as a percentage of net revenues.
Current wording
Our chief operating decision maker makes decisions, allocates resources, and evaluates business segment performance based on segment gross profit and segment operating income. Only dedicated, direct selling, general, and administrative ("SG&A") expenses of the segments are included in the calculation of segment operating income. We do not allocate certain SG&A expenses that are managed at the regional or corporate global level to our segments. Accordingly, segment operating income excludes these SG&A expenses that are not directly traceable to the segments. Segment operating income would also exclude costs not routinely used in the management of the segments in periods when those items are present, such as restructuring and severance costs, goodwill impairment charges, the direct impact of the COVID-19 pandemic, and other items affecting comparability. Segment operating income is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs. Segment operating margin is segment operating income expressed as a percentage of net revenues.
Previous wording
Revenues decreased versus the fourth fiscal quarter of 2022 and versus the prior fiscal quarter primarily due to lower sales volume. The book-to-bill ratio and backlog were negatively impacted by the distributor inventory correction that began in 2022 and continued through 2023. We continue to increase manufacturing capacity for critical product lines. Average selling prices decreased versus the fourth fiscal quarter of 2022 and prior fiscal quarter.
Current wording
Revenues decreased versus the fourth fiscal quarter of 2023 and versus the prior fiscal quarter primarily due to lower sales volume and lower average selling prices. The book-to-bill ratio increased versus the prior fiscal quarter, but orders backlog were negatively impacted by the distributor inventory correction that began in 2022 and continued through 2024. We continue to increase manufacturing capacity for critical product lines. Average selling prices decreased versus the fourth fiscal quarter of 2023 and prior fiscal quarter.
Previous wording
Gross profit margin decreased versus the prior fiscal quarter and prior year quarter primarily due to lower volume.
Current wording
Gross profit margin decreased versus the prior fiscal quarter and prior year quarter primarily due to lower volume and decreased average selling prices.
Previous wording
The book-to-bill ratio in the fourth fiscal quarter of 2023 increased to 0.75 versus 0.63 in the third fiscal quarter of 2023.
Current wording
The book-to-bill ratio in the fourth fiscal quarter of 2024 increased to 1.01 versus 0.88 in the third fiscal quarter of 2024.
Previous wording
As part of its growth strategy, the Company seeks to expand through targeted acquisitions of other manufacturers of electronic components. These acquisition targets include businesses that have established positions in major markets, reputations for product quality and reliability, and product lines with which the Company has substantial marketing and technical expertise. It also includes certain businesses that possess technologies which the Company expects to further develop and commercialize, such as MaxPower Semiconductor, Inc. ("MaxPower"), acquired in 2022, and key niche suppliers to vertically integrate our supply chain, such as Centerline Technologies, LLC, acquired in 2023. To limit our financial exposure, we have implemented a policy not to pursue acquisitions if our post-acquisition debt would exceed 2.5x our pro forma earnings before interest, taxes, depreciation, and amortization (“EBITDA”). For these purposes, we calculate pro forma EBITDA as the adjusted EBITDA of Vishay and the target for Vishay’s four preceding fiscal quarters, with a pro forma adjustment for savings which management estimates would have been achieved had the target been acquired by Vishay at the beginning of the four fiscal quarter period.
Current wording
As part of its growth strategy, the Company seeks to expand through targeted acquisitions of other manufacturers of electronic components. These acquisition targets include businesses that have established positions in major markets, reputations for product quality and reliability, and product lines with which the Company has substantial marketing and technical expertise. It also includes certain businesses that possess technologies which the Company expects to further develop and commercialize, such as MaxPower Semiconductor, Inc., acquired in 2022; businesses with well-developed technologies that the Company expects to grow using its manufacturing capabilities, capacity, and economies of scale to expand production and sell to its global customer base, such as Ametherm, Inc., acquired in 2024; and key niche suppliers to vertically integrate our supply chain, such as Birkelbach Kondensatortechnik GmbH ("Birkelbach"), acquired in 2024, and Centerline Technologies, LLC, acquired in 2023. To limit our financial exposure, we have implemented a policy not to pursue acquisitions if our post-acquisition debt would exceed 2.5x our pro forma earnings before interest, taxes, depreciation, and amortization (“EBITDA”). For these purposes, we calculate pro forma EBITDA as the adjusted EBITDA of Vishay and the target for the trailing four fiscal quarters, with a pro forma adjustment for savings which management estimates would have been achieved had the target been acquired by Vishay at the beginning of the trailing four fiscal quarters.
Previous wording
There is no assurance that we will be able to close the transaction for the Nexperia wafer fabrication facility, or identify and acquire additional suitable acquisition candidates at price levels and on terms and conditions we consider acceptable.
Current wording
There is no assurance that we will be able to identify and acquire suitable acquisition candidates at price levels and on terms and conditions we consider acceptable.
Previous wording
Also beginning in 2023, we made and are making significant investments in capital expenditures primarily for capital expansion projects outside of China, which will increase depreciation expense. At the same time, we are focusing on increasing our technical resources, adding additional customer-facing engineers, and intensifying our activities in R&D. We have seen and expect to continue to see an increase in operating expenses over the next couple of years as we add these engineering talents, fill gaps in our technology, and become a preferred supplier to more customers and more broadly sell our product portfolio. Management believes such additional costs will enhance our long-term performance by accelerating our growth.
Current wording
The acquisition of Nexperia's Newport fab in 2024 will enhance the manufacturing capacity and capabilities of our MOSFETs segment. The facility added significant depreciation and other costs to our MOSFETs segment. The facility is generating a loss and we expect it to continue to generate a loss while we invest in new equipment and qualify new products. Also beginning in 2023, we began making significant investments in capital expenditures primarily for capital expansion projects primarily outside of China, which will also increase depreciation expense. At the same time, we are focusing on increasing our technical resources, adding additional customer-facing engineers, and intensifying our activities in R&D.
Previous wording
At the same time, we are focusing on increasing our technical resources, adding additional customer-facing engineers, and intensifying our activities in R&D. We have seen and will continue to see an increase in operating expenses over the next couple of years as we add these engineering talents, fill gaps in our technology, and become a preferred supplier to more customers and more broadly sell our product portfolio. This includes investments in technology, including enhanced Customer Relationship Management and planning tools, to improve our operational excellence.
Current wording
We have seen and expect to continue to see an increase in operating expenses over the next couple of years as we add engineering talents, fill gaps in our technology, and become a preferred supplier to more customers and more broadly sell our product portfolio.
Previous wording
During 2023, we implemented the Vishay Intertechnology, Inc. 2023 Long-Term Incentive Plan (the "2023 Plan") to enable us to recruit and retain highly qualified employees, directors, consultants and other service providers, provide them with an incentive for productivity, and create an opportunity for them to share in the growth and value of the Company. The 2023 Plan is the first broad-based stock compensation program at Vishay in over 20 years. This program increased operating expenses by $8.8 million in 2023 and is expected to increase operating expenses by between $7 million and $10 million in 2024 versus 2023. Management believes such additional non-cash costs will enhance the long-term performance of the Company by providing selected participants with an incentive to improve the growth and profitability of the Company.
Current wording
During 2023, we implemented the Vishay Intertechnology, Inc. 2023 Long-Term Incentive Plan (the "2023 Plan") to enable us to recruit and retain highly qualified employees, directors, consultants and other service providers, provide them with an incentive for productivity, and create an opportunity for them to share in the growth and value of the Company. The 2023 Plan is the first broad-based stock compensation program at Vishay in over 20 years. This program increased operating expenses by $5.1 million in 2024 versus 2023 and is expected to increase operating expenses by between $4 million and $7 million in 2025 versus 2024. Management believes such additional non-cash costs will enhance the long-term performance of the Company by providing selected participants with an incentive to improve the growth and profitability of the Company.
Previous wording
For those subsidiaries where the local currency is the functional currency, revenues and expenses are translated at the average exchange rate for the year. While the translation of revenues and expenses into U.S. dollars does not directly impact the consolidated statement of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies. The dollar was weaker during 2023 versus 2022, but stronger during 2022 versus 2021, with the translation of foreign currency revenues and expenses into U.S. dollars increasing reported revenues and expenses in 2023 versus 2022, but decreasing reported revenues and expenses in 2022 versus 2021.
Current wording
For those subsidiaries where the local currency is the functional currency, revenues and expenses are translated at the average exchange rate for the year. While the translation of revenues and expenses into U.S. dollars does not directly impact the consolidated statement of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies. The net change of the dollar was not material when comparing 2024 versus 2023, but the dollar was weaker during 2023 versus 2022, with the translation of foreign currency revenues and expenses into U.S. dollars increasing reported revenues and expenses in 2023 versus 2022.
Previous wording
Our operations in Israel and most significant locations in Asia are largely financed in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly payroll-related, which are incurred in the local currency. The cost of products sold and selling, general, and administrative expense have been favorably impacted for the year ended December 31, 2023 compared to 2022 and for the year ended December 31, 2022 compared to 2021 by local currency transactions of subsidiaries which use the U.S. dollar as their functional currency.
Current wording
Our operations in Israel, the United Kingdom, and most significant locations in Asia are largely financed in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly payroll-related, which are incurred in the local currency. The cost of products sold and selling, general, and administrative expense have been favorably impacted for the year ended December 31, 2024 compared to 2023 and for the year ended December 31, 2023 compared to 2022 by local currency transactions of subsidiaries which use the U.S. dollar as their functional currency.
Previous wording
The fair value of reporting units for goodwill impairment testing purposes is measured primarily using present value techniques based on projected cash flows from the reporting unit. The calculated results are evaluated for reasonableness using comparable company data. The determination of the fair value of the reporting units requires us to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries in which we compete; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization, and capital expenditures.
Current wording
The determination of the fair value of the reporting units requires us to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries in which we compete; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization (components of earnings before interest, taxes, depreciation, and amortization, "EBITDA"); and capital expenditures.
Previous wording
See Note 1 to our consolidated financial statements for a description of our goodwill impairment tests.
Current wording
See Notes 1 and 19 to our consolidated financial statements for a description of our goodwill impairment tests.
Previous wording
During 2023, certain tax examinations were concluded and certain statutes of limitations lapsed. Our tax provision for those years includes adjustments related to the resolution of these matters. We settled an examination of our U.S. federal income tax returns for the periods ended December 31, 2017 through 2019. Our federal income tax returns for subsequent years remain subject to examination. The tax returns of significant non-U.S. subsidiaries currently under examination are located in the following jurisdictions: Israel (2021), Germany (2017 through 2021), India (2004 through 2021), and Philippines (2017 through 2022). The Company and its subsidiaries also file income tax returns in other taxing jurisdictions in the U.S. and around the world, many of which are still open to examination.
Current wording
During 2024, certain tax examinations were concluded and certain statutes of limitations lapsed. Our tax provision for those years includes adjustments related to the resolution of these matters. During 2023, we settled an examination of our U.S. federal income tax returns for the periods ended December 31, 2017 through 2019. Our federal income tax returns for the years 2021 through 2023 remain subject to examination. The tax returns of significant non-U.S. subsidiaries currently under examination are located in the following jurisdictions: Israel (2021), Germany (2017 through 2021), India (2004 through 2021), and Philippines (2017 through 2023). The Company and its subsidiaries also file income tax returns in other taxing jurisdictions in the U.S. and around the world, many of which are still open to examination.
Previous wording
Despite the 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 in 2023 is primarily sales volume-driven, partially offset by increased average selling prices. The increase in net revenues in 2022 was primarily due to increased sales volume and average selling prices.
Current wording
Despite the 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 in 2024 is primarily due to lower sales volume and decreased average selling prices. The decrease in net revenues in 2023 was primarily sales volume-driven, partially offset by increased average selling prices.
Previous wording
Gross profit margins for the year ended December 31, 2023 were 28.6%, as compared to 30.3% for the year ended December 31, 2022. The decrease in gross profit margin is primarily due to decreased sales volume. Higher labor, materials, and utilities costs also negatively impacted the gross profit margin.
Current wording
Gross profit margins for the year ended December 31, 2024 were 21.3%, as compared to 28.6% for the year ended December 31, 2023. The decrease in gross profit margin is primarily due to lower sales volume, decreased average selling prices, and the impact of the Newport acquisition. Higher labor costs and depreciation expense also negatively impacted the gross profit margin.
Previous wording
Net revenues of the MOSFETs segment increased slightly in 2023 versus the prior year. The increase is primarily due to increased sales to automotive, power supply, and industrial end market customers in the Europe region, partially offset decreased sales to customers in the Americas and Asia regions.
Current wording
Net revenues of the MOSFETs segment decreased significantly in 2024 versus the prior year. The decrease is primarily due to decreased sales to distribution customers and customers in the industrial, power supply, and automotive end markets.
Previous wording
The segment operating margin decreased versus the prior year primarily due to decreased gross profit. Increased segment SG&A expenses primarily due to acquisition-related expenses also contributed to the decrease.
Current wording
The segment operating margin decreased versus the prior year. The decreases are primarily due to gross profit margin decreases and increased segment SG&A expenses associated with the Newport wafer fab.
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 2-3 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
We acquired leading edge silicon and silicon carbide MOSFETs products with our acquisition of MaxPower in the fourth fiscal quarter of 2022. Our pending acquisition of Nexperia's Newport fab is expected to enhance the manufacturing capacity and capabilities of our MOSFETs segment.
Current wording
We acquired leading edge silicon and silicon carbide MOSFETs products with our acquisition of MaxPower in the fourth fiscal quarter of 2022. We plan to use the Newport wafer fabrication facility acquired in the first fiscal quarter of 2024 as the home for MaxPower to further develop and scale our SiC MOSFETs and diodes capabilities. The acquisitions of MaxPower Semiconductor, Inc. and the Newport wafer fab, as well as the planned capacity expansions at Itzehoe and Newport, are long-term investments which were not expected to generate significant income or cash flows in the near-term, but should greatly enhance the long-term position of our MOSFETs business. Despite the goodwill impairment charge recorded in 2024, we remain committed to these long-term projects.
Previous wording
Net revenues of the Diodes segment decreased significantly in 2023. The decrease is primarily due to decreased sales to distribution and EMS customers, power supply end market customers, and customers in the Americas and Asia regions, partially offset by increased sales to automotive end market customers.
Current wording
Net revenues of the Diodes segment decreased significantly in 2024. The decrease versus the prior year is due to decreased sales in all regions to distribution and EMS customers and industrial, automotive, and power supply end market customers.
Previous wording
Gross profit margin decreased versus the prior year primarily due to lower sales volume and higher materials, labor, and fixed costs, partially offset by higher average selling prices.
Current wording
Gross profit margin decreased significantly versus the prior year primarily due to lower sales volume, decreased average selling prices, and higher materials, labor, and fixed costs.
Previous wording
The gross profit margin decreased versus the prior year. The decrease is due to lower sales volume, higher labor and materials costs, and other inflationary impacts, partially offset by increased average selling prices, lower metals and logistics costs, and favorable exchange rate impacts.
Current wording
The gross profit margin decreased versus the prior year. The decrease is due to lower sales volume, decreased average selling prices, and higher labor and materials costs, partially offset by a favorable product mix and decreased utilities costs.
Previous wording
Net revenues of the Inductors segment increased moderately versus the prior year. The increase is primarily due to increased sales to EMS customers, medical, automotive, and military and aerospace end market customers, and customers in the Americas and Europe regions, partially offset by decreased sales to distribution customers, industrial and telecommunications end market customers, and customers in the Asia region.
Current wording
Net revenues of the Inductors segment increased slightly versus the prior year. The increase is primarily due to increased sales to EMS customers, medical, and military and aerospace end market customers, and customers in the Americas and Asia regions, partially offset by decreased sales to industrial and automotive end market customers and customers in the Europe region.
Previous wording
We expect long-term growth in this segment, and are continuously expanding manufacturing capacity for certain product lines and evaluating acquisition opportunities, particularly of specialty businesses. We have greatly increased our manufacturing capacity for power inductors in the past year.
Current wording
We expect long-term growth in this segment, and are continuously expanding manufacturing capacity for certain product lines and evaluating acquisition opportunities, particularly of specialty businesses.
Previous wording
Net revenues of the Capacitors segment decreased slightly versus the prior year. The decrease is primarily due to decreased sales to distribution and EMS customers and customers in the Americas and Asia regions, partially offset by increased sales to industrial end market customers.
Current wording
Net revenues of the Capacitors segment decreased versus the prior year. The decrease is primarily due to decreased sales to distribution customers, customers in the industrial and automotive end markets, and customers in the Americas and Europe regions, partially offset by increased sales to customers in the Asia region.
Previous wording
The gross profit margin increased versus the prior year. The increase is due to increased average selling prices, positive impact of product mix, positive foreign currency impacts, and lower metals, freight, and utility costs, partially offset by lower sales volume and higher labor and tantalum costs.
Current wording
The gross profit margin decreased slightly versus the prior year. The decrease is due to lower sales volume, decreased average selling prices, higher labor and tantalum costs, partially offset by a favorable product mix, and decreased utilities costs.
Previous wording
SG&A expenses for the year ended December 31, 2023 increased versus the year ended December 31, 2022 due to general inflation and higher compensation costs, including the implementation of the 2023 Long-Term Incentive Plan in 2023.
Current wording
SG&A expenses for the year ended December 31, 2024 increased versus the year ended December 31, 2023 due to higher stock-based compensation and general cost inflation, partially offset by lower bonus compensation.
Previous wording
For the years ended December 31, 2023, 2022, and 2021, the effective tax rates were 30.4%, 27.5%, and 31.2%, respectively. With the reduction in the U.S. statutory rate to 21% beginning January 1, 2018, we expect that our effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions. Historically, the effective tax rates were generally less than the U.S. statutory rate of 35% primarily because of earnings in foreign jurisdictions. Discrete tax items impacted our effective tax rate for each period presented. These items were $20.0 million in 2022 and $39.3 million in 2021.
Current wording
For the years ended December 31, 2024, 2023, and 2022, the effective tax rates were (1,145.5)%, 30.4%, and 27.5%, respectively. We expect that our effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions. Our GAAP effective tax rate for the year ended December 31, 2024 is not meaningful at the low levels of pre-tax loss.
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Previous report — wording carried elsewhere
Segment operating margin decreased versus the prior year primarily due to decreased gross profit.
Previous report — wording carried elsewhere
Segment operating margin decreased versus the prior year. The decrease is primarily due to decreased gross profit.
Previous report — wording carried elsewhere
We had $42 million outstanding on our revolving credit facility at December 31, 2022 and no amounts outstanding at December 31, 2023. We borrowed $501 million and repaid $543 million on the revolving credit facility during the year ended December 31, 2023. The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $93.3 million and the highest amount outstanding on our revolving credit facility at a fiscal month end was $185 million during the year ended December 31, 2023. We used $185 million of the net proceeds from the convertible senior notes due 2030 to repay amounts outstanding on the revolving credit facility in the third fiscal quarter of 2023.
Previous report — wording carried elsewhere
The remaining convertible senior notes due 2025 are not currently convertible. 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.