威世科技 (VSH) 2012 Q1 法說會逐字稿

Good morning. And welcome to the Vishay Intertechnology first-quarter earnings call. My name is Melissa and I will be your conference moderator today. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session.

I will now turn the call over to Peter Henrici, Senior Vice President Corporate Communications. You may begin.

Thank you, Melissa.

With me today are Dr. Gerald Paul, Vishay's President and Chief Executive Officer and Lori Lipcaman, our Executive Vice President and Chief Financial Officer. As usual, we will start today's call with the CFO, who will review our first-quarter financial results. Dr. Gerald Paul will then give an overview of our Business and discuss operational performance, as well as segment results in more detail. Finally, we'll reserve time for questions and answers. This call is being webcast from the Investor Relations section of our website at ir.Vishay.com. The replay for this call will be publicly available for approximately 30 days.

You should be aware that in today's conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. For a discussion of factors that could cause results to differ, please see today's press release and Vishay's Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.

In addition, during this call, we may refer to adjusted or other financial measures that are not prepared according to Generally Accepted Accounting Principles. We use non-GAAP measures because we believe they provide useful information about the operating performance of our businesses, and should be considered by investors in conjunction with GAAP measures that we also provide.

This morning we filed a Form 8-K that outlines the various variables that impact the diluted earnings-per-share computation. We expect to file our Form 10-Q for the first quarter this evening. On the Investor Relations section of our website, you can find the presentation of the Q1 2012 financial information containing some of the operational metrics Dr. Paul will be discussing. Johan Vandoorn, our Executive Vice President and Chief Technical Officer, will be presenting on Wednesday, May 16 at the JPMorgan Global Technology Media and Telecom Conference In Boston.

Now I turn the discussion over to Chief Financial Officer Lori Lipcaman.

Think you, Peter. Good morning, everyone.

I'm sure that most of you have had a chance to review our earnings press release, so, I will focus on some highlights and key metrics. As you have seen, our adjusted EPS of $0.21 represents a $0.06 quarter-over-quarter increase despite the lower level of revenues. This is primarily due to the temporary cost reduction measures we implemented during the quarter, and also to manufacturing efficiencies. These evidence our ability to act quickly to changing economic environments, which we are proud of.

The HiRel acquisition was accretive, as expected. We expect HiRel sales growth to outperform our corporate average. This is our second acquisition following Huntington Electric, which was acquired in quarter three of last year, and also fits well into our strategy of acquiring specialty products businesses.

After the quarter ended, we capitalized on our strong financial position to expand the borrowing capacity on our credit facility. These new incremental revolving commitments allow us additional flexibility to pursue our growth plan and we now have borrowing capacity in excess of $500 million.

Looking at the P&L, revenues in the quarter were $539 million, which were down by 2.3% from the previous quarter, and down by 22.5% compared to the prior year. Our gross margin was 25.4%. And our operating margin was 9.3%. Our quarterly EPS is $0.21. We recorded no unusual items in Q1.

At this point, I will provide some information on the reconciliations. Looking at our operating income for the first quarter of 2012, compared to operating income for the prior quarter, based on $13 million lower sales, or $8 million lower excluding exchange rate impacts, the operating income increased by $16 million from $34 million in Quarter Four of 2011 to $50 million in Quarter One 2012. The main elements were average selling prices, which had a negative impact of $5 million, representing a 1% ASP decline; lower costs, both fixed and variable, with a positive impact of $15 million, primarily due to temporary reduction measures; and inventory impacts with a positive impact of $6 million.

Reconciling operating income quarter one, 2012 compared to prior year, based on $157 million lower sales, or $150 million lower excluding exchange rate impacts, the operating income decreased by $72 million from $122 million in quarter one 2011 to $50 million in quarter one 2012. The main elements were a volume decrease with a negative impact of $69 million. Average selling prices had a negative impact of $11 million, representing a 2% ASP decline, which were offset by decreased fixed costs with a positive impact of $9 million.

Turning to SG&A for the quarter. Selling, general and administrative expenses were $86 million for the quarter. This is in line with our expectations, primarily reflecting temporary cost reduction measures as well as the positive impact from exchange rates. Also, the current quarter will benefit from cost reduction benefits, but at a lower level. Our expectations are slightly above $90 million.

Taking a look at taxes, the tax rate for the first quarter is approximately 27% based on our expected rate for the full year. On share count, our total shares outstanding at the quarter's end were 157 million. The expected share count for EPS purposes for the second quarter, based on the average stock price of below $15, is approximately 164 million shares. For a full explanation of our EPS share count and variables that impact the calculation, please refer to the 8-K that we filed earlier this morning.

Highlighting selected key metrics. Cash from operations for year-to-date through March was $23 million. Our capital expenditures for the year were $17 million, split approximately $10 million for expansion, $2 million for cost reduction, and $5 million from maintenance of business. Proceeds from the sales of property and equipment were $3 million. Free cash generation was $9 million. This compares to $80 million in the prior year.

Vishay has consistently generated in excess of $100 million free cash in each of the past six years and more than $200 million of free cash for the last three years. Cash flows from operations were greater than $100 million for the last 17 years and greater than $200 million for the last 10 years. Despite the slow start in Q1, we expect solid cash generation for 2012.

Taking a look at our backlog, it was $607 million or 3.4 months of sales at the end of the first quarter. On our cash conversion cycle, inventories increased quarter-over-quarter by $23 million, or $19 million excluding exchange rate impacts. And $7 million of this increase was in the HiRel acquisition. Days of inventory outstanding were 97 days. Days of sales outstanding were 47 days. Days of payables outstanding for the quarter were 33 days. Resulting in a cash conversion cycle of 111 days.

Wrapping up with liquidity and debt, we had a total liquidity of $1.2 billion at the quarter's end. Cash and short-term investments comprise $923 million. And unused capacity on our credit facility was $297 million. We paid down our credit facility by $10 million in Quarter One 2012. And by a total of $95 million in the trailing 12 months. After the quarter ended, we added an additional $78 million of borrowing capacity to the facility at the same terms. This gives us a total of $528 million and brings our total liquidity back to $1.3 billion.

The breakdown of our debt of $389 million was as follows. $145 million outstanding on our credit facility. $95 million of exchangeable unsecured notes, due in 90 years. And $149 million of convertible debentures, net of unamortized discount, and due in 28, respectively, 29 years. The principal amount or face value of the converts is $425 million. I'd like to remind you that no principal payments are due until 2015.

Now I will turn the call over to our Chief Executive Officer, Dr. Gerald Paul.

Thank you, Lori. And good morning, everybody.

The first quarter represented the promising start into 2012. We have seen a very substantial recovery of orders in combination with declining inventories in the pipeline. Vishay achieved quite satisfactory results due to fixed cost reductions and good efficiencies, despite still low sales. We reached, like Lori said, gross margin of 25% of sales, operating margin of 9% of sales, and earnings per share of $0.21 and generated $9 million of free cash. We are confident for the second quarter and for the year.

Let me talk now about the economic environment. After a substantial slowdown in the second half of 2011, the business climate improved progressively through the quarter. Obviously the second-half slowdown of orders was highly related to inventory build up in the pipeline during the first eight months of 2011. We have seen reducing inventory levels at distributors world-wide.

Returning confidence in the United States, affected most market segments there, in particular, industrial and computing. There is continued strength of automotive and industrial segments in Europe. There is unbroken optimism, especially in Central Europe. European automotive customers, like Bosch and Conti, obviously, are winning more programs in the US. And benefit from the market growth in Asia.

Asia is improving fast after a very slow start into the year. We saw significantly increased orders from almost all segments. Naturally, for the region, this upturn is heavily oriented towards consumer segments like smartphones, laptops, and pure consumer.

Distribution inventory was down by 10% or $41 million in the first quarter, which was very encouraging. This was supported by improving POS plus 7% versus prior quarter. Distribution turns in the first quarter were 3.2 worldwide versus 2.8 in prior quarter, 2.4 in the Americas versus 2.1, 3.8 in Europe versus 3.0, 3.8 in Asia versus 3.5 in prior quarter. So, you see we saw improvements in all regions. Our expectations concerning successively improving business conditions through 2012 came through earlier than expected.

Let me talk about our business development now. Sales in the quarter still were impacted by high distribution inventories and a very slow start into the year, in particular in Asia, as I mentioned. We achieved sales of $539 million in the quarter, out of which $11 million came from our acquisition of HiRel versus $551 million in prior quarter and $695 million in the prior year. Excluding exchange rate effects, sales were down versus prior quarter by $8 million, or by 1%. And versus prior year by $150 million, or by 22%.

The positive development of orders in all business segments which we saw is encouraging. Orders were, in total, up by 36% versus prior quarter. Book to bill of 1.11 appears to indicate a turnaround. We have seen 1.11 for distribution, 1.10 for OEMs. 1.09 for actives, 1.12 for passives. 1.08 for the Americas, 1.17 for Asia, 1.07 for Europe. Again, what you see is a very broad, positive development in practically all of the markets.

Our backlog has increased to 3.4 months, 3.5 months in actives, 3.3 in passives. All this is very normal now. The order cancellations continued on a very low level. The ASP decline remains moderate. Prices went down by 1% versus prior quarter and by 2% versus prior year. The actives are back to a normal ASP decline. They have declined 1.1% versus prior quarter and 3.3% prices went down versus prior year. Also, this time passives declined slightly, 0.8% versus prior quarter and 0.7% versus prior year. We believe that this decline in the first quarter represents a singularity. Normally passives are more stables, in our case.

Despite a relatively low level of activity, especially in January, our contributive margin remains well in our traditional range of between 46% and 48%, which we are proud of, a performance which we like to see. SG&A costs, like Lori indicated before, continued well under control. They came out at $86 million in the quarter, including the acquisition. Savings programs helped, which were of partially temporary character. Again, as the CFO said before, without these temporary savings programs, SG&A costs would be more like $90 million.

Total headcount increased from 20,900 to 21,750 or by 4%. The only reason for that was the acquisition of HiRel. Inventory turns in the quarter came slightly down to 3.7. Excluding exchange rate impacts, inventories in the first quarter increased by $19 million. $7 million were due to the HiRel acquisition. The remaining increase in WIP and finished goods basically was due to increasing production levels, which will support scheduled sales increases in the second quarter.

Capital spending in the first quarter was $17 million. For 2012, we expect capital expenditures of $165 million, which is 10% higher than originally expected. The business environment is more promising from today's standpoint, and Vishay is going to react to that. 50% of the capital spending is for expansion and 15% for cost reduction projects. We generated in the first quarter cash from operations of $23 million and free cash of $9 million which is substantially below record levels of the first two quarters 2011, but we still expect another good year of cash generation. The integration of our acquisitions, Huntington and HiRel, is well underway.

Let me come to our product lines. And I start, as always, with resistors and inductors. Vishay's Traditional business in the first quarter entered the phase of solid recovery. We enjoy a very strong position in the industrial, automotive, and middle markets and benefit from the strong performance of these segments. Sales in the quarter were $158 million, 14% above prior quarter and 7% below prior year. Without acquisitions, 6% above prior quarter and 15% below prior year. The book to bill ratio was 1.13, which improved the backlog to a good level of 3.1 months. The gross margin was at 34% of sales, after 30% in prior quarter, driven mainly by higher volume.

Selling prices continued to be fairly stable, minus 0.5% versus prior quarter, minus 0.6% versus prior year. The inventory turns were at quite excellent, 4.3. As I said before, the integration of Huntington and HiRel is well underway. We achieved already in this quarter gross margins of over 30% of sales with both acquisitions. And the profitability of these two companies is planned to grow further with expanding sales and based on some fixed cost reductions to come.

Coming to capacitors. The business is based on a broad range of technologies with a strong position in the European and American market niches. We still suffered from relatively high inventories at distribution, largely to perceived shortages in 2011. Sales in the quarter were $114 million, 4% below prior quarter and 29% below prior year. We have seen the book to bill ratio of 1.12, which brings backlog up to a good level of 3.6 months, and I think indicates starting recovery also for this product line.

The gross margin of capacitors went up to 26% of sales by 4% versus prior quarter, due to a richer product mix. The ASPs are slightly declining in the quarter by 1.2% versus prior quarter, by 0.8% versus prior year. We, indeed, gave back part of the price increases of 2011 in molded tantalum caps, accelerating inventory reduction and distribution. In that sense, we believe this somewhat more steep ASP decrease was a temporary one-time effect. The inventory turns for capacitors were 2.9. And we strongly believe that capacitors in the second quarter will follow resistors in terms of recovery.

Coming to Opto products. Vishay's Opto business consists of infrared sensors, couplers, and LEDs, and contains a substantial share of custom-designed products, mainly sold to automotive and industrial markets. After some inventory corrections in the consumer pipeline, last year the business demonstrated relative stability and now has entered the phase of recovery, mainly driven by IR receivers in Asia where we are successful for years due to technical leadership.

Sales in the quarter were $51 million, 2% below prior quarter and 11% below prior year. Book to bill was 1.12, which leads to a solid backlog of 3.5 months. Gross margin increased to a good level of 34% of sales, improving from 30% in prior quarter due to better deficiencies, lower fixed costs, and slightly increasing inventories. The inventory turns in this line are quite excellent with 5.1. There is a slightly increased price decline, minus 2.4% versus prior quarter, minus 4.1% versus prior year, again, we believe, also in this case, a temporary effect. Also, for Opto products, we expect to further improve second quarter.

Coming to diodes. Diodes represent a broad commodity business where we, Vishay, are largest provider worldwide. We are leading in particular in power applications. Vishay offers virtually all technologies, as well as the most complete product portfolio. Business in Quarter One still suffered from too high distribution inventories, in particular in Asia.

Sales in the quarter were $120 million, which is 5% below prior quarter and 24% below prior year. Book to bill was at 1.01. The backlog at 3.3 months. This does not really indicate at this point in time a major recovery yet. Gross margins were slightly improved, 21% of sales after 20% in prior quarter. Inventory turns were at quite excellent 4.2. The price decline was moderate, minus 0.7% versus prior quarter, and minus 2.4% versus prior year. But we do expect some first signs of recovery showing up in the second quarter.

Coming to MOSFETs. Vishay continues to be one of the market leaders in this segment of low voltage MOSFETs. The predominately Asian business, with customers in computers and phones, had been hurt the most by too high distribution inventories last year. The business is still on a low level but shows strong signs of recovery. Sales in the quarter were $95 million, 13% below prior quarter and 34% below prior year. Book to bill was at 1.18. Backlog increased substantially to 3.9 months.

The gross margin for MOSFETs reduced further to 11% of sales after 15% in Quarter Four. The performance was negatively impacted by lower volume and by a one-time manufacturing problem due to purchased materials, which is behind us. Inventory turns were at 3.2. Price decline was moderate, 0.9% down versus prior quarter, 3.9% down versus prior year. We have started volume production of new and competitive high-voltage MOSFETs, which will impact favorably the performance of the quarters to come. MOSFETs in the first quarter clearly have reached their low inflection point of sales and profitability.

Let me summarize. The phase of economic slowdown we, like our competitors, just have gone through, has highlighted again Vishay's stability and ability to react quickly and effectively to changes of its environment. We were able to prove a substantially increased earnings potential, also at the bottom of the cycle. Now with sales trending upward, we will demonstrate our potential to return to the high profitability levels of the second half of 2010 and of the first half of 2011.

We also have geared the Company towards expansion by maintaining sufficient manufacturing capabilities in critical lines, anticipating the next upturn; by increased efforts in R&D and marketing, also in economically more depressed times; by successful acquisitions in specialty products, which will continue. All in all, we are following our plan to improve shareholders value by increasing earnings per share going forward. And, very important for me, we will be doing so, we will defend our prudent capital structure. For the second quarter, we guide to a sales range between $580 million and $620 million, at accordingly improved gross margins.

Thank you very much, and I would like to turn it back to Peter Henrici.

Thank you, Dr. Paul. We will now open the call to questions. Melissa, please take the first question.

Matt Sheerin.

A question on how you see the margins playing out over the next quarter or two, Dr. Paul. You talked about some temporary cost-savings programs that impact SG&A. Were there also some temporary cost reductions that impacted gross margins so that you won't get as much leverage as you see revenues come back? If you could just give us an idea of what we should think about in terms of gross margin and SG&A in the next quarter.

You're absolutely right. We will not see the full impact of the sales increase, but nice share of it. As I indicated already in the presentation, SG&A we expect to go up from $86 million to approximately $90 million, slightly over $90 million. And also in manufacturing fixed, you can expect some increase of the same magnitude. So altogether we are not going to see the full impact, but we expect a good quarter of it.

But do you still think that you can get closer to a 26% number on gross margin where you could still get it up in the quarter?

Yes.

Okay, that's great. And then in terms of Siliconix, that's obviously been lagging the rest of your business and that's been an issue now. I know you've talked about actually trying to expand capacity, focusing on more higher-margin, more specialty business. Could you talk about your near-term and long-term strategy for Siliconix?

No change. Siliconix remains to be one of the most important parts of Vishay. No question. It has the highest growth potential, I believe, of all of our lines. We have, indeed, concentrated in the last month, even in the last year, on developing a more competitive high-voltage version which we lacked before. We have it now. We are in the qualification process, and the quite broad qualification process. And for the remainder of the year, we really expect Siliconix to come back to historical levels in terms of sales and profitability. Already, as it looks for the second quarter, things look much better than in the first quarter.

Okay. And just lastly, on distribution, it looks like the book to bill there is quite strong. Inventories were down. Are your thoughts that distribution will basically just replenish what they are selling out, and are not right yet in a position to be adding a buffer or layers of inventory? So, in other words, what you're selling in is basically going out, so you're not going to see any near-term inventory build there?

I would even say distribution will continue to reduce inventory but at a much slower rate. As a matter of fact, their POS is strong. So our fear that they go again into an inventory increase would not be justified, I believe.

Okay, great. Thanks a lot.

Steve Smigie.

I was wondering if you could talk a little bit about the SG&A as we get, say, to the back half of the year. Because obviously, you'd had some of these cost reductions, and it looks like you are still getting some benefit in June. So would we expect a dollar step-up as we go into September-December? And, to a certain extent, I am assuming that you have an improvement in revenue, as well, in the back half. My question is, are there some cost reduction efforts that you took in March that will be going away still further in September?

First of all, we came out, as I said before, at $86 million, which was substantially below even what I had expected. I thought, including the acquisition, we would be at $90 million or so. But there were a few things which helped us. Partially we really we adding short work and plant closings, and included the SG&A people in that. This will come to an end. So I expect next quarter, the second quarter, to be around $90 million. Maybe a little above but not much. And for the remainder of the year, we think we can stay at this level approximately. I think we will be more or less at the same level of SG&A costs as last year, but including the acquisition.

Okay. And that's on a dollar level, not a percentage of revenue level?

$360 million or so.

Okay. And then with regard to the acquisition, can you talk about -- and I apologize if you covered it -- how much that impacted revenues in March and how much it will impact it in June.

It impacted March by around $14 million. About $14 million in sales and gross margin was over 30%. Which will grow. We are going to have more sales in the second quarter. And profitability, it has a nice variable margin, will be accordingly up.

Okay. Because you have a pretty decent June guide, but it seems like certainly some of that comes from the full quarter of the acquisition, correct?

No. Most of it comes from the normal business. Most of it.

All right, thank you.

Shawn Harrison.

The first question, maybe if you could quantify what was the one-time charge within Siliconix for the quarter. How much did that affect the business?

It was about $3 million, approximately. As a matter of fact, it really was a one-time effect, which was quite aggravating, but those things sometimes happen. It was a purchased material, which was not up to standards.

Okay. And then if you could help me, I'm trying to understand the really positive book to bill ratio within Asia. At the same time, you are still seeing some inventory corrections at distribution. At least the positive Asian implies to me that maybe we should see better semi growth versus passives growth for the June quarter. Is that the correct way to think about it?

Yes, as it looks.

And then since we've covered a full month of the second quarter, has there been any changes through this quarter versus what you saw during the February-March time frame? Anything a little bit better or worse?

Better. It's encouraging what happened.

Okay. And then, finally, two acquisitions, smaller-sized, now within the past nine months. What does the M&A environment look like for you right now? What are the deals out there?

How to say it? We are still pursuing our strategy. We are going after small and mid-sized specialty businesses. And there are possibilities around. We are pursuing certain possibilities.

Okay. Thanks so much.

Jim Suva.

This is [Asti] on behalf of Jim. If you could just provide some more commentary on the end market that you referred to, the industrial and auto segments in particular, that would be helpful. Thank you.

Sure. You said industry and auto? Sorry, it was a bad connection. Industrial and auto. So, as a matter of fact, Europe continues what was excellent last year, especially the German auto -- the car industry had a record year. We were a little skeptical for the current year but it was all not true. People continue to be super optimistic. They go from record to record. And at this point in time, it doesn't look as if the auto car industry in Europe could slow down. But also the US recovered. So altogether we are seeing a very nice picture in automotive. And we are quite strong in automotive. It helps us.

On the industrial side, there were never the same kind of fears. We had the feeling that the peak was over, say, in September, October, but also here we see a continuation now on the same level as last year. So it's altogether a very positive picture in automotive and industrial, as we see it. May I add to that, better than I personally had anticipated.

Thank you.

(Operator Instructions) Steve Smigie.

Dr. Paul, I was wondering if you could give a little color on the back of the year. I know you don't like to forecast that far out, but with the pretty healthy guidance here, do you think that continues into the back half of the year? Can we return to historical peak revenue levels any time this year?

Difficult question, because we all know we have no visibility. I'm repetitive on that. But of course, if you want to, you can be optimistic. Because you see passives in Europe seem to continue strong. The European economy seems strong, at least the segments of Europe which are important to Vishay. That is, Germany basically, and some of France. Then you can add, of course, the cycle in Asia, which normally indicates always a better second half than a first half. So if you want to be optimistic, you can see higher sales in the second half than in the first half. That I think I can really see. To which extent we can go up to the record levels of $700 million and more this year, I would not forecast that, to say, at this point.

Okay. And with regards to inventory in the channel, you have a very positive book to bill. And yet you indicated that they are still working inventory down. What does it look like as we get to -- or how do you think that order pattern plays out in June? So if a quarter from now we're looking out into September, do you think distributors will be done depleting? And will they actually start to get to a point where they might have to start to restock? It seems like we haven't finished depleting yet, so I don't want to get too far ahead on the restocking. But I think, I believe it was Avent reported yesterday, and they, I believe, indicated that they were starting to see their customers -- so, two steps down the food chain from you -- starting to get to the point where they had to start to restock. So I was wondering if you could just talk through how you think that timing of depletion to being where you want to be to having to restock looks like.

I believe that the ambition of our distributors to reduce further inventory at this point is very limited. I think they count on increasing sales. When you look at their book to bill, it's also very good. It's above 1.1. It was quite substantially above even 1.1. So, I believe the ambition low. I think they will not reduce much anymore as if the POS pattern holds. But this looks as if it was the case. It means what I would expect is very limited inventory reduction and the improved inventory turns. They still have to be improved, obviously. They are still on the low side. I believe they count more on their sales, on their cost of goods sold, to improve it then on lower inventory. So I could expect that there will be no real inventory correction anymore in the second half. Unless the whole economy breaks down, which nobody of us expects at this point, I would say.

Okay. Then just turning to Europe a little bit. You've already given color in a bunch of areas. But just overall, is your sense that the major economies over there are in good enough shape that you should see stability in orders for Europe? I'm talking specifically about orders that will likely stay in Europe as opposed -- I know a lot of your business is shipping maybe to German auto makers that end up in China. I'm talking more about the European demand. Does it seem like the customers ordering over there for Europe are looking at a stable environment in the coming year, or do you think it's still some softening?

We all know that Europe at the moment has two faces, very clearly. We see Central Europe, Germany's the biggest part of it, which has hardly ever seen better times than these, to say it frankly. But, as you said, it's very much buffered by exports out of the European Union. Let's assume that it stays the same. There may be some impacts of the business, I could imagine, with Southern Europe. Sooner or later we are going to see a worse picture there. For Vishay itself, this is not so relevant, I believe. Indirectly we may see also something, but our major focus in sales is Germany and Central Europe, by far. Really by far. Indirectly, there can always be something. But, say, the southern part of Europe, of course, is not well off, it's clear.

Okay. Last question. With regard to pricing, I think your pricing is actually reasonably good here, even on the actives. I look at Fairchild. I think they had about down 3% sequential in the quarter. I think you guys were down 1%. And then NXP, I forget the exact numbers, it was somewhat more challenging. Is it just the case that NXP continues to be a price leader and maybe Fairchild is more aggressive in this particular quarter? Or is there something that you did differently that you are not down as much?

No, we did not do anything differently from before. I don't like to comment on the pricing strategies of my competitors. They are good competitors, and they would know what they do, no question. But it's true what you say. Our price decline is lower. And we do not see an acceleration, either, at this point.

Great, thank you.

Shawn Harrison.

Just to follow up on the pricing on the other side of the business within passives. Believing that you thought the first quarter was a singularity, how has been the experience here through April? Has the pricing decline gotten back to essentially parity?

To say it clearly, the whole thing was not -- first of all, we are not talking a big thing, as you know. Secondly, on resisters, inductors, was practically nothing. So, we are really talking capacitors. And within capacitors, we are talking, the only remaining commodity part of that, which is molded tantalum capacitors. We did it intentionally. We wanted to help distribution to get rid of the inventory, so we indeed made some concessions. So this was to be expected. Yet you hear, the inventory at distribution, in general, went down substantially by $41 million, which was a big number for us. So, not only in tantalum capacitors, of course, but altogether, but tantalum contributed to that. I think it's very clear we are going to see normalization already the second quarter.

Perfect. Thanks so much.

There are no further questions. At this time, I would like to turn the call back to Mr. Henrici for closing remarks.

Thank you for your interest in Vishay Intertechnology. This concludes our call.

This concludes today's conference call. You may now disconnect.