Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management's Discussion and Analysis ("MD&A") is intended to provide an understanding of Vishay's financial condition, results of operations and cash flows by focusing on changes in certain key measures from period to period. The MD&A should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes included in Item 1. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in our Annual Report on Form 10-K, particularly in Item 1A. "Risk Factors," filed with the Securities and Exchange Commission on February 13, 2026.
Overview
Vishay Intertechnology, Inc. ("Vishay," "we," "us," or "our") manufactures one of the world’s largest portfolios of discrete semiconductors and passive electronic components that are essential to innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and healthcare markets.
We operate in six segments based on product functionality: MOSFETs, Diodes, Optoelectronic Components, Resistors, Inductors, and Capacitors.
Our goal is to enhance 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. As we advance our Think Customer First organizational culture in 2026, we are focused on maintaining capacity readiness to fulfill rising demand, growing existing customer relationships, attracting new customer relationships, driving innovation, delivering new products and solutions, and expanding production in low cost countries to support our regional competitiveness. We continue to evaluate our manufacturing footprint for ways to improve efficiency and profitability while maintaining capacity readiness.
We are focused on realizing the full value of our broad product portfolio, becoming a customer-first company, and capitalizing on the mega trends of e-mobility, sustainability, and connectivity to drive top line growth, expand margins, and optimize stockholder returns. We are using eight strategic levers to achieve these goals. Our elevated capital expenditure levels over the past three years have positioned us with increased capacity in an effort to ensure our customers of reliable supply as they scale production and to supply more part numbers to them. We are committed to completing our capacity expansion projects, but have modulated and will continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity. For 2026, we plan to spend between $400 million to $440 million for capital expenditures, approximately half of which will be invested in our 12-inch wafer fab we are building in Itzehoe, Germany.
On July 1, 2026, we completed an underwritten public offering of 17.25 million shares of our common stock at a price to the public of $50.00 per share for proceeds of $830.25 million, net of underwriting discounts and issuance costs. We intend to use the net proceeds from the sale of our common stock in this offering to accelerate our growth initiatives and for general corporate purposes, including to reduce borrowings under our revolving credit facility.
In addition to enhancing stockholder value through growing our business, we continue to follow our Stockholder Return Policy, which calls for us to return at least 70% of free cash flow, net of scheduled principal payments of long-term debt, on an annual basis. See further discussion in “Stockholder Return Policy” below.
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 believe we have sufficient liquidity to withstand temporary disruptions in the economic environment.
We utilize several financial metrics, including net revenues, gross profit margin, operating margin, segment operating income, 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. Nearly all key financial metrics increased versus the prior fiscal quarter and prior year periods. Net revenues increased versus the prior fiscal quarter and the prior year periods primarily due to higher sales volume. Margins were positively impacted by higher sales volume and associated manufacturing efficiencies, which offset higher metals and materials costs. The order level remained at a high level and backlog continued to increase.
Net revenues for the fiscal quarter ended July 4, 2026 were $888.6 million, compared to $839.2 million and $762.3 million for the fiscal quarters ended April 4, 2026 and June 28, 2025, respectively. Net earnings for the fiscal quarter ended July 4, 2026 were $28.1 million, or $0.19 per diluted share, compared to net earnings of $7.2 million, or $0.05 per diluted share for the fiscal quarter ended April 4, 2026, and net earnings of $2.0 million, or $0.01 per diluted share for the fiscal quarter ended June 28, 2025.
Net revenues for the six fiscal months ended July 4, 2026 were $1,727.8 million, compared to $1,477.5 million for the six fiscal months ended June 28, 2025. Net earnings for the six fiscal months ended July 4, 2026 were $35.3 million, or $0.25 per diluted share, compared to a net loss of $(2.1) million, or $(0.02) per share for the six fiscal months ended June 28, 2025.
Measures such as adjusted net earnings (loss), free cash, and segment operating income are considered non-GAAP measures. We define adjusted net earnings (loss) 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. We define segment operating income as operating income excluding selling, general, and administrative costs of our global operations, sales and marketing, information systems, finance, and administrative groups, as well as restructuring and severance costs, goodwill impairments, and other items affecting comparability. The reconciliations of adjusted net earnings (loss), adjusted net earnings (loss) per share, and free cash are below. Note 10 to our consolidated condensed financial statements includes the reconciliation for segment operating income. 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 (loss), adjusted net earnings (loss) per share, free cash, and segment operating income 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 (loss) and adjusted net earnings (loss) 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. We utilize the free cash metric in defining our Stockholder Return Policy. Management uses segment operating income, along with segment gross profit, to make decisions, allocate resources, and assess performance of its operating segments.
Net earnings (loss) attributable to Vishay stockholders include items affecting comparability. The items affecting comparability are (in thousands, except per share amounts):
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net earnings (loss) | $ | 28,124 | | | $ | 7,164 | | | $ | 2,004 | | | $ | 35,288 | | | $ | (2,088 | ) |
| | | | | | | | | | | | | | | | | | | | |
| Reconciling items affecting net revenues: | | | | | | | | | | | | | | | | | | | |
| Tariff refunds passed through to customers | | 30,008 | | | | - | | | | - | | | | 30,008 | | | | - | |
| | | | | | | | | | | | | | | | | | | | |
| Other reconciling items affecting gross profit: | | | | | | | | | | | | | | | | | | | |
| Tariff refunds received from U.S. government | | (30,008 | ) | | | - | | | | - | | | | (30,008 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | |
| Other reconciling items affecting operating income: | | | | | | | | | | | | | | | | | | | |
| Favorable resolution of contingency | | - | | | | - | | | | (11,293 | ) | | | - | | | | (11,293 | ) |
| | | | | | | | | | | | | | | | | | | | |
| Adjusted net earnings (loss) | $ | 28,124 | | | $ | 7,164 | | | $ | (9,289 | ) | | $ | 35,288 | | | $ | (13,381 | ) |
| | | | | | | | | | | | | | | | | | | | |
| Adjusted weighted average diluted shares outstanding | | 147,901 | | | | 137,471 | | | | 135,702 | | | | 142,680 | | | | 135,750 | |
| | | | | | | | | | | | | | | | | | | | |
| Adjusted earnings (loss) per diluted share | $ | 0.19 | | | $ | 0.05 | | | $ | (0.07 | ) | | $ | 0.25 | | | $ | (0.10 | ) |
Although the term "free cash" is not defined in GAAP, each of the elements used to calculate free cash for the year-to-date period is presented as a line item on the face of our consolidated condensed statement of cash flows prepared in accordance with GAAP and the quarterly amounts are derived from the year-to-date GAAP statements as of the beginning and end of the respective quarter. Free cash results are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net cash provided by (used in) continuing operating activities | $ | 105,359 | | | $ | 63,669 | | | $ | (8,791 | ) | | $ | 169,028 | | | $ | 7,307 | |
| Proceeds from sale of property and equipment | | 155 | | | | 66 | | | | 215 | | | | 221 | | | | 494 | |
| Less: Capital expenditures | | (95,201 | ) | | | (110,661 | ) | | | (64,598 | ) | | | (205,862 | ) | | | (126,167 | ) |
| Free cash | $ | 10,313 | | | $ | (46,926 | ) | | $ | (73,174 | ) | | $ | (36,613 | ) | | $ | (118,366 | ) |
Our accelerated investments to expand capacity have positioned us to be able to better serve our customers and capture the early stages of upturns in end market demand. The long-term outlook for our business remains strong.
Recent Developments
On July 1, 2026, we completed an underwritten public offering of 17.25 million shares of our common stock at a price to the public of $50.00 per share for proceeds of $830.25 million, net of underwriting discounts and issuance costs. We intend to use the net proceeds from the sale of our common stock in this offering to accelerate our growth initiatives and for general corporate purposes, including to reduce borrowings under our revolving credit facility. These growth initiatives may include investments in capacity expansion, manufacturing optimization, technology innovation research and development, and other strategic priorities intended to support long-term growth. Pending these uses, we may invest the net proceeds in short-term, investment-grade instruments. We may also use a portion of the net proceeds to acquire or invest in businesses, products and/or technologies that are complementary to our own, although we have no current plans, commitments, or agreements with respect to any acquisitions. In the third fiscal quarter of 2026, we reduced the outstanding balance of the revolving credit facility to zero using the proceeds of the offering.
On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court’s decision, the U.S. administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.
In the fiscal quarter ended July 4, 2026, we received refunds of IEEPA tariffs from the U.S. government, of which $30.0 million will be passed through to customers. The tariff refunds received were recognized as a reduction of costs of products sold. Tariff refunds to be passed through to customers are recorded as a reduction of net revenues. Interest on tariff refunds was recorded as interest income and was not material.
Stockholder Return Policy
In 2022, our Board of Directors adopted a Stockholder Return Policy, which calls for us to return at least 70% of free cash flow, net of scheduled principal payments of long-term debt, on an annual basis. We intend to return such amounts to stockholders directly, in the form of dividends, or indirectly, in the form of stock repurchases. The policy sets forth our intention, but does not obligate us to acquire any shares of common stock or declare any dividends, and the policy may be terminated or suspended at any time at our discretion, in accordance with applicable laws and regulations. For 2026, we expect to maintain our dividend and opportunistically repurchase shares in line with this policy. We did not repurchase any shares of common stock in the second fiscal quarter of 2026. We expect to be in compliance with our Stockholder Return Policy without repurchasing any common stock in 2026.
Financial Metrics
We utilize several financial metrics to evaluate the performance and assess the future direction of our business. These key financial measures and metrics include net revenues, gross profit margin, operating margin, segment operating income, segment operating margin, end-of-period backlog, and the book-to-bill ratio. We also monitor changes in inventory turnover and our or publicly available average selling prices (“ASP”).
Gross profit margin is computed as gross profit as a percentage of net revenues. Gross profit is generally net revenues less costs of products sold, but also deducts certain other period costs, particularly losses on purchase commitments and inventory write-downs. Losses on purchase commitments and inventory write-downs have the impact of reducing gross profit margin in the period of the charge, but result in improved gross profit margins in subsequent periods by reducing costs of products sold as inventory is used. We also regularly evaluate gross profit by segment to assist in the analysis of consolidated gross profit. Gross profit margin and gross profit margin by segment are clearly a function of net revenues, but also reflect our cost management programs and our ability to contain fixed costs.
Operating margin is computed as gross profit less operating expenses, expressed as a percentage of net revenues. Operating margin is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs.
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 does not include these SG&A expenses that are not directly traceable to the segments. Segment operating income also would not include income or costs not routinely used in the management of the segments in periods when those items are present, such as tariff refunds received from the U.S. government, tariff refunds passed through to customers, restructuring and severance costs, goodwill impairment charges, 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.
End-of-period backlog is one indicator of future revenues. We include in our backlog only open orders that we expect to ship in the next twelve months. If demand falls below customers’ forecasts, or if customers do not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty. Therefore, the backlog is not necessarily indicative of the results to be expected for future periods.
An important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the amount of product ordered during a period as compared with the product that we ship during that period. A book-to-bill ratio that is greater than one indicates that our backlog is building and that we are likely to see increasing revenues in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of declining demand and may foretell declining revenues.
We focus on our inventory turnover as a measure of how well we are managing our inventory. We define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory (computed using each fiscal quarter-end balance) for this same period. A higher level of inventory turnover reflects more efficient use of our capital.
Pricing in our industry can be volatile. Using our and publicly available data, we analyze trends and changes in average selling prices to evaluate likely future pricing. The erosion of average selling prices of established products is typical for semiconductor products. We attempt to offset this deterioration with ongoing cost reduction activities and new product introductions. Our specialty passive components are more resistant to average selling price erosion. All pricing is subject to governing market conditions and is independently set by us.
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 2025 through the second fiscal quarter of 2026 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | | 2nd Quarter 2025 | | | | 3rd Quarter 2025 | | | | 4th Quarter 2025 | | | | 1st Quarter 2026 | | | | 2nd Quarter 2026 | |
| | | | | | | | | | | | | | | | | | | | |
| Net revenues(1) | $ | 762,250 | | | $ | 790,640 | | | $ | 800,922 | | | $ | 839,242 | | | $ | 888,575 | |
| | | | | | | | | | | | | | | | | | | | |
| Gross profit margin(2) | | 19.5 | % | | | 19.5 | % | | | 19.6 | % | | | 21.0 | % | | | 23.3 | % |
| | | | | | | | | | | | | | | | | | | | |
| Operating margin(2) | | 2.9 | % | | | 2.4 | % | | | 1.8 | % | | | 2.6 | % | | | 6.0 | % |
| | | | | | | | | | | | | | | | | | | | |
| End-of-period backlog | $ | 1,174,900 | | | $ | 1,152,700 | | | $ | 1,314,100 | | | $ | 1,592,300 | | | $ | 1,877,300 | |
| | | | | | | | | | | | | | | | | | | | |
| Book-to-bill ratio | | 1.02 | | | | 0.97 | | | | 1.20 | | | | 1.34 | | | | 1.32 | |
| | | | | | | | | | | | | | | | | | | | |
| Inventory turnover | | 3.3 | | | | 3.3 | | | | 3.4 | | | | 3.4 | | | | 3.5 | |
| | | | | | | | | | | | | | | | | | | | |
| Change in ASP vs. prior quarter | | 0.0 | % | | | (0.3 | )% | | | (0.3 | )% | | | (1.1 | )% | | | 2.1 | % |
____________
(1) Net revenues for the second fiscal quarter of 2026 have been reduced by $30.0 million for tariff refunds passed through to customers, with no impact on gross profit.
(2) Gross profit margin and operating margin for the second fiscal quarter of 2026 also include $30.0 million tariff refunds received from the U.S. government, with no impact on gross profit. Operating margin for the second fiscal quarter of 2025 includes an $11.3 million gain recognized upon the favorable resolution of a contingency.
See “Financial Metrics by Segment” below for net revenues, book-to-bill ratio, and gross profit margin broken out by segment.
Revenues increased versus the prior fiscal quarter and prior year quarter. The increases versus the prior fiscal quarter and prior year quarter are primarily due to higher sales volume and improved pricing conditions. Order levels remain high and backlog increased versus the prior fiscal quarter and prior year quarter. We continue to increase capacity for critical product lines. Average selling prices increased versus the prior fiscal quarter.
Gross profit margin increased versus the prior fiscal quarter and prior year quarter. The increases are primarily due to higher sales volume, associated manufacturing efficiencies, and higher average selling prices, which offset higher metals and materials costs and unfavorable foreign exchange impacts.
Financial Metrics by Segment
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 2025 through the second fiscal quarter of 2026 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | | 2nd Quarter 2025 | | | | 3rd Quarter 2025 | | | | 4th Quarter 2025 | | | | 1st Quarter 2026 | | | | 2nd Quarter 2026 | |
| MOSFETs | | | | | | | | | | | | | | | | | | | |
| Net revenues | $ | 148,633 | | | $ | 167,133 | | | $ | 172,584 | | | $ | 173,991 | | | $ | 188,926 | |
| | | | | | | | | | | | | | | | | | | | |
| Book-to-bill ratio | | 1.00 | | | | 0.86 | | | | 1.48 | | | | 1.57 | | | | 1.08 | |
| | | | | | | | | | | | | | | | | | | | |
| Gross profit margin | | 6.3 | % | | | 10.1 | % | | | 13.8 | % | | | 12.9 | % | | | 13.8 | % |
| | | | | | | | | | | | | | | | | | | | |
| Segment operating margin | | (9.7 | )% | | | (3.8 | )% | | | (0.5 | )% | | | 0.8 | % | | | 1.4 | % |
| | | | | | | | | | | | | | | | | | | | |
| Diodes | | | | | | | | | | | | | | | | | | | |
| Net revenues | $ | 147,942 | | | $ | 149,628 | | | $ | 154,224 | | | $ | 163,669 | | | $ | 186,965 | |
| | | | | | | | | | | | | | | | | | | | |
| Book-to-bill ratio | | 0.93 | | | | 1.07 | | | | 1.09 | | | | 1.35 | | | | 1.36 | |
| | | | | | | | | | | | | | | | | | | | |
| Gross profit margin | | 20.0 | % | | | 20.3 | % | | | 20.3 | % | | | 21.3 | % | | | 24.4 | % |
| | | | | | | | | | | | | | | | | | | | |
| Segment operating margin | | 15.0 | % | | | 15.2 | % | | | 15.3 | % | | | 15.8 | % | | | 19.6 | % |
| | | | | | | | | | | | | | | | | | | | |
| Optoelectronic Components | | | | | | | | | | | | | | | | | | | |
| Net revenues | $ | 54,119 | | | $ | 55,590 | | | $ | 55,674 | | | $ | 58,875 | | | $ | 70,076 | |
| | | | | | | | | | | | | | | | | | | | |
| Book-to-bill ratio | | 1.05 | | | | 0.93 | | | | 1.12 | | | | 1.48 | | | | 1.33 | |
| | | | | | | | | | | | | | | | | | | | |
| Gross profit margin | | 23.2 | % | | | 22.9 | % | | | 15.0 | % | | | 18.6 | % | | | 22.8 | % |
| | | | | | | | | | | | | | | | | | | | |
| Segment operating margin | | 12.6 | % | | | 12.9 | % | | | 4.5 | % | | | 8.0 | % | | | 13.6 | % |
| | | | | | | | | | | | | | | | | | | | |
| Resistors | | | | | | | | | | | | | | | | | | | |
| Net revenues | $ | 194,769 | | | $ | 195,707 | | | $ | 189,367 | | | $ | 203,743 | | | $ | 215,028 | |
| | | | | | | | | | | | | | | | | | | | |
| Book-to-bill ratio | | 0.91 | | | | 0.92 | | | | 1.05 | | | | 1.26 | | | | 1.43 | |
| | | | | | | | | | | | | | | | | | | | |
| Gross profit margin | | 22.8 | % | | | 20.1 | % | | | 19.4 | % | | | 22.0 | % | | | 22.1 | % |
| | | | | | | | | | | | | | | | | | | | |
| Segment operating margin | | 17.9 | % | | | 15.3 | % | | | 14.3 | % | | | 16.8 | % | | | 17.1 | % |
| | | | | | | | | | | | | | | | | | | | |
| Inductors | | | | | | | | | | | | | | | | | | | |
| Net revenues | $ | 95,675 | | | $ | 91,990 | | | $ | 92,588 | | | $ | 92,225 | | | $ | 104,189 | |
| | | | | | | | | | | | | | | | | | | | |
| Book-to-bill ratio | | 0.91 | | | | 0.99 | | | | 1.07 | | | | 1.31 | | | | 1.42 | |
| | | | | | | | | | | | | | | | | | | | |
| Gross profit margin | | 28.0 | % | | | 30.7 | % | | | 29.8 | % | | | 31.8 | % | | | 31.1 | % |
| | | | | | | | | | | | | | | | | | | | |
| Segment operating margin | | 24.0 | % | | | 26.6 | % | | | 25.4 | % | | | 27.4 | % | | | 27.1 | % |
| | | | | | | | | | | | | | | | | | | | |
| Capacitors | | | | | | | | | | | | | | | | | | | |
| Net revenues | $ | 121,112 | | | $ | 130,592 | | | $ | 136,485 | | | $ | 146,739 | | | $ | 153,399 | |
| | | | | | | | | | | | | | | | | | | | |
| Book-to-bill ratio | | 1.40 | | | | 1.07 | | | | 1.30 | | | | 1.13 | | | | 1.35 | |
| | | | | | | | | | | | | | | | | | | | |
| Gross profit margin | | 21.5 | % | | | 20.1 | % | | | 21.3 | % | | | 23.4 | % | | | 25.9 | % |
| | | | | | | | | | | | | | | | | | | | |
| Segment operating margin | | 16.3 | % | | | 15.2 | % | | | 16.6 | % | | | 18.7 | % | | | 21.4 | % |
Results of Operations
Statements of operations’ captions as a percentage of net revenues and the effective tax rates were as follows:
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Cost of products sold | | 76.7 | % | | | 79.0 | % | | | 80.5 | % | | | 77.8 | % | | | 80.8 | % |
| Gross profit | | 23.3 | % | | | 21.0 | % | | | 19.5 | % | | | 22.2 | % | | | 19.2 | % |
| Selling, general & administrative expenses | | 17.3 | % | | | 18.4 | % | | | 16.6 | % | | | 17.8 | % | | | 17.7 | % |
| Operating income | | 6.0 | % | | | 2.6 | % | | | 2.9 | % | | | 4.4 | % | | | 1.6 | % |
| Income before taxes | | 4.8 | % | | | 1.5 | % | | | 1.6 | % | | | 3.2 | % | | | 0.5 | % |
| Net earnings (loss) | | 3.2 | % | | | 0.9 | % | | | 0.3 | % | | | 2.0 | % | | | (0.1 | )% |
| ________ | | | | | | | | | | | | | | | | | | | |
| Effective tax rate | | 33.7 | % | | | 44.3 | % | | | 83.7 | % | | | 36.1 | % | | | 125.9 | % |
Net Revenues
Net revenues were as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net revenues(1) | $ | 888,575 | | | $ | 839,242 | | | $ | 762,250 | | | $ | 1,727,817 | | | $ | 1,477,486 | |
(1) Net revenues for the second fiscal quarter of 2026 have been reduced by $30.0 million of tariff refunds passed through to customers.
The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | | Fiscal quarter ended | | | Six fiscal months ended |
| | | July 4, 2026 | | | July 4, 2026 |
| | | | Change in net revenues | | | | % change | | | | | Change in net revenues | | | | % change | |
| April 4, 2026 | | $ | 49,333 | | | | 5.9 | % | | | | n/a | | | | n/a | |
| June 28, 2025 | | $ | 126,325 | | | | 16.6 | % | | | $ | 250,331 | | | | 16.9 | % |
Changes in net revenues were attributable to the following:
| | | | | | | | | | | |
| | | vs. Prior Quarter | | | | vs. Prior Year Quarter | | | | vs. Prior Year-to-Date | |
| Change attributable to: | | | | | | | | | | | |
| Increase in volume | | 7.4 | % | | | 17.5 | % | | | 16.0 | % |
| Increase in average selling prices | | 2.1 | % | | | 1.6 | % | | | 0.5 | % |
| Foreign currency effects | | (0.3 | )% | | | 0.9 | % | | | 2.4 | % |
| Tariff refunds passed through to customers | | (3.6 | )% | | | (3.9 | )% | | | (2.0 | )% |
| Other | | 0.3 | % | | | 0.5 | % | | | 0.0 | % |
| Net change | | 5.9 | % | | | 16.6 | % | | | 16.9 | % |
We continued to see improving market conditions in the second fiscal quarter of 2026, resulting in revenue growth driven primarily by higher sales volume and improved pricing conditions. This represents an improvement from most of 2025 when we experienced distribution customers digesting high channel inventories. The long-term prospects of our business remain favorable. We continue to increase manufacturing capacities for critical product lines.
Gross Profit Margins
Gross profit margins for the fiscal quarter ended July 4, 2026 were 23.3%, versus 21.0% and 19.5% for the comparable prior fiscal quarter and prior year quarter, respectively. Gross profit margins for the six fiscal months ended July 4, 2026 were 22.2%, versus 19.2% for the comparable prior year period. Gross profit margin increased versus the prior fiscal quarter and prior year quarter primarily due to higher sales volume, associated manufacturing efficiencies, and higher average selling prices, which offset higher metals and materials costs and unfavorable foreign exchange impacts.
Segments
Analysis of revenues and margins for our segments is provided below.
MOSFETs
Net revenues, gross profit margins, and segment operating margins of the MOSFETs segment were as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net revenues | $ | 188,926 | | | $ | 173,991 | | | $ | 148,633 | | | $ | 362,917 | | | $ | 290,746 | |
| Gross profit margin | | 13.8 | % | | | 12.9 | % | | | 6.3 | % | | | 13.4 | % | | | 7.2 | % |
| Segment operating margin | | 1.4 | % | | | 0.8 | % | | | (9.7 | )% | | | 1.1 | % | | | (8.0 | )% |
The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | | Fiscal quarter ended | | | Six fiscal months ended |
| | | July 4, 2026 | | | July 4, 2026 |
| | | | Change in net revenues | | | | % change | | | | | Change in net revenues | | | | % change | |
| April 4, 2026 | | $ | 14,935 | | | | 8.6 | % | | | | n/a | | | | n/a | |
| June 28, 2025 | | $ | 40,293 | | | | 27.1 | % | | | $ | 72,171 | | | | 24.8 | % |
Changes in MOSFETs segment net revenues were attributable to the following:
| | | | | | | | | | | |
| | | vs. Prior Quarter | | | | vs. Prior Year Quarter | | | | vs. Prior Year-to-Date | |
| Change attributable to: | | | | | | | | | | | |
| Increase in volume | | 7.8 | % | | | 26.3 | % | | | 26.5 | % |
| Change in average selling prices | | 1.0 | % | | | 0.1 | % | | | (2.5 | )% |
| Foreign currency effects | | (0.1 | )% | | | 0.5 | % | | | 1.4 | % |
| Other | | (0.1 | )% | | | 0.2 | % | | | (0.6 | )% |
| Net change | | 8.6 | % | | | 27.1 | % | | | 24.8 | % |
Net revenues of the MOSFETs segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers, industrial end market end market customers, and customers in all regions. The increases versus the prior year periods are primarily due to increased sales to OEM and distribution customers, industrial and automotive end market customers, and customers in all regions.
Gross profit margin increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to higher sales volume and higher average selling prices. The increase versus the prior year periods is primarily due to higher sales volume.
Segment operating margin increased versus the prior fiscal quarter and prior year periods. The increases are primarily due to changes in gross profit and decreased segment SG&A expenses associated with the Newport wafer fab.
Average selling prices increased versus the prior fiscal quarter and prior year quarter, but decreased versus the prior year-to-date period.
We continue to invest to expand mid- and long-term manufacturing capacity for strategic product lines. We plan to use the Newport wafer fab, acquired in 2024, to further develop and scale our SiC MOSFETs and diodes capabilities. We are also committed to building a 12-inch wafer fab in Itzehoe, Germany. These 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.
Diodes
Net revenues, gross profit margins, and segment operating margins of the Diodes segment were as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net revenues | $ | 186,965 | | | $ | 163,669 | | | $ | 147,942 | | | $ | 350,634 | | | $ | 288,905 | |
| Gross profit margin | | 24.4 | % | | | 21.3 | % | | | 20.0 | % | | | 23.0 | % | | | 19.9 | % |
| Segment operating margin | | 19.6 | % | | | 15.8 | % | | | 15.0 | % | | | 17.9 | % | | | 15.0 | % |
The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | | Fiscal quarter ended | | | Six fiscal months ended |
| | | July 4, 2026 | | | July 4, 2026 |
| | | | Change in net revenues | | | | % change | | | | | Change in net revenues | | | | % change | |
| April 4, 2026 | | $ | 23,296 | | | | 14.2 | % | | | | n/a | | | | n/a | |
| June 28, 2025 | | $ | 39,023 | | | | 26.4 | % | | | $ | 61,729 | | | | 21.4 | % |
Changes in Diodes segment net revenues were attributable to the following:
| | | | | | | | | | | |
| | | vs. Prior Quarter | | | | vs. Prior Year Quarter | | | | vs. Prior Year-to-Date | |
| Change attributable to: | | | | | | | | | | | |
| Increase in volume | | 8.4 | % | | | 20.1 | % | | | 17.3 | % |
| Increase in average selling prices | | 5.5 | % | | | 4.7 | % | | | 1.9 | % |
| Foreign currency effects | | (0.2 | )% | | | 0.8 | % | | | 1.9 | % |
| Other | | 0.5 | % | | | 0.8 | % | | | 0.3 | % |
| Net change | | 14.2 | % | | | 26.4 | % | | | 21.4 | % |
Net revenues of the Diodes segment increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods are primarily due to increased sales to distribution customers, industrial and automotive end markets customers, and customers in all regions. Increased sales to OEM customers also contributed to the increase versus the prior year periods.
Gross profit margin increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods were primarily due to higher sales volume and higher average selling prices.
Segment operating margin increased versus the prior fiscal quarter and prior year periods. The increases are primarily due to changes in gross profit.
Average selling prices increased versus the prior fiscal quarter and prior year periods.
Optoelectronic Components
Net revenues, gross profit margins, and segment operating margins of the Optoelectronic Components segment were as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net revenues | $ | 70,076 | | | $ | 58,875 | | | $ | 54,119 | | | $ | 128,951 | | | $ | 105,287 | |
| Gross profit margin | | 22.8 | % | | | 18.6 | % | | | 23.2 | % | | | 20.9 | % | | | 22.1 | % |
| Segment operating margin | | 13.6 | % | | | 8.0 | % | | | 12.6 | % | | | 11.0 | % | | | 11.6 | % |
The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | | Fiscal quarter ended | | | Six fiscal months ended |
| | | July 4, 2026 | | | July 4, 2026 |
| | | | Change in net revenues | | | | % change | | | | | Change in net revenues | | | | % change | |
| April 4, 2026 | | $ | 11,201 | | | | 19.0 | % | | | | n/a | | | | n/a | |
| June 28, 2025 | | $ | 15,957 | | | | 29.5 | % | | | $ | 23,664 | | | | 22.5 | % |
Changes in Optoelectronic Components segment net revenues were attributable to the following:
| | | | | | | | | | | |
| | | vs. Prior Quarter | | | | vs. Prior Year Quarter | | | | vs. Prior Year-to-Date | |
| Change attributable to: | | | | | | | | | | | |
| Increase in volume | | 15.3 | % | | | 23.8 | % | | | 18.1 | % |
| Increase in average selling prices | | 3.2 | % | | | 2.6 | % | | | 0.4 | % |
| Foreign currency effects | | (0.4 | )% | | | 1.6 | % | | | 3.5 | % |
| Other | | 0.9 | % | | | 1.5 | % | | | 0.5 | % |
| Net change | | 19.0 | % | | | 29.5 | % | | | 22.5 | % |
Net revenues of the Optoelectronic Components segment increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods are primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution customers and industrial end market customers.
Gross profit margin increased versus the prior fiscal quarter, but decreased versus the prior year periods. The increase versus the prior fiscal quarter is primarily due to higher sales volume and higher average selling prices. The decreases versus the prior year periods are primarily due to higher metals prices and fixed overhead costs, partially offset by higher sales volume and higher average selling prices.
Segment operating margin increased versus the prior fiscal quarter and prior year quarter, but decreased versus the prior year-to-date period. The changes are primarily due to changes in gross profit.
Average selling prices increased versus the prior fiscal quarter and prior year periods.
Resistors
Net revenues, gross profit margins, and segment operating margins of the Resistors segment were as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net revenues | $ | 215,028 | | | $ | 203,743 | | | $ | 194,769 | | | $ | 418,771 | | | $ | 374,269 | |
| Gross profit margin | | 22.1 | % | | | 22.0 | % | | | 22.8 | % | | | 22.0 | % | | | 22.6 | % |
| Segment operating margin | | 17.1 | % | | | 16.8 | % | | | 17.9 | % | | | 16.9 | % | | | 17.7 | % |
The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | | Fiscal quarter ended | | | Six fiscal months ended |
| | | July 4, 2026 | | | July 4, 2026 |
| | | | Change in net revenues | | | | % change | | | | | Change in net revenues | | | | % change | |
| April 4, 2026 | | $ | 11,285 | | | | 5.5 | % | | | | n/a | | | | n/a | |
| June 28, 2025 | | $ | 20,259 | | | | 10.4 | % | | | $ | 44,502 | | | | 11.9 | % |
Changes in Resistors segment net revenues were attributable to the following:
| | | | | | | | | | | |
| | | vs. Prior Quarter | | | | vs. Prior Year Quarter | | | | vs. Prior Year-to-Date | |
| Change attributable to: | | | | | | | | | | | |
| Increase in volume | | 4.8 | % | | | 6.2 | % | | | 6.3 | % |
| Increase in average selling prices | | 1.0 | % | | | 2.9 | % | | | 2.6 | % |
| Foreign currency effects | | (0.3 | )% | | | 1.2 | % | | | 2.8 | % |
| Other | | 0.0 | % | | | 0.1 | % | | | 0.2 | % |
| Net change | | 5.5 | % | | | 10.4 | % | | | 11.9 | % |
Net revenues of the Resistors segment increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods are primarily due to increased sales to distribution customers, industrial end market customers, and customers in all regions.
Gross profit margin increased slightly versus the prior fiscal quarter, but decreased versus the prior year periods. The increase versus the prior fiscal quarter is primarily due to higher sales volume and higher average selling prices, partially offset by higher metals costs. The decreases versus the prior year periods are primarily due to higher metals costs, unfavorable product mix, and unfavorable foreign exchange impacts, partially offset by higher sales volume and higher average selling prices.
Segment operating margin increased versus the prior fiscal quarter, but decreased versus the prior year periods. The changes are primarily due to changes in gross profit.
Average selling prices increased versus the prior fiscal quarter and prior year periods.
We are increasing critical manufacturing capacities for certain product lines. We continue to broaden our business with targeted acquisitions of specialty resistors businesses.
Inductors
Net revenues, gross profit margins, and segment operating margins of the Inductors segment were as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net revenues | $ | 104,189 | | | $ | 92,225 | | | $ | 95,675 | | | $ | 196,414 | | | $ | 179,796 | |
| Gross profit margin | | 31.1 | % | | | 31.8 | % | | | 28.0 | % | | | 31.4 | % | | | 24.7 | % |
| Segment operating margin | | 27.1 | % | | | 27.4 | % | | | 24.0 | % | | | 27.3 | % | | | 20.5 | % |
The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | | Fiscal quarter ended | | | Six fiscal months ended |
| | | July 4, 2026 | | | July 4, 2026 |
| | | | Change in net revenues | | | | % change | | | | | Change in net revenues | | | | % change | |
| April 4, 2026 | | $ | 11,964 | | | | 13.0 | % | | | | n/a | | | | n/a | |
| June 28, 2025 | | $ | 8,514 | | | | 8.9 | % | | | $ | 16,618 | | | | 9.2 | % |
Changes in Inductors segment net revenues were attributable to the following:
| | | | | | | | | | | |
| | | vs. Prior Quarter | | | | vs. Prior Year Quarter | | | | vs. Prior Year-to-Date | |
| Change attributable to: | | | | | | | | | | | |
| Increase in volume | | 11.4 | % | | | 13.2 | % | | | 11.2 | % |
| Change in average selling prices | | 1.5 | % | | | (4.2 | )% | | | (2.8 | )% |
| Foreign currency effects | | (0.1 | )% | | | 0.4 | % | | | 1.1 | % |
| Other | | 0.2 | % | | | (0.5 | )% | | | (0.3 | )% |
| Net change | | 13.0 | % | | | 8.9 | % | | | 9.2 | % |
Net revenues of the Inductors segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution customers and customers in the Americas region. The increases versus the prior year periods are primarily due to increased sales to distribution customers, military and aerospace and healthcare end market customers, and customers in the Americas and Asia regions.
Gross profit margin decreased versus the prior fiscal quarter, but increased versus the prior year periods. The decrease versus the prior fiscal quarter is primarily due to higher material and labor costs, partially offset by higher sales volume and higher average selling prices. The increases versus the prior year periods are primarily due to higher sales volume, materials price savings, lower logistics costs, and higher yield, partially offset by lower average selling prices.
Segment operating margin decreased versus the prior fiscal quarter, but increased versus the prior year periods. The changes are primarily due to changes in gross profit.
Average selling prices increased versus the prior fiscal quarter, but decreased versus the prior year periods.
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.
Capacitors
Net revenues, gross profit margins, and segment operating margins of the Capacitors segment were as follows (dollars in thousands):
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Net revenues | $ | 153,399 | | | $ | 146,739 | | | $ | 121,112 | | | $ | 300,138 | | | $ | 238,483 | |
| Gross profit margin | | 25.9 | % | | | 23.4 | % | | | 21.5 | % | | | 24.7 | % | | | 22.4 | % |
| Segment operating margin | | 21.4 | % | | | 18.7 | % | | | 16.3 | % | | | 20.1 | % | | | 16.9 | % |
The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):
| | | Fiscal quarter ended | | | Six fiscal months ended |
| | | July 4, 2026 | | | July 4, 2026 |
| | | | Change in net revenues | | | | % change | | | | | Change in net revenues | | | | % change | |
| April 4, 2026 | | $ | 6,660 | | | | 4.5 | % | | | | n/a | | | | n/a | |
| June 28, 2025 | | $ | 32,287 | | | | 26.7 | % | | | $ | 61,655 | | | | 25.9 | % |
Changes in Capacitors segment net revenues were attributable to the following:
| | | vs. Prior Quarter | | | | vs. Prior Year Quarter | | | | vs. Prior Year-to-Date | |
| Change attributable to: | | | | | | | | | | | |
| Increase in volume | | 3.6 | % | | | 22.6 | % | | | 19.6 | % |
| Increase in average selling prices | | 0.9 | % | | | 1.9 | % | | | 1.9 | % |
| Foreign currency effects | | (0.5 | )% | | | 1.5 | % | | | 4.0 | % |
| Other | | 0.5 | % | | | 0.7 | % | | | 0.4 | % |
| Net change | | 4.5 | % | | | 26.7 | % | | | 25.9 | % |
Net revenues of the Capacitors segment increased versus the prior fiscal quarter and prior year periods. 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 increases versus the prior year periods are primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution end market customers, industrial and military and aerospace end market customers, and customers in the Asia and Americas regions.
Gross profit margin increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to higher sales volume and higher average selling prices, partially offset by higher metals costs. The increases versus the prior year periods are primarily due to higher sales volume and higher average selling prices.
Segment operating margin increased versus the prior fiscal quarter and prior year periods. The increases are primarily due to changes in gross profit.
Average selling prices increased versus the prior fiscal quarter and prior year periods.
A large portion of expected growth of our Capacitors segment is in high voltage high power film capacitors used for smart-grid infrastructure projects.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses are summarized as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended | | Six fiscal months ended |
| | | July 4, 2026 | | | | April 4, 2026 | | | | June 28, 2025 | | | | July 4, 2026 | | | | June 28, 2025 | |
| Total SG&A expenses | $ | 153,856 | | | $ | 154,488 | | | $ | 126,565 | | | $ | 308,344 | | | $ | 261,304 | |
| as a percentage of revenues | | 17.3 | % | | | 18.4 | % | | | 16.6 | % | | | 17.8 | % | | | 17.7 | % |
We are incurring additional SG&A costs associated with our strategic initiatives. The sequential decrease in SG&A expenses is primarily due to uneven attribution of stock-based compensation expense. SG&A expenses increased versus the prior year periods due to higher stock-based compensation expense, general cost inflation, and a one-time gain recognized in the prior year periods.
Other Income (Expense)
Interest expense for the fiscal quarter ended July 4, 2026 increased $0.3 million versus the fiscal quarter ended April 4, 2026 and decreased $(0.3) million versus the fiscal quarter ended June 28, 2025. Interest expense for the six fiscal months ended July 4, 2026 increased $0.9 million versus the six fiscal months ended June 28, 2025. The increase versus the prior year-to-date period is due to higher average outstanding balances on our revolving credit facility.
In the third fiscal
quarter of 2026, we reduced the outstanding balance of the revolving credit
facility to zero using a portion of the net proceeds from the
sale of our common stock. We expect interest expense in the third fiscal quarter to be approximately $7 million.
The following tables analyze the components of the line “Other” on the consolidated condensed statements of operations (in thousands):
| | | | | | | | | | | |
| | Fiscal quarters ended | | | | |
| | | July 4, 2026 | | | | April 4, 2026 | | | | Change | |
| Foreign exchange gain (loss) | $ | (3,555 | ) | | $ | (586 | ) | | $ | (2,969 | ) |
| Interest income | | 4,088 | | | | 3,038 | | | | 1,050 | |
| Other components of net periodic pension expense | | (1,903 | ) | | | (1,919 | ) | | | 16 | |
| Investment income | | 568 | | | | 170 | | | | 398 | |
| Other | | 8 | | | | (2 | ) | | | 10 | |
| $ | (794 | ) | | $ | 701 | | | $ | (1,495 | ) |
| | | | | | | | | | | |
| | Fiscal quarters ended | | | | |
| | | July 4, 2026 | | | | June 28, 2025 | | | | Change | |
| Foreign exchange gain (loss) | | (3,555 | ) | | $ | (1,673 | ) | | $ | (1,882 | ) |
| Interest income | | 4,088 | | | | 4,023 | | | | 65 | |
| Other components of net period pension expense | | (1,903 | ) | | | (1,794 | ) | | | (109 | ) |
| Investment income | | 568 | | | | 179 | | | | 389 | |
| Other | | 8 | | | | 12 | | | | (4 | ) |
| | (794 | ) | | | 747 | | | $ | (1,541 | ) |
| | Six fiscal months ended | | | | |
| | | July 4, 2026 | | | | June 28, 2025 | | | | Change | |
| Foreign exchange gain (loss) | $ | (4,141 | ) | | $ | (344 | ) | | $ | (3,797 | ) |
| Interest income | | 7,126 | | | | 7,900 | | | | (774 | ) |
| Other components of net periodic pension cost | | (3,822 | ) | | | (3,491 | ) | | | (331 | ) |
| Investment income | | 738 | | | | 440 | | | | 298 | |
| Other | | 6 | | | | (11 | ) | | | 17 | |
| $ | (93 | ) | | $ | 4,494 | | | $ | (4,587 | ) |
Income Taxes
For the fiscal quarter ended July 4, 2026, our effective tax rate was 33.7%, as compared to 44.3% and 83.7% for the fiscal quarters ended April 4, 2026 and June 28, 2025, respectively. For the six fiscal months ended July 4, 2026, our effective tax rate was 36.1%, as compared to 125.9% for the six fiscal months ended June 28, 2025. We expect that our effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions, even at higher levels of pre-tax income.
We continue to evaluate the applicability of Pillar Two to our group, the timing of enactment and effective dates by jurisdiction, and the potential impacts on our effective tax rate, cash taxes, and related income tax disclosures.
We operate in a global environment with significant operations in various locations outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting our earnings and the applicable tax rates in the various locations where we operate. Part of our historical strategy has been to achieve cost savings through the transfer and expansion of manufacturing operations to countries where we can take advantage of lower labor costs and available tax and other government-sponsored incentives.
Additional information about income taxes is included in Note 3 to our consolidated condensed financial statements.
Financial Condition, Liquidity, and Capital Resources
Our financial condition as of July 4, 2026 is adequate to meet our capital expenditure and other growth plans. 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.
Management uses a non-GAAP measure, "free cash," to evaluate our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends. See "Overview" above for "free cash" definition and reconciliation to GAAP.
Cash flows provided by operating activities were $169.0 million for the six fiscal months ended July 4, 2026, as compared to cash flows provided by operations of $7.3 million for the six fiscal months ended June 28, 2025.
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 2025 through the second fiscal quarter of 2026:
| | | | | | | | | | | | | | | | | | | |
| | Fiscal quarters ended |
| | | 2nd Quarter 2025 | | | | 3rd Quarter 2025 | | | | 4th Quarter 2025 | | | | 1st Quarter 2026 | | | | 2nd Quarter 2026 | |
| Days sales outstanding ("DSO")(a) | | 53 | | | | 53 | | | | 48 | | | | 41 | | | | 38 | |
| Days inventory outstanding ("DIO")(b) | | 109 | | | | 108 | | | | 107 | | | | 106 | | | | 102 | |
| Days payable outstanding ("DPO")(c) | | (32 | ) | | | (31 | ) | | | (30 | ) | | | (31 | ) | | | (30 | ) |
| Cash conversion cycle | | 130 | | | | 130 | | | | 125 | | | | 116 | | | | 110 | |
a) DSO measures the average collection period of our receivables. DSO is calculated by dividing the average accounts receivable by the average net revenue per day for the respective fiscal quarter.
b) DIO measures the average number of days from procurement to sale of our product. DIO is calculated by dividing the average inventory by average cost of goods sold per day for the respective fiscal quarter.
c) DPO measures the average number of days our payables remain outstanding before payment. DPO is calculated by dividing the average accounts payable by the average cost of goods sold per day for the respective fiscal quarter.
The cash conversion cycle improved to 110 days in the second fiscal quarter of 2026, reflecting increased revenues and cost of products sold, our sale of an additional net $15.5 million trade receivables, and disciplined working capital management.
Cash paid for property and equipment for the six fiscal months ended July 4, 2026 was $205.9 million, as compared to $126.2 million for the six fiscal months ended June 28, 2025. 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. Our elevated capital expenditure levels over the past three years have positioned us with increased capacity to assure our customers of reliable supply as they scale production and to supply more part numbers to them. We are committed to completing our capacity expansion projects, but have modulated and will continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity. For 2026, we plan to spend between $400 million to $440 million for capital expenditures, approximately half of which will be invested in our 12-inch wafer fab we are building in Itzehoe, Germany.
Free cash flow for the six fiscal months ended July 4, 2026 increased versus the six fiscal months ended June 28, 2025. Free cash flow for the six fiscal months ended July 4, 2026 was positively impacted by increased net earnings, as well as tariff refunds received from the U.S. government and additional net cash inflows related to our account receivable securitization programs. We expect that free cash flow will be negatively impacted by the expected high level of capital expenditures for expansion 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.
In 2022, our Board of Directors adopted a Stockholder Return Policy that will remain in effect until such time as the Board votes to amend or rescind the policy. See “Stockholder Return Policy” above for additional information.
On July 1, 2026, we completed an underwritten public offering of 17.25 million shares of our common stock at a price to the public of $50.00 per share for proceeds of $830.25 million, net of underwriting discounts and issuance costs. We intend to use the net proceeds from the sale of our common stock in this offering to accelerate our growth initiatives and for general corporate purposes, including to reduce borrowings under our revolving credit facility.
The following table summarizes the components of net cash and short-term investments (debt) at July 4, 2026 and December 31, 2025 (in thousands):
| | | | | | | |
| | | July 4, 2026 | | | | December 31, 2025 | |
| | | | | | | | |
| Credit facility | $ | 238,000 | | | $ | 219,000 | |
| Convertible senior notes, due 2030 | | 750,000 | | | | 750,000 | |
| Deferred financing costs | | (15,713 | ) | | | (18,107 | ) |
| Total debt | | 972,287 | | | | 950,893 | |
| | | | | | | | |
| Cash and cash equivalents | | 1,297,309 | | | | 514,966 | |
| Short-term investments | | 5,263 | | | | 265 | |
| Net cash and short-term investments (debt) | $ | 330,285 | | | $ | (435,662 | ) |
"Net cash and short-term investments (debt)" does not have a uniform definition and is not recognized in accordance with GAAP. This measure should not be viewed as an alternative to GAAP measures of performance or liquidity. However, management believes that an analysis of "net cash and short-term investments (debt)" assists investors in understanding aspects of our cash and debt management. The measure, as calculated by us, may not be comparable to similarly titled measures used by other companies.
We invest a portion of our excess cash in highly liquid, high-quality instruments with maturities greater than 90 days, but less than 1 year, which we classify as short-term investments on our consolidated condensed balance sheets. As these investments were funded using a portion of excess cash and represent a significant aspect of our cash management strategy, we include the investments in the calculation of net cash and short-term investments (debt). Following the completion of our public offering on July 1, 2026, we have increased excess cash available to invest in such instruments.
The interest rates on our short-term investments vary by location. Transactions related to these investments are classified as investing activities on our consolidated condensed statements of cash flows.
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.
As of July 4, 2026, $804.9 million of our cash and cash equivalents and short-term investments were held by our U.S. subsidiaries. The cash generated from the public offering of our common stock completed on July 1, 2026, was held in the U.S. as of July 4, 2026, and will be deployed to execute our global strategic priorities. As of July 4, 2026, we have approximately $560.4 million of earnings that are deemed not indefinitely reinvested, primarily in Germany and Israel. Based on the expected timing of future repatriations, we estimate that the tax liability to repatriate these unremitted earnings will be approximately $80.8 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, 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.
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, and share repurchases pursuant to our Stockholder Return Policy, while allowing us to manage our repatriation and financing activities to minimize tax and interest expense.
We maintain a $750 million revolving credit agreement with a consortium of banks led by JPMorgan Chase Bank, N.A., that matures on May 8, 2028. The maximum amount available on the revolving credit facility is restricted by the financial covenants described below. The credit facility also provides us the ability to request up to $300 million of incremental facilities, subject to the satisfaction of certain conditions, which could take the form of additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or incremental equivalent debt.
Pursuant to the credit facility, the financial maintenance covenants include (a) an interest coverage ratio of not less than 3.25 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). Net leverage ratio reduces the measure of outstanding debt by up to $250 million of unrestricted cash.
The credit facility limits or restricts us from, among other things, incurring indebtedness, incurring liens on its respective assets, making investments and acquisitions (assuming our pro forma net leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming our pro forma net leverage ratio is greater than 2.50 to 1.00).
We were in compliance with all financial covenants under the credit facility at July 4, 2026. Our interest coverage ratio and net leverage ratio were 10.70 to 1 and 2.10 to 1, respectively. We expect to continue to be in compliance with these covenants based on current projections. The usable capacity on the credit facility is approximately $423 million as of July 4, 2026.
If we are not in compliance with all of the required financial covenants, the credit facility could be terminated by the lenders, and any amounts then outstanding pursuant to the credit facility could become immediately payable. Additionally, our convertible senior notes due 2030 (the "2030 Notes") have cross-default provisions that could accelerate repayment in the event the indebtedness under the credit facility is accelerated.
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 2.77 to 1, any new U.S. dollar borrowings will bear interest at SOFR plus 2.10% (including the applicable credit spread), and the undrawn commitment fee is 0.35% per annum.
The borrowings under the credit facility are secured by a lien on substantially all assets, including accounts receivable, inventory, machinery and equipment, and general intangibles (but excluding real estate, intellectual property registered or licensed solely for use in, or arising solely under the laws of, any country other than the United States, assets located solely outside of the United States and deposit and securities accounts), of Vishay and certain significant subsidiaries located in the United States, and pledges of stock in certain subsidiaries; and are guaranteed by certain significant subsidiaries.
We had $219 million outstanding on our revolving credit facility at December 31, 2025 and $238 million outstanding at July 4, 2026. We borrowed $384 million and repaid $365 million on the revolving credit facility during the six fiscal months ended July 4, 2026. The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $273 million and the highest amount outstanding at a fiscal month end was $319 million during the six fiscal months ended July 4, 2026. In the third fiscal quarter of 2026, we used a portion of the net proceeds from the public offering of our common stock completed on July 1, 2026, to fully repay the outstanding balance on our revolving credit facility. We expect, at least initially, to fund certain future obligations required to be paid by the U.S. parent company by borrowing under our credit facility. We also expect to continue to use the credit facility from time-to-time to meet certain short-term financing needs. Additional acquisition activity, convertible debt repurchases, or conversion of our convertible debt instruments, may require additional borrowing under our credit facility or may otherwise require us to incur additional debt. No principal payments on our debt are due until 2028.
The
2030 Notes were not convertible during the second fiscal
quarter of 2026. The 2030 Notes became eligible for conversion at the option of the holders
beginning on July 6, 2026 and will remain eligible for conversion throughout
the third fiscal quarter of 2026.
Pursuant to the indenture governing the 2030 Notes, we will satisfy our conversion obligations by paying $1,000 cash per
$1,000 principal amount of converted notes and settle any additional amounts
due in cash and/or common stock, at our election. We
have the ability to finance a certain amount of any converted 2030 Notes with borrowings
from our long-term revolving credit facility.
The principal amount of 2030 Notes and associated deferred financing costs are classified as current liabilities on the consolidated
condensed balance sheet.
Safe Harbor Statement
From time to time, information provided by us, including but not limited to statements in this report, or other statements made by or on our behalf, may contain “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should,” or other similar words or expressions often identify forward-looking statements.
Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance, or achievements may vary materially from those anticipated, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; delays or difficulties in implementing our cost reduction strategies; delays or difficulties in expanding our manufacturing capacities; manufacturing or supply chain interruptions or changes in customer demand (including due to political, economic, and health instability and military conflicts and hostilities); an inability to attract and retain highly qualified personnel; changes in foreign currency exchange rates; uncertainty related to the effects of changes in foreign currency exchange rates; competition and technological changes in our industries; difficulties in new product development; difficulties in identifying suitable acquisition candidates, consummating a transaction on terms which we consider acceptable, and integration and performance of acquired businesses; changes in applicable domestic and foreign tax regulations and uncertainty regarding the same; changes in U.S. and foreign trade regulations and tariffs and uncertainty regarding the same; volatility in prices for metals and materials; changes in applicable accounting standards and other factors affecting our operations, markets, capacity to meet demand, products, services, and prices that are set forth in our filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Our 2025 Annual Report on Form 10-K listed various important factors that could cause actual results to differ materially from projected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading “Risk Factors.” You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.