Vishay Intertechnology, Inc. (VSH) Q1 2013 Earnings Report, Transcript and Summary

Good morning. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vishay Q1 2013 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Henrici, you may begin your conference.

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'll 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 2013 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 Thursday, May 9 at the Raymond James Spring Investors Conference in Boston. Now I turn the discussion over to Chief Financial Officer, Lori Lipcaman.

Thank you, Peter. Good morning, everyone. I am sure that most of you have had a chance to review our earnings press release. I will focus on some highlights and key metrics. Vishay reported revenues for Q1 of $554 million, at the high end of the guidance. EPS for Q1 of $0.19 included a onetime tax benefit of approximately $1 million related to the retroactive enactment of the American Tax Payer Relief Act of 2012, signed into law on January 2, 2013. Adjusted EPS for quarter 1 was $0.18. Vishay signed a definitive purchase agreement to acquire MCB Industrie S.A., a specialty resistor company located in France. We expect the transaction to close during the second quarter. Revenues in the quarter were $554 million, up by 4.5% from previous quarter and up by 2.9% compared to prior year. Gross margin was 24.7%. Operating margin was 8.2%. EPS was $0.19. Adjusted EPS was $0.18. The adjusted EPS includes the onetime tax benefit related to the enactment of the American Taxpayer Relief Act. Looking at the reconciliations versus prior quarter. Operating income Q1 2013 compared to operating income for prior quarter based on $24 million higher sales or $21 million higher excluding exchange rate impacts, operating net income increased by $24 million from $22 million in quarter 4 2012 to $46 million in Q1 2013. The main elements were: average selling prices, which had a negative impact of $5 million, representing a 0.8% ASP decline; Volume increased with the positive impact of $16 million; Variable costs had a positive impact of $11 million primarily related to lower material prices and volume-related deficiencies. Inventories increased with a positive impact of $4 million. Versus prior year, operating income Q1 2013 compared to prior year based on $16 million higher sales or $15 million higher excluding exchange rate impacts, operating income decreased by $5 million from $50 million in Q1 2012 to $46 million in Q1 2013. The main elements were: average selling prices, which had a negative impact of $18 million, representing a 3.1% ASP decline; Volume increased with a positive impact of $18 million; Variable cost decreased with a positive impact of $5 million, again, primarily due to lower material prices and volume-related efficiencies; Fixed cost increased with a negative impact of $9 million. This is higher than inflation. However, Q1 of 2012 included more extreme temporary cost containment measures than we found reasonable to do this quarter. Selling, general and administrative expenses for the quarter were $91 million. This included temporary cost reduction and containment measures, such as temporary furloughs and delayed salary increases, which will not repeat in quarter 2. However, if economic conditions worsen, we may resume these temporary measures. For the second quarter of 2013, our expectations are approximately $93 million to $95 million of SG&A expenses at current exchange rates. This is also our expectation for the coming quarters. It is somewhat higher than last year due to currency impacts and bonus expectations. The expected normalized tax rate for the year, excluding unusual items, is approximately 31%. This rate is based on an assumed mix of income among our various taxing jurisdictions. A shift in income could result in significantly different results. The GAAP tax rate, which includes the tax impact of the retroactive enactment of the Taxpayer Relief Act, was 27.6% for the quarter. Total shares outstanding at quarter end were 144 million. The expected share count for EPS purposes for the second quarter of 2013, based on the same average stock price as in quarter 1, is approximately 151 million shares. For a full explanation of our EPS share count and variables that impact that calculation, please refer to the 8-K we filed this morning. Cash from operations for the quarter was $23 million. Capital expenditures for the quarter were $20 million. Proceeds from the sale of assets were $1 million. Free cash generation for the quarter was $4 million. For the trailing 12 months, cash from operations was $288 million. Capital expenditures were $154 million, split approximately $82 million for -- for expansion, $82 million; for cost reduction, $16 million; for maintenance of business, $56 million. Proceeds trailing 12 months from the sales of property and equipment were $8 million. Free cash generation was $143 million. Vishay has consistently generated in excess $100 million free cash in each of the past 7 years. Cash flows from operations were greater than $100 million for the last 18 years and greater than $200 million for the last 11 years. Backlog at the end of quarter 1 was at $578 million or 3.1 months of sales. Inventories increased quarter-over-quarter by $12 million or by $16 million excluding exchange rate impacts. Days of inventory outstanding were 90 days. Days of sales outstanding for the quarter were 42 days. Days of payables outstanding for the quarter were 31 days, resulting in a cash conversion cycle of 101 days. We had liquidity of $1.4 billion at quarter end. Cash and short-term investments comprised $985 million, and unused capacity on the credit facility was $430 million. The breakdown of our debt of $395 million was: $90 million outstanding on our credit facility; $95 million of exchangeable unsecured notes due in 90 years; $210 million of convertible debentures, net of unamortized discount issued in 3 tranches and due in 27, 28, and 29 years, respectively. The principal amount or face value of the converts is $575 million. 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, after a quite difficult second half of 2012, showed clear signs of an economic recovery. Vishay's results benefited from better economic conditions, as well as from improved efficiencies and some temporary measures to save fixed costs. We achieved gross margin of 25% of sales, operating margin of 8% of sales, adjusted earnings per share of $0.18 and GAAP earnings per share of $0.19. Not unlike prior year, we had a slow start in terms of free cash generation. We made $4 million in the quarter, but we, nevertheless, expect for this year the continuation of our traditionally strong performance. Let me talk about the economic environment as we see it. After very slow fourth quarter, our markets began to recover in the course of Q1, driven by some restocking in distribution, but also by improving end-customer demand. All regions show improvements in business climate. In particular, Asia expects a normal cycle. Automotive continues to be strong in general. There is an exception as we see it in France and Southern Europe. Vishay's traditionally strong industrial market sector shows recovery across the board, which, of course, is encouraging for us. Computing continues to be weak, in particular, for notebooks. For consumer, we do expect a normal seasonality in 2013. Distribution inventories continued to reduce by 7% versus the fourth quarter. Distri turns have normalized, 3.7 worldwide versus 3.2 in the fourth quarter, 2.5 turns in the Americas versus 2.3 turns in the fourth quarter, 4.8 turns in Asia versus 4.5, 4.1 turns in Europe versus 3.5. The POS is up by 8% versus the fourth quarter, and I'd like to highlight that there is a positive book-to-bill ratio of distributors. Talking about our business development. Sales, due to a strong month of March, came in well within our guidance. We achieved sales of $554 million in the quarter versus $531 million in prior quarter and $539 million in prior year. Excluding exchange rate effects, sales were up versus prior quarter by $21 million or 4% and up versus prior year by $15 million or by 3%. We saw a strong book-to-bill ratio in the quarter, was 1.14, 1.14; 1.24 for distribution; 1.04 for OEMs; 1.22 for actives; 1.07 for passives; 1.08 for the Americas; 1.26 for Asia; 1.07 for Europe. The quarter 1 recovery was mainly for actives in -- and in Asian distribution, which has been the main area of decline in the second half of 2012. Our backlog has grown to 3.1 months, 3.4 in actives and 2.9 in passives. Order cancellations continued on a very low level. We have seen a decreasing price pressure in the commodity part of the business. For Vishay in total, we have seen minus 0.8% versus prior quarter, minus 3.1% versus prior year. The decrease of the price decline was primarily due to actives, minus 0.9% versus prior quarter, minus 4.5% versus prior year. You will remember that this decline was much heavier in the last quarter. We continue to see a relative stability in terms of prices in passives, minus 0.7% versus prior quarter, minus 1.6% versus prior year. Some highlights of our operations. Contributive margin at Vishay recovered nicely vis-a-vis prior quarter and came in well within our traditional range of between 46% and 48%. SG&A costs continue to be well under control. You have heard it, $91 million in the quarter as expected. Manufacturing fixed costs in the quarter were $121 million on the level of prior quarter. In the quarter, fixed costs in general, manufacturing fixed plus SG&A, were favorably impacted by temporary cost-saving measures, like for instance, the postponement of salary increases by one quarter wherever possible. Total employment at Vishay at the end of the first quarter was 22,100, which represents an increase in the quarter of 2% due to increased production rates. We are in the process to expand our sales organization in Asia, namely in China, and we, in the meantime, have hired approximately 75% of the targeted additional headcount. The inventory turns in the quarter were at 4.0, which is on the satisfactory level of 2012. Excluding exchange rate impacts, inventories in the first quarter increased slightly by $16 million, 1-6 million, equally in raw materials and in WIP and finished goods, driven, of course, by higher production rates in the first quarter and expectation for the second quarter. Capital spending in Q1 was $20 million. We continue to expect capital expenditures of about $165 million in 2013 following the midterm requirements of our growth plan. It will be in the traditional split, more than $100 million for expansion and cost reduction. We generated, in the first quarter, cash from operations of $23 million like prior year. We generated in the first quarter free cash of $4 million, as I mentioned in the beginning, versus $9 million in prior year. On a trailing 12-month basis, Vishay generated cash from operations of $288 million and free cash of $143 million. So I think we can say, Vishay remains a very reliable generator of free cash. Let me come to Resistors and Inductors. Vishay's traditional and most profitable business has bottomed out in the fourth quarter and now shows recovery. We do enjoy a very strong position in the industrial and mill markets and are intensively penetrating the medical segment. Sales in the quarter were $165 million, which is 7% above prior quarter and 4% above prior year. The book-to-bill ratio in the quarter was 1.07, which is substantially improved from prior quarter where book-to-bill was 0.94. The backlog is on a quite normal level of 2.7 months. The gross margin improved quite nicely to 32% of sales, which is up by 3 percentage points from prior quarter due to better volume and of course, related to better efficiencies. We have seen practically priced stability, minus 0.1% versus prior quarter, minus 1.5% versus prior year. The inventory turns were quite excellent, 4.7. And as indicated by Ms. Lipcaman before, after the successful acquisition of the specialty businesses, Huntington and HiRel, we recently signed a definitive purchase agreement to acquire MCB in France, a well-established manufacturer of specialty resistors and sensors, with sales of about $330 million. The acquisition expense, our European market position in the industrial segment and will -- quite well synergize with our successful Spanish [ph] divisions. Talking about Capacitors. Our business is based on a broad range of technologies with a strong position in European and American market niches. It has obviously bottomed out in the first quarter and starts to see signs of an upturn. Sales in the quarter were $106 million, 1% below prior quarter and 7% below prior year. Book to bill was 1.06, improved from 0.93 in the prior quarter. The backlog is on a normal level of 3.2 months. The gross margin came up. We have seen 23% of sales in the quarter, which is a 5% improvement versus prior quarter, which was depressed by temporary inefficiencies. Positive impact came from improving yields, as well as from a temporary inventory build. Selling prices in Capacitors were burdened by some singularities versus prior quarter, but the long-term trend remains normal. We have seen minus 1.6% versus prior quarter and minus 1.7% versus prior year. Inventory turns at Capacitors were at quite normal, 3.1. We do remain confident for the midterm in view of increasing power and green energy applications. Coming to Opto products. Vishay's Opto business consists of infrared sensors, couplers and LEDs, mainly for automotive applications. It contains a substantial share of customer-designed products mainly sold to automotive and to industrial markets. The business has shown a high degree of stability during the recent downturn and is now back to growth. Sales in the quarter were $56 million, which is 11% above prior quarter and prior year. Book to bill was 1.08, after 1.03 in prior quarter. The backlog is at normal 3 months. The gross margin improved further to 35% of sales, actually, an improvement of 2% vis-a-vis prior quarter, mostly due to higher volume. This line has quite excellent turns of 5.4. The ASP declined year-over-year but is normal. We have seen an increase of 0.8% versus prior quarter and a decrease of 2.8% versus prior year. Coming to Diodes. Diodes represent a broad commodity business where we are the largest supplier worldwide. Vishay offers virtually all technologies, as well as the most complete product portfolio, and we are leading, in particular, in power applications. The business in the course of Q1 recovered quite drastically, with Asian distributions started -- starting to restock and business conditions in general improved. Sales in the quarter were $125 million, which was 7% above prior quarter and 4% above prior year. Book to bill came in at fairly surprising 1.28 after 1.01 in the prior quarter, and the backlog consequently has grown to 3.4 months. We are in process to increase manufacturing capacities to quickly work down the lead times. Gross margin was at 22% of sales, which is a substantial improvement again of 5 percentage points versus prior quarter, mainly due to higher volume and again, related to this higher volume, better efficiencies. The inventory turns were at quite excellent, 4.6. Price decline was normal, minus 2.1% versus prior quarter and minus 3.8% versus prior year. Last but not least, our MOSFETs line. Vishay continues to be one of the market leaders in the segment of low-voltage MOSFETs, and we are in process to complete our product offering also in high-voltage products. The predominantly Asian business with our customers in computers and phones in Q1 started to benefit from the recovery of Asian distribution and better economic conditions in general. Sales in the quarter were at $101 million, still 3% below prior quarter, 6% above prior year. Book to bill was strong though at 1.22, after 0.9 in prior quarter, and the backlog has grown to 3.5 months. Gross margin was at 13% of sales, a 3% improvement versus prior quarter due to higher efficiencies, better product mix and lower fixed costs. Inventory turns were at 3.6. The price decline year-over-year was normal. Vis-à-vis prior quarter, it was minus 0.1% and vis-a-vis prior year, minus 6.4%. The qualification of a new generation of high-voltage MOSFETs is ongoing, and we see beginning revenues there. Let me summarize. I think Vishay has delivered a good first quarter with results above its business model. We, for contributive margins, are back within our traditional range mainly due to improved deficiencies. Fixed costs are kept well under control and benefited from temporary cost-saving measures. The business conditions have recovered from a very slow fourth quarter, and the majority of our customers, including distribution, is confident for the year 2013. They expect a normal business cycle this year, quite in contrast to the years 2011 and 2012. Vishay, while maintaining its adopted [ph] earnings power, continues to work on its growth plan by expanding manufacturing capacities in critical lines, by strengthening R&D and designing efforts, by expanding its sales presence in Asia, by acquiring specialty businesses like recently MCB in France. Also, we are confident for the current year and expect for the second quarter further improved results. Based on current order trends, we guide to a range of sales between $570 million and $610 million at similar gross margin percent and an improved operating margin. Thank you. We are open for questions.

[Operator Instructions] Your first question comes from Matt Sheerin. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: From Stifel. First question, you just mentioned in your guidance, I think you said that gross margin is going to be a similar percentage. Does that mean it's going to be flat? Or will you see the kind of normal contribution margin that you see on higher volumes?

You will see the same contributive margin, but as I said, the fixed costs in quarter 1 were favorably impacted by temporary fixed cost savings measures, which automatically means, in our case, that we expect the same percentage while the sales will be growing, but of course, the operating margin will improve in terms of percent. Gross margin will improve in absolute numbers of course. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then that SG&A that you talked about going up a little bit, also I think, Lori mentioned that, that SG&A number off of that $93 million to $95 million guide, that'll be sort of that level that you're expecting for the rest of the year. Is that correct?

Precisely, yes. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And your commentary regarding distribution, you said distribution inventories were down, I believe you said 7%, but sellout was up, I think, 8%. At this point, are you starting to see restocking take place? And is that the reason for that high book to bill in distribution, which was over 1.2?

Well, we have expected some restocking already taking place in quarter 1, which did not take place obviously. Now of course, there will be some restocking, but I think it's modest at this point. The sell-through is not bad. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And just lastly, I think you mentioned in your Opto business that lead times were stretching. Could you talk about lead times, generally your cost, your business? And is it stretching out in your other businesses?

Well, basically, we see stretching lead times on the semiconductor side in Diodes, as I mentioned, and to a degree also in MOSFETs. Opto was one of the examples also, but I think I highlighted really Diodes and the MOSFETs. And we are going to expand our capacities as we always do, not necessarily by increased capital, but we bring people back in short work wherever we're headed. So we are increasing, we hope, quickly. In total, we have lead times, well, if you asked that, over 10 weeks, for sure, depending on the line, very strong. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: 10 weeks on the active side?

Excuse me, sorry? Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: That's on the semiconductor side?

Yes, indeed, yes.

Your next question comes from Shawn Harrison.

Just wanted to get back to the temporary fixed cost dynamic in the March quarter. How much on a dollar basis were the temporary fixed cost savings that will come back, I guess, split both between on cost of goods sold and SG&A?

My CFO just indicate $7 million. Okay, yes, $7 million.

Okay. Got it. Got you. And then just looking, I guess, back or looking at the MOSFETs business, the book to bill is a lot higher, but the PC market, at least the outlook for that business, is still kind of weak. Could you maybe describe how you think about that business over the next 12 months in terms of whether you may need to take some additional cost-cutting actions, how quickly the high-voltage products will ramp to maybe offset some of the ongoing weakness within the PC portfolio?

Well, to be honest with you, we expected a more quick impact of the high-voltage business on our overall business in MOSFETs. But industrial markets were slow, as you know, in the last, I would say, half a year, and this didn't help our attempts to qualify, as a matter of fact. We have qualifications now. We will see increased revenues, and we continue to be confident that high voltage will become a major part, let's say a strong part of our MOSFET business altogether. We will see increasing revenues throughout the year. We do not plan to cut further fixed costs at this point in time in MOSFETs. We bet still on the fact that we can -- we need more technical personnel to continue with our efforts to develop new products and to design in.

Okay. And then finally, on the acquisition, is that -- is there a revenue aspect of that within the guidance for the quarter?

So it will not -- excuse me? Well, it's not closed yet. It's not in. The $30 million are not taken into account, the $30 million per year.

Okay. So that's not within the guidance. And the margins on that business would be similar to your existing Resistor portfolio?

Yes, absolutely.

And then, I guess, just on M&A, how is the landscape looking for other deals potentially this year?

We are pursuing other potentials, but we are looking, as you know, at this point for sure for specialty businesses, and it's quite somewhere 50% [ph], somewhere to find candidates to evaluate them, but they exist. So we will continue on this route.

Your next question comes from Steve Smigie. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Just going back to gross margin. Just curious why you might not see some better leverage there within utilization go up and get better cost absorption on the guidance.

Well, basically, we expect that same variable margin, but we have to take in people now, obviously. And this is always a retraining effort also. But I think we are very well within our normal range already, but the real reason for the lower than maybe theoretically to be expected incremental performance is clearly the fact that we have to add back the end to temporary fixed cost savings, and this is the real reason, nothing else. It's not a lack of efficiency. You are only -- I was only commenting that you don't see even more with increased volume. Maybe, but at the point in time, we have trained these additional people, but this is future. But for the second quarter, it's clearly the increased fixed costs which limits our incremental performance. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: So just theoretically, let's say you went to a Q3 and you had flat revenue, would you see margin up there because you wouldn't have any of those temporary costs coming back?

The contributive margin depends on so many things. It's not only the efficiency. It's the price. It's the mix. So at constant mix and at constant price, it's obvious that people that you take in and train are better if the better volume holds, which we believe. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Okay, great. Can you talk a little bit about the competitive environment from a manufacturing perspective on high voltage and low voltage out there? A lot of, I think, folks are adding facilities and -- or shutting down other facilities. Just curious how you see that on the MOSFETs side for low-voltage, high-voltage FETs.

We believe that the competitive landscape has not changed dramatically. We see the same people we have faced since a long time, we see again. And everybody, all of us, we attempt to reduce our variable costs and quite successfully. You see that despite the fact that the prices go down in MOSFETs quite substantially, at least we can keep our variable margin percent quite nicely, and we do believe that our move towards high-voltage products will support that even. So I do not see major changes in the environmental arena -- in the, excuse me, in the competitive arena. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Okay. And overall, you guys had very nice revenue for the quarter and on the guidance. It's been some mixed signals out there in terms of what's strong and what's not. It seems like some of the IT spending stuff's a little bit softer. It would seem to me, typically, sort of industrial categories tend to lag on improvement in PC or IT-based activities. In this case, it almost seems like it's leading. I'm just curious if this is sort of what you would say is a typical pattern or help me sort of understand the environment from your perspective.

At the moment, you know that Vishay vis-à-vis others is relatively stronger in industrial and automotive and maybe not so strong in other segments like computers, et cetera. At the moment, the overall market development helps us. Let's face it. Industrial is quite strong, gets stronger everywhere. And automotive holds it place especially for our customers. It's not so that automotive is beautiful around -- across the board, but in this case, you know we were -- our major customers have their major focus on premium cars, and this are exactly -- this is exactly the segment which goes well at the moment. So we see improvements in industrial, and we see, at least for our customers, quite a stable situation in automotive also. So it plays a little towards us in our favor at the moment. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Great. If I could ask just one last one, on that automotive segment you talked about, as you said, you guys have seen decent strength there as have other folks. That's despite the -- as you mentioned in your comments, despite the weakness in France and elsewhere in the auto market. Is the dynamic just that what's doing well out there is the high-end cars where you have a lot of the semi content and what's weak and...

Yes, exactly. Well, first of all, our main customers at the moment, I cannot name them, but it's clear who. I suspect, they are winners. They gain market share, which is good that we are in line with the right people. Secondly, these people are focused very much on the premium cars, as exactly as you say, and these premium cars, by nature, is not so strong this segment in the southern part of Europe. So Vishay, in this case, sits in the -- on the right horse, so to speak. No question about it.

Your next question comes from Jim Suva.

You were nice and clear, and you said that, if I remember correctly, that the revenue outlook does not include any of the revenues from the pending acquisition.

No, it doesn't.

I just wanted to make sure, I think there were some comments made on the SG&A and the comments made for the remainder part of the year in that $93 million to $95 million. Am I accurate that, that also does not include the pending acquisitions?

Absolutely. Absolutely.

Okay. And then in doing so, with that acquisition, is the profile of the -- part of the company that you're buying, that company, is the SG&A profile similar to Vishay's? Or is it a little more cost heavy because you're a much bigger company and can work that down? Or how should we think about once we fold that acquisition into the Vishay model?

Can I say, in general, it's typical. Smaller companies, by nature, have more overhead costs than bigger companies by nature if they produce about the same products. So of course, there's the potential for synergies in this case, of course. On the other hand, we will have a very close look on the technical abilities of this company. They are quite promising. So we will not cut in the wrong place, for sure not. But for sure, in total, it represents the potential for synergies.

Great. And then my follow-up is, with this acquisition, it's been a little while since Vishay's done an acquisition. Now this one's pending in definitive agreement. Is it fair to say you're looking at folding this one in before making additional tuck-in acquisitions? Or do you have the bandwidth to continue to do more?

No, no, no. Jim, really, I think our new strategy to go towards and go for specialty houses of limited size has the advantage that not only one division is burdened by an acquisition. That means, really, you can do a lot of things at the same time because different people have to deal with it. So it would not limit our possibility to have, at the same time, another acquisition.

Your next question comes from Chris Danley. Sameer Kalucha - JP Morgan Chase & Co, Research Division: Kalucha calling in for Chris Danley. Dr. Paul, you mentioned this quarter was strong on book to bill, 1.14. With 1 month under the new quarter, I wonder how the book to bill is tracking for the second quarter so far.

Don't want to talk about, but seriously speaking... Sameer Kalucha - JP Morgan Chase & Co, Research Division: It would be strong, I suppose.

Listen, I wouldn't sound this confident if this would be a disaster April, was, of course, not. So. Sameer Kalucha - JP Morgan Chase & Co, Research Division: So it would be at similar levels or better?

It's still strong. Still strong. Sameer Kalucha - JP Morgan Chase & Co, Research Division: Got it. And then the second question is along the inventory levels. I mean, you mentioned they were low and you're seeing some restocking. If you were to sort of split the improvement between restocking and end-demand, what do you think is contributing more to the improvement? Is it end-demand? Or is it restocking?

There was no restocking, actually, because the inventories at distribution in quarter 1 went down actually. So there was... Sameer Kalucha - JP Morgan Chase & Co, Research Division: Overall? In terms of -- the improvement you're seeing in the business from the overall high-level perspective, do you think it's more to do with restocking or more to do with end-demand?

I think quarter 2, by nature of things, will see more restocking than the Quarter 1. Quarter 1 was a decline in inventories. I could not imagine that quarter 2 will see another decline in inventories in that sense. And I'm talking distribution only. Concerning the remainder of the business, we don't have that visibility by nature. I can only guess. I think that inventories in the pipeline altogether, after a quite soft second half of last year, are limited, and distribution is not a singularity. I think we are not drowning in inventories in the complete supply chain. Sameer Kalucha - JP Morgan Chase & Co, Research Division: How did the overall inventory compare with the 2008, '09 time frame? Is it close to that, below that?

There was a time in -- I don't know by heart. At the moment, inventories are lower than that for sure. Sameer Kalucha - JP Morgan Chase & Co, Research Division: Lower. Okay. And how do you see pricing...

I mean, may I say one more? Inventories, per se, is not the only criteria. What really -- it all depends on the POS level, obviously. So if the business is high -- distribution, for sure, we'll afford higher end, has to afford higher inventory levels. So just a comparison of the inventories wouldn't say that much, I think. Sameer Kalucha - JP Morgan Chase & Co, Research Division: Got it. Makes sense. And then how do you see the pricing environment evolving through the rest of the year so far and...

Quarter 4 wasn't nice. You know that, in the commercial part of the business at all. Quarter 1 came in much better, as I tried to say. Passives, again, when I talk price decline, I really, in Vishay, I always am repetitive on that. I always talk about semiconductors, our passives by -- have developed, and we drove this into more specialty kind of business where price decline is not such a subject. But of course, on the semiconductor side, we are exposed like everybody else. It's true, the price decline has softened in the quarter 1. We also suspected that to happen after such a big pressure, which we have seen substantial pressure in quarter 4. Going forward, it depends all on the economy. If our predictions and the expectation of so many people hold, then I think we will continue to see just normal price decline. If it heats up, then we have see situations that even price increases were possible in 2010. So it depends very much on the economic environment, which we see positive. Sameer Kalucha - JP Morgan Chase & Co, Research Division: Got it. And then the last question I had was on the lead times that you mentioned on the Opto side, and -- so my question on there is, is it because there were some stronger orders and you need to improve capacity there? Or is it that the customers are sensing that they need to put in orders to secure supplies before anyone else does? So what I'm trying to guess -- I'm trying to get an idea whether it's company specific or whether it's some behavior from the customers.

Well, first of all, it's really not so much Opto. Where we see it, it's Diodes and MOSFETs. But book-to-bill ratio of 1.28, like we have seen in Quarter 1, you just cannot follow. Nobody can follow such an abrupt order intake, especially as things were escalating in the second half of the quarter. By nature of things, in a certain phase of an upturn, you always see people that just place orders to reserve capacity. That is not abnormal. But I do not think that this is the case at this point. I believe it's really so that people have reduced the inventories, and then it continue to reduce and people just place orders to get the product [indiscernible]. And what we do in raising capacities is not that I start to build machines. This would be too late anyway. We really bring back people, which we had to let go. We had to work short in the time of the decline, which was basically 6 months. So we will react quickly. It's part of our growth plan that we want in future to react more quickly to the changes in the market. We do have some spare capacities built for certain critical lines. We have done that. So we are quite confident that we can react to this sudden demand. The nature of the beast, obviously more and more, the sudden demand in commodities more quickly than we were able to a few years ago when it happened before.

[Operator Instructions] There are no further questions at this time. I will turn the call back over to Mr. Henrici for closing remarks.

Thank you for your interest in Vishay Intertechnology. This terminates our Quarter 1 2013 conference call.

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