MALVERN, Pa. - Vishay Intertechnology, Inc. (NYSE: NYSE:VSH), a prominent manufacturer of discrete semiconductors and passive components, is set to undergo a significant restructuring as part of its Vishay 3.0 growth strategy. The company announced today that it will streamline its operations, including the consolidation of its manufacturing facilities and reduction of its workforce.
The restructuring will involve the closure of three manufacturing sites: a Diodes (NASDAQ:DIOD) segment back-end facility in Shanghai, China, and two smaller facilities in the Resistors segment located in Fichtelberg, Germany, and Milwaukee, Wisconsin. These closures are expected to be completed by the end of 2026, with production transfers commencing in the fourth quarter of 2025.
As a result of the consolidation, approximately 365 employees, or 2% of Vishay's manufacturing labor force, will be laid off. Additionally, the company will streamline its selling, general, and administrative functions immediately, affecting around 170 employees, or 6% of that workforce. These changes will lead to severance payments for roughly 260 employees.
The restructuring is expected to incur pre-tax cash charges between $38 to $42 million, mainly due to severance costs, with the majority of these charges occurring in the third quarter of 2024. Vishay anticipates annualized cost savings of at least $23 million once the program is fully implemented, with immediate savings of approximately $9 million and an additional $12 million in savings beginning in the first quarter of 2025.
Joel Smejkal, President and CEO of Vishay, stated that the restructuring actions are aimed at improving decision-making processes, enhancing customer focus, and increasing cost efficiencies. The move is also intended to optimize the company's global manufacturing footprint by transitioning to campus manufacturing structures that accommodate multiple product lines.
While Vishay has provided estimates of costs and savings related to the restructuring, these figures are preliminary and may be subject to change as the programs are implemented.
Vishay serves a diverse range of markets, including automotive, industrial, computing, consumer, telecommunications, military, aerospace, and medical sectors. The company is listed on the New York Stock Exchange and is a Fortune 1,000 company.
This news article is based on a press release statement from Vishay Intertechnology, Inc.
In other recent news, Vishay Intertechnology reported Q2 2024 earnings, with revenues remaining steady at $741.2 million. The company's gross margin was 22.0%, impacted negatively by the Newport acquisition. Vishay anticipates Q3 2024 revenues to range between $725 million and $765 million, with a projected gross margin of 21.0%. TD Cowen maintained a Hold rating on Vishay's shares but lowered the price target from $24.00 to $22.00, citing less than expected performance.
Vishay has also declared a dividend of $0.10 per share for both common stock and Class B common stock, approved by its Board of Directors. In terms of strategic moves, Vishay plans capacity expansion investments of $2.6 billion from 2023 to 2028, aiming to increase MOSFET capacity by 12% in 2025 and semiconductor products by 5.5% in 2024.
Moreover, Vishay has announced the expansion of its IHPT series of haptic actuators, designed to enhance user experience in various automotive and commercial applications. The new solenoid-based actuators offer high-definition tactile feedback and are engineered to deliver clear haptic feedback in noisy, rugged environments. The company has also broadened its market presence by acquiring Ametherm, which is expected to boost its standing in the electric vehicle and battery management system markets.
InvestingPro Insights
As Vishay Intertechnology, Inc. (NYSE: VSH) embarks on its Vishay 3.0 growth strategy and the associated restructuring, investors are closely monitoring the company's financial health and market performance. According to recent data from InvestingPro, Vishay's market capitalization stands at $2.53 billion, reflecting the scale of the business amidst the semiconductor industry. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, is 14.96, which adjusts to 13.68 when considering the last twelve months as of Q2 2024. This suggests a valuation that could be attractive to investors looking for earnings stability.
Despite a challenging environment, Vishay has maintained its commitment to shareholder returns, having upheld dividend payments for 11 consecutive years, with a current yield of 2.16%. This consistent dividend history may appeal to income-focused investors, especially in a volatile market. Moreover, InvestingPro Tips indicate that the company's liquid assets surpass its short-term obligations, which is a positive sign of financial resilience.
However, it's not all positive news. The company is trading near its 52-week low, and analysts have revised their earnings downwards for the upcoming period. They also anticipate a sales decline in the current year and expect net income to drop. Yet, it's noteworthy that analysts predict Vishay will remain profitable this year, which could be a testament to the company's operational efficiency and market positioning.
For investors seeking more in-depth analysis, InvestingPro offers additional insights and metrics. There are 5 more InvestingPro Tips available for Vishay Intertechnology, providing a more comprehensive understanding of the company's financial outlook and stock performance. These tips can be accessed through the InvestingPro platform at https://www.investing.com/pro/VSH.
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