• Vishay Precision Group, Inc.
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  • VPG Reports Fiscal 2018 First Quarter Results
    Company Release - 05/08/2018 07:30

    MALVERN, Pa.--(BUSINESS WIRE)-- Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and systems, today announced its results for its fiscal 2018 first quarter ended March 31, 2018.

    First Quarter Highlights:

    • Growth in revenues to $73.1 million, up 22.3% year-over-year
    • Earnings increased to $0.37 per diluted share, compared to $0.15 reported last year
    • Adjusted diluted EPS* increased 95% to $0.37 compared to prior year $0.19
    • Operating margin for the quarter was 11.2% as compared to 6.6% for the prior year period
    • Book-to-bill remained strong at 1.05, reflecting healthy, stable end-markets

    Ziv Shoshani, Chief Executive Officer of VPG, commented, “Our operating performance in the first quarter of 2018 demonstrates our ability to capture opportunity across all of our end markets in the improved business environment, delivering solid operating margins. We continue to execute well against our business strategy and deliver value to our stockholders.”

    The Company grew first fiscal quarter 2018 net earnings attributable to VPG stockholders to $5.0 million, or $0.37 per diluted share, compared to $2.0 million, or $0.15 per diluted share, in the first fiscal quarter of 2017.

    The first fiscal quarter 2018 adjusted net earnings attributable to VPG stockholders approximately doubled to $5.0 million, or $0.37 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $2.5 million, or $0.19 per diluted share, for the comparable prior year period. This growth was achieved despite a foreign currency exchange rate headwind that reduced net income for the first fiscal quarter of 2018 by $0.2 million, or $0.02 per diluted share relative to the first fiscal quarter of 2017.

    Segments

    Foil Technology Products segment revenues grew 23.0% to $34.2 million in the first fiscal quarter of 2018, up from $27.8 million in the first fiscal quarter of 2017; sequential revenue increased 14.3% compared to $29.9 million in the fourth quarter of 2017. The year-over-year and sequential increases in revenues were attributable to precision resistors growth in all regions, primarily for the test and measurement market, in addition to an increase mainly in the advanced sensors products across all regions.

    Gross profit margin for the segment was 42.8% for the first fiscal quarter of 2018, an increase compared to 41.4% in the first fiscal quarter of 2017 and 39.3% in the fourth fiscal quarter of 2017. The year-over-year and sequential increase in gross margin was directly due to the volume increase experienced in the first fiscal quarter of 2018.

    Force Sensors segment revenues grew 24.3% to $19.2 million in the first fiscal quarter of 2018, up from $15.5 million in the first fiscal quarter of 2017; sequential revenue increased 8.5% up from $17.7 million in the fourth quarter of 2017. The year-over-year increase in revenues was mainly attributable to OEM customers in the force measurement and precision weighing markets across all regions. The increase in sequential revenue was primarily attributable to OEM customers in the force measurement market in Europe.

    Gross profit margin for Force Sensors was 27.3% for the first fiscal quarter of 2018, an increase compared to 23.9% in the first fiscal quarter of 2017 and a decrease compared to 29.5% in the fourth fiscal quarter of 2017. Gross margins were up compared to the prior year period due to the volume increase experienced in the first fiscal quarter of 2018. The sequential decline in gross margins is primarily related to higher freight costs and wage increases.

    Weighing and Control Systems segment revenues grew by 19.0% to $19.7 million in the first fiscal quarter of 2018, up from $16.6 million in the first fiscal quarter of 2017; sequential revenue decreased 9.7% from $21.8 million in the fourth fiscal quarter of 2017. The increased year-over-year revenues were primarily attributable to the on-board weighing and process weighing product lines in Europe and the Americas. The comparative decrease in sequential revenue was attributable to the significant revenues in the steel business, primarily in Asia, that occurred in the fourth fiscal quarter of 2017.

    The first fiscal quarter 2018 gross profit margin for the segment was 43.9%, a decrease compared to 44.3% from the first fiscal quarter of 2017 and 44.8% from the fourth fiscal quarter of 2017. The year-over-year decline in gross margin was primarily due to product mix. The sequential decline in gross margin was primarily due to a reduction in volume.

    Near-Term Outlook

    “In light of a continued strong business environment, at constant first fiscal quarter 2018 exchange rates, we expect net revenues in the range of $71 million to $77 million for the second fiscal quarter of 2018,” concluded Mr. Shoshani.

    *Use of Non-GAAP Financial Information

    We define “adjusted net earnings” as net earnings attributable to VPG stockholders before restructuring costs and associated tax effects. The reconciliation table within this release reconciles the Company's non-GAAP measures, which are provided for comparison with other results, to the most directly comparable U.S. GAAP measures. Management believes that these measures are meaningful because they provide insight with respect to intrinsic operating results.

    Conference Call and Webcast

    A conference call will be held today (May 8) at 10:00 a.m. ET (9:00 a.m. CT). To access the conference call, interested parties may call 1-888-317-6003 or internationally 1-412-317-6061 and use passcode 5447133, or log on to the investor relations page of the VPG website at www.vpgsensors.com.

    A replay will be available approximately one hour after the completion of the call by calling toll-free 1-877-344-7529 or internationally 1-412-317-0088 and by using the passcode 10119570. The replay will also be available on the investor relations page of the VPG website at www.vpgsensors.com for a limited time.

    About VPG

    Vishay Precision Group, Inc. (VPG) is an internationally recognized designer, manufacturer and marketer of: components based on its resistive foil technology; sensors; and sensor-based measurement systems specializing in the growing markets of stress, force, weight, pressure, and current measurements. VPG is a market leader of foil technology products, providing ongoing technology innovations in precision foil resistors and foil strain gages, which are the foundation of the company's force sensors products and its weighing and control systems. The product portfolio consists of a variety of well-established brand names recognized for precision and quality in the marketplace. To learn more, visit VPG at www.vpgsensors.com.

    Forward-Looking Statements

    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. Such statements involve a number of risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those anticipated.

    Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; difficulties or delays in completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; difficulties in implementing our cost reduction strategies, such as underutilization of production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to difficulties in transferring production to achieve efficiencies; and other factors affecting our operations, markets, products, services, and prices that are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

     
    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Operations
    (Unaudited - In thousands, except per share amounts)
       
    Fiscal quarter ended
    March 31, 2018April 1, 2017
    Net revenues $73,091 $ 59,787
    Costs of products sold   44,586     37,270  
    Gross profit 28,505 22,517
    Gross profit margin 39.0% 37.7 %
     
    Selling, general, and administrative expenses 20,319 18,018
    Restructuring costs       554  
    Operating income 8,186 3,945
    Operating margin 11.2% 6.6 %
     
    Other income (expense):
    Interest expense (442) (452 )
    Other   (649)   (529 )
    Other income (expense) - net   (1,091)   (981 )
     
    Income before taxes 7,095 2,964
     
    Income tax expense   2,137     961  
     
    Net earnings 4,958 2,003
    Less: net earnings attributable to noncontrolling interests   (30)   8  
    Net earnings attributable to VPG stockholders $4,988   $ 1,995  
     
    Basic earnings per share attributable to VPG stockholders $0.37 $ 0.15
    Diluted earnings per share attributable to VPG stockholders $0.37 $ 0.15
     
    Weighted average shares outstanding - basic 13,342 13,210
    Weighted average shares outstanding - diluted 13,497 13,438
     
     
    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Balance Sheets
    (In thousands)
      March 31, 2018   December 31, 2017
    (Unaudited)
    Assets
    Current assets:
    Cash and cash equivalents $73,734 $ 74,292
    Accounts receivable, net 53,141 46,789
    Inventories:
    Raw materials 18,247 16,601
    Work in process 23,387 23,160
    Finished goods   19,963     20,174  
    Inventories, net 61,597 59,935
    Prepaid expenses and other current assets   12,668     10,299  
    Total current assets 201,140 191,315
     
    Property and equipment, at cost:
    Land 3,484 3,434
    Buildings and improvements 50,816 50,276
    Machinery and equipment 97,199 95,158
    Software 8,068 7,955
    Construction in progress 2,501 2,252
    Accumulated depreciation   (106,324)   (103,401 )
    Property and equipment, net 55,744 55,674
     
    Goodwill18,995 19,181
     
    Intangible assets, net 19,748 20,475
     
    Other assets   19,775     19,906  
    Total assets $315,402   $ 306,551  
     
    Liabilities and equity
    Current liabilities:
    Trade accounts payable $12,953 $ 13,678
    Payroll and related expenses 17,201 15,892
    Other accrued expenses 16,408 15,952
    Income taxes 2,103 2,515
    Current portion of long-term debt   3,926     3,878  
    Total current liabilities 52,591 51,915
     
    Long-term debt, less current portion 27,717 28,477
    Deferred income taxes 2,300 2,300
    Other liabilities 13,968 14,131
    Accrued pension and other postretirement costs   16,952     16,424  
    Total liabilities   113,528     113,247  
     
    Commitments and contingencies
     

    Equity:

    Common stock 1,304 1,288
    Class B convertible common stock 103 103
    Treasury stock (8,765) (8,765 )
    Capital in excess of par value 195,259 192,904
    Retained earnings 47,911 43,076
    Accumulated other comprehensive loss   (33,939)   (35,450 )
    Total Vishay Precision Group, Inc. stockholders' equity 201,873 193,156
    Noncontrolling interests   1     148  
    Total equity   201,874     193,304  
    Total liabilities and equity $315,402   $ 306,551  
     
     
    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Cash Flows
    (Unaudited - In thousands)
     
      Three fiscal months ended
    March 31, 2018   April 1, 2017
    Operating activities
    Net earnings $4,958 $ 2,003
    Adjustments to reconcile net earnings to net cash provided by operating activities:
    Depreciation and amortization 2,684 2,681
    Gain on disposal of property and equipment (53) (109 )
    Share-based compensation expense 373 243
    Inventory write-offs for obsolescence 613 297
    Deferred income taxes 268 (97 )
    Other (723) (359 )
    Net changes in operating assets and liabilities:
    Accounts receivable, net (5,519) (3,362 )
    Inventories, net (1,910) 284
    Prepaid expenses and other current assets (2,517) (2,154 )
    Trade accounts payable 1,687 1,422
    Other current liabilities   1,943     2,032  
    Net cash provided by operating activities   1,804     2,881  
     
    Investing activities
    Capital expenditures (4,296) (1,962 )
    Proceeds from sale of property and equipment   53     148  
    Net cash used in investing activities   (4,243)   (1,814 )
     
     
    Financing activities
    Principal payments on long-term debt and capital leases (2,970) (657 )
    Proceeds from revolving facility 8,000 7,000
    Payments on revolving facility (3,000) (7,000 )
    Distributions to noncontrolling interests (117) (2 )
    Payments of employee taxes on certain share-based arrangements   (785)   (303 )
    Net cash provided by (used in) financing activities 1,128 (962 )
    Effect of exchange rate changes on cash and cash equivalents   753     694  
    (Decrease) increase in cash and cash equivalents (558) 799
     
    Cash and cash equivalents at beginning of period   74,292     58,452  
    Cash and cash equivalents at end of period $73,734   $ 59,251  
     
    Supplemental disclosure of non-cash investing transactions:
    Capital expenditures purchased $(1,773) $ (1,962 )
    Supplemental disclosure of non-cash financing transactions:
    Conversion of exchangeable notes to common stock $(2,794) $
     
     
    VISHAY PRECISION GROUP, INC.
    Reconciliation of Consolidated Adjusted Gross Profit Margin
    (Unaudited - In thousands)
    Fiscal quarter ended
    March 31, 2018   April 1, 2017

    Gross profit

    $28,505 $ 22,517
    Gross profit margin 39.0% 37.7 %
     
       
    Adjusted gross profit $28,505   $ 22,517  
    Adjusted gross profit margin 39.0% 37.7 %
     
     
    VISHAY PRECISION GROUP, INC.
    Reconciliation of Consolidated Adjusted Operating Margin
    (Unaudited - In thousands)
     
    Fiscal quarter ended
    March 31, 2018April 1, 2017

    Operating income

    $8,186 $ 3,945
    Operating margin 11.2% 6.6 %
     

    Reconciling items affecting operating margin

    Restructuring costs 554
       
    Adjusted operating income $8,186   $ 4,499  
    Adjusted operating margin 11.2% 7.5 %
     
     
    VISHAY PRECISION GROUP, INC.
    Reconciliation of Adjusted Earnings Per Share
    (Unaudited - In thousands, except per share data)
    Fiscal quarter ended
    March 31, 2018April 1, 2017
    Net earnings attributable to VPG stockholders $4,988 $ 1,995
     

    Reconciling items affecting operating margin

    Restructuring costs 554

    Less reconciling items affecting income tax expense

    Tax effect of reconciling items       42  
    Adjusted net earnings attributable to VPG stockholders $4,988   $ 2,507  
     
    Adjusted net earnings per diluted share $0.37 $ 0.19
     
    Weighted average shares outstanding - diluted 13,497 13,438
     

    VPG
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    or
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    Source: VPG