VPG Reports Fiscal 2023 First Quarter Results

May 9, 2023

MALVERN, Pa., May 09, 2023 (GLOBE NEWSWIRE) -- Vishay Precision Group, Inc. (NYSE: VPG), a leader in precision measurement sensing technologies, today announced its results for its fiscal 2023 first quarter ended April 1, 2023.

First Fiscal Quarter Highlights:

  • Revenues of $88.9 million increased 1.4% from a year ago.
  • Gross profit margin was 41.9%, as compared to 40.2% reported a year ago.
  • Adjusted gross profit margin* was 41.9%, as compared to 41.0% reported a year ago.
  • Operating margin was 11.2%, as compared to 9.5% reported a year ago.
  • Adjusted operating margin* was 11.4%, as compared to 10.5% reported a year ago.
  • Diluted net earnings per share of $0.51 compared to $0.46 reported a year ago.
  • Adjusted diluted net earnings per share* of $0.52 compared to $0.49 reported a year ago.
  • EBITDA* was $14.0 million with an EBITDA margin* of 15.8%.
  • Adjusted EBITDA* was $14.1 million with an adjusted EBITDA margin* of 15.9%.
  • Cash from operating activities was $8.4 million with adjusted free cash flow* of $4.9 million.

Ziv Shoshani, Chief Executive Officer of VPG, commented, "Our performance for the first quarter of 2023 marked a solid start for the year. We achieved revenue in line with our expectations, and increased our gross margin both sequentially and year-over-year. Orders of $83.1 million grew 13.1% sequentially, reflecting strengthening trends through the first quarter. We ended the quarter with a strong backlog of $150.4 million.

Mr. Shoshani said: "Our strong balance sheet and cash generation supports our ongoing strategic initiatives aimed at capturing a broader set of opportunities for our sensing and precision measurement technologies, while maintaining tight control of our costs and increasing our operating efficiencies."

First Fiscal Quarter Financial Trends:

The Company's first fiscal quarter 2023 net earnings attributable to VPG stockholders were $7.0 million, or $0.51 per diluted share, compared to $6.4 million, or $0.46 per diluted share, in the first fiscal quarter of 2022.

The first fiscal quarter 2023 adjusted net earnings* attributable to VPG stockholders were $7.0 million, or $0.52 per adjusted diluted net earnings per share*, compared to $6.6 million, or $0.49 per adjusted diluted net earnings per share* in the first fiscal quarter of 2022.

Segment Performance:

The Sensors segment revenue of $36.7 million in the first fiscal quarter of 2023 decreased 2.7% from $37.8 million in the first fiscal quarter of 2022; sequentially, revenue increased 1.1% compared to $36.3 million in the fourth quarter of 2022. The year-over-year decrease in revenues was primarily attributable to lower sales of advanced sensors products primarily in Other markets (mainly for consumer applications), partially offset by increases in precision resistors revenues and advanced sensors in Avionics, Military and Space (AMS) and in precision resistors in the Test and Measurement market. Sequentially, the increase primarily reflected higher revenue of precision resistors in the AMS market partially offset by lower advanced sensors revenue in Other markets (mainly for consumer applications).

Gross profit margin for the Sensors segment was 41.2% for the first fiscal quarter of 2023. Gross profit margin increased compared to 37.8% (or 38.6% adjusted to exclude the impact of $0.3 million of advanced sensors facility start-up costs) in the first fiscal quarter of 2022, and increased compared to 37.6% in the fourth fiscal quarter of 2022. The year-over-year increase in adjusted gross profit margin* was primarily due to higher selling prices and favorable foreign currency exchange rates. Sequentially, the higher adjusted gross profit margin* was primarily due to manufacturing efficiencies and favorable foreign currency exchange rates.

The Weighing Solutions segment revenue of $31.9 million in the first fiscal quarter of 2023 decreased 2.8% compared to $32.8 million in the first fiscal quarter of 2022 and was 3.7% lower than $33.1 million in the fourth quarter of 2022. The year-over-year decrease in revenues was mainly attributable to lower sales of load cells in the Industrial Weighing market, partially offset by higher revenues in our Other markets for precision agriculture and construction applications. Sequentially, the decrease in revenues was attributable to lower sales in the Industrial Weighing market, partially offset by an increase in revenues in the Transportation market.

Gross profit margin for the Weighing Solutions segment was 34.9% for the first fiscal quarter of 2023, which decreased compared to 36.9% in the first fiscal quarter of 2022, and increased compared to 33.4% in the fourth fiscal quarter of 2022. The year-over-year decrease in adjusted gross profit margin* was primarily due to higher materials costs, lower volume and unfavorable product mix, mainly offset by selling price increases and favorable foreign currency exchange rates. The sequential increase in adjusted gross profit margin* was primarily due to favorable foreign currency exchange rates, partially offset by lower volume.

The Measurement Systems segment revenue of $20.3 million in the first fiscal quarter of 2023 increased 18.3% year-over-year from $17.1 million in the first fiscal quarter of 2022 and was 24.4% lower than $26.8 million in the fourth fiscal quarter of 2022. The year-over-year increase was primarily attributable to increased revenue in the Steel market. Sequentially, the decrease in revenue was primarily due to the lower revenue of products in the Steel market and at Diversified Technical Systems Inc. ("DTS") products in the Transportation market.

Gross profit margin for the Measurement Systems segment was 53.9% (or 54.1% adjusted to exclude the $0.05 million of purchase accounting adjustments related to the DTS acquisition), compared to 51.8% (or 54.1% adjusted to exclude the purchase accounting adjustment related to the DTS acquisition of $0.4 million), in the first fiscal quarter of 2022, and 55.9% (or 56.8% adjusted to exclude the $0.2 million of purchase accounting adjustments related to the DTS acquisition) in the fourth fiscal quarter of 2022. The year-over-year adjusted gross profit margin* was flat, as higher volume and higher selling prices were offset mainly by unfavorable foreign exchange rates and higher materials costs. The sequentially lower adjusted gross profit margin* reflected lower volume and higher material costs, offset by higher selling prices.

Near-Term Outlook

“We expect net revenues to be in the range of $83 million to $93 million for the second fiscal quarter of 2023, at constant first fiscal quarter 2023 foreign currency exchange rates,” concluded Mr. Shoshani.

*Use of Non-GAAP Financial Information:

We define “adjusted gross profit margin" as gross profit margin before purchase accounting adjustments related to the DTS and DSI acquisitions, and start-up costs related to our new advanced sensors facility, and COVID-19 costs. We define "adjusted operating margin" as operating margin before purchase accounting adjustments related to the DTS and DSI acquisitions, start-up costs related to our new advanced sensors facility, COVID-19 costs, and restructuring costs. We define "adjusted net earnings” and "adjusted diluted net earnings per share" as net earnings attributable to VPG stockholders before purchase accounting adjustments related to the DTS and DSI acquisitions, start-up costs related to our new advanced sensors facility, COVID-19 costs, restructuring costs, foreign currency exchange gains and losses, and associated tax effects. We define "EBITDA" as earnings before interest, taxes, depreciation, and amortization. We define "Adjusted EBITDA" as earnings before interest, taxes, depreciation, and amortization before purchase accounting adjustments related to the DTS and DSI acquisitions, start-up costs related to our new advanced sensors facility, COVID-19, restructuring costs, foreign currency exchange gains and losses, and associated tax effects. "Adjusted free cash flow" for the first fiscal quarter of 2023 is defined as the amount of cash generated from operating activities ($8.4 million), in excess of our capital expenditures ($3.5 million), net of proceeds, if any, from the sale of assets ($0.0 million).

Management believes that these non-GAAP measures are useful to investors because each presents what management views as our core operating results for the relevant period. The adjustments to the applicable GAAP measures relate to occurrences or events that are outside of our core operations, and management believes that the use of these non-GAAP measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods. These reconciling items are indicated on the accompanying reconciliation schedules and are more fully described in VPG’s financial statements presented in our Annual Report on Form 10-K and its Quarterly Reports on Forms 10-Q.

Conference Call and Webcast:

A conference call will be held on Tuesday, May 9, 2023 at 9:00 a.m. ET (8:00 a.m. CT). To access the conference call, interested parties may call 1-833-470-1428 or internationally +1-929-526-1599 and use passcode 165286, or log on to the investor relations page of the VPG website at ir.vpgsensors.com. A replay will be available approximately one hour after the completion of the call by calling toll-free 1-866-813-9403 or internationally +1-929-458-6194 and by using passcode 476028. The replay will also be available on the “Events” page of investor relations section of the VPG website at ir.vpgsensors.com.

About VPG:

Vishay Precision Group, Inc. (VPG) is a leader in precision measurement sensing technologies. Our sensors, weighing solutions and measurement systems optimize and enhance our customers’ product performance across a broad array of markets to make our world safer, smarter, and more productive. To learn more, visit VPG at www.vpgsensors.com and follow us on LinkedIn.

Forward-Looking Statements:

From time to time, information provided by us, including, but not limited to, statements in this press release, or other statements made by or on our behalf, may contain or constitute "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; impact of inflation; issues respecting the United States federal government debt ceiling; global labor and supply chain challenges; difficulties or delays in identifying, negotiating and 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; political, economic, health (including the COVID-19 pandemic) and military instability in the countries in which we operate; 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; compliance issues under applicable laws, such as export control laws, including the outcome of our voluntary self-disclosure of export control non-compliance; significant developments from the recent and potential changes in tariffs and trade regulation; our efforts and efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter-in-place orders and business closures and the related impact on resource allocations, manufacturing and supply chains; our status as a “critical”, “essential” or “life-sustaining” business in light of COVID-19 business closure laws, orders and guidance being challenged by a governmental body or other applicable authority; our ability to execute our new corporate strategy and business continuity, operational and budget plans; 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, 2022. We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this report or as of the dates otherwise indicated in such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Contact:
Steve Cantor
Vishay Precision Group, Inc.
781-222-3516
info@vpgsensors.com

 

VISHAY PRECISION GROUP, INC.      
Consolidated Condensed Statements of Operations      
(Unaudited - In thousands, except per share amounts)      
       
  Fiscal quarter ended
  April 1, 2023   April 2, 2022
Net revenues $ 88,864     $ 87,665  
Costs of products sold   51,665       52,415  
Gross profit   37,199       35,250  
Gross profit margin   41.9 %     40.2 %
       
Selling, general, and administrative expenses   27,159       26,674  
Restructuring costs   116       261  
Operating income   9,924       8,315  
Operating margin   11.2 %     9.5 %
       
Other income (expense):      
Interest expense   (997 )     (329 )
Other   275       439  
Other income (expense)   (722 )     110  
       
Income before taxes   9,202       8,425  
       
Income tax expense   2,220       1,741  
       
Net earnings   6,982       6,684  
Less: net earnings attributable to noncontrolling interests   18       328  
Net earnings attributable to VPG stockholders $ 6,964     $ 6,356  
       
Basic earnings per share attributable to VPG stockholders $ 0.51     $ 0.47  
Diluted earnings per share attributable to VPG stockholders $ 0.51     $ 0.46  
       
Weighted average shares outstanding - basic   13,586       13,637  
Weighted average shares outstanding - diluted   13,652       13,675  

 

VISHAY PRECISION GROUP, INC.      
Consolidated Condensed Balance Sheets      
(In thousands)      
  April 1, 2023   December 31, 2022
  (Unaudited)    
Assets      
Current assets:      
Cash and cash equivalents $ 93,281     $ 88,562  
Accounts receivable, net   59,347       60,068  
Inventories:      
Raw materials   32,983       31,852  
Work in process   29,453       26,401  
Finished goods   24,995       26,407  
Inventories, net   87,431       84,660  
       
Prepaid expenses and other current assets   17,352       18,516  
Total current assets   257,411       251,806  
       
Property and equipment:      
Land   4,138       4,117  
Buildings and improvements   72,019       71,613  
Machinery and equipment   127,333       125,301  
Software   9,674       9,539  
Construction in progress   10,472       10,075  
Accumulated depreciation   (136,642 )     (133,518 )
Property and equipment, net   86,994       87,127  
       
Goodwill   45,567       45,544  
Intangible assets, net   47,298       48,217  
Operating lease right-of-use assets   24,189       24,342  
Other assets   19,310       19,706  
Total assets $ 480,769     $ 476,742  

 

VISHAY PRECISION GROUP, INC.      
Consolidated Condensed Balance Sheets      
(In thousands)      
  April 1, 2023   December 31, 2022
  (Unaudited)    
Liabilities and equity      
Current liabilities:      
Trade accounts payable $ 11,184     $ 13,792  
Payroll and related expenses   21,704       21,966  
Other accrued expenses   22,364       20,306  
Income taxes   1,002       4,064  
Current portion of operating lease liabilities   4,108       4,208  
Total current liabilities   60,362       64,336  
       
Long-term debt, less current portion   60,803       60,799  
Deferred income taxes   3,929       4,212  
Operating lease liabilities   19,817       20,043  
Other liabilities   13,044       13,053  
Accrued pension and other postretirement costs   7,921       7,777  
Total liabilities   165,876       170,220  
       
Equity:      
Common stock   1,328       1,325  
Class B convertible common stock   103       103  
Treasury stock   (11,504 )     (11,504 )
Capital in excess of par value   201,065       201,164  
Retained earnings   163,323       156,359  
Accumulated other comprehensive loss   (39,395 )     (40,900 )
Total Vishay Precision Group, Inc. stockholders' equity   314,920       306,547  
Noncontrolling interests   (27 )     (25 )
Total equity   314,893       306,522  
Total liabilities and equity $ 480,769     $ 476,742  

 

VISHAY PRECISION GROUP, INC.      
Consolidated Condensed Statements of Cash Flows      
(Unaudited - In thousands)      
       
  Three Fiscal Months Ended
  April 1, 2023   April 2, 2022
Operating activities      
Net earnings $ 6,982     $ 6,684  
Adjustments to reconcile net earnings to net cash provided by operating activities:      
Depreciation and amortization   3,858       3,823  
Gain on sale of property and equipment         7  
Reclassification of foreign currency translation adjustment related to disposal of subsidiary         191  
Share-based compensation expense   681       497  
Inventory write-offs for obsolescence   425       396  
Deferred income taxes   383       25  
Foreign currency impacts and other items   (1,022 )     (844 )
Net changes in operating assets and liabilities:      
Accounts receivable   1,201       (1,546 )
Inventories   (2,854 )     (3,755 )
Prepaid expenses and other current assets   1,260       (2,367 )
Trade accounts payable   (1,713 )     (358 )
Other current liabilities   (695 )     (2,641 )
Other non current assets and liabilities, net   (201 )     (131 )
Accrued pension and other postretirement costs, net   138       (254 )
Net cash provided by (used in) operating activities   8,443       (273 )
       
Investing activities      
Capital expenditures   (3,501 )     (4,303 )
Proceeds from sale of property and equipment         10  
Net cash used in investing activities   (3,501 )     (4,293 )
       
Financing activities      
Distributions to noncontrolling interests   (20 )     (246 )
Payments of employee taxes on certain share-based arrangements   (825 )     (435 )
Net cash used in financing activities   (845 )     (681 )
Effect of exchange rate changes on cash and cash equivalents   622       (907 )
Increase (decrease) in cash and cash equivalents   4,719       (6,154 )
       
Cash and cash equivalents at beginning of period   88,562       84,335  
Cash and cash equivalents at end of period $ 93,281     $ 78,181  
       
Supplemental disclosure of investing transactions:      
Capital expenditures accrued but not yet paid $ 806     $ 850  

 

VISHAY PRECISION GROUP, INC.                    
Reconciliation of Consolidated Adjusted Gross Profit, Operating Income, Net Earnings Attributable to VPG Stockholders and Diluted Earnings Per Share    
(Unaudited - In thousands)                            
                               
  Gross Profit   Operating Income   Net Earnings Attributable
to VPG Stockholders
  Diluted Earnings Per share
Three months ended April 1,
2023
  April 2,
2022
  April 1,
2023
  April 2,
2022
  April 1,
2023
  April 2,
2022
  April 1,
2023
  April 2,
2022
As reported - GAAP $ 37,199     $ 35,250     $ 9,924     $ 8,315     $ 6,964     $ 6,356     $ 0.51   $ 0.46  
As reported - GAAP Margins   41.9 %     40.2 %     11.2 %     9.5 %                
Acquisition purchase accounting adjustments   49       371       49       371       49       371           0.03  
COVID-19 impact         138             138             138           0.01  
Start-up costs         150             150             150           0.01  
Restructuring costs               116       261       116       261       0.01     0.02  
Foreign currency exchange (gain)/loss                           (62 )     (554 )         (0.04 )
Less: Tax effect of reconciling items and discrete tax items                       32       76            
As Adjusted - Non GAAP $ 37,248     $ 35,909     $ 10,089     $ 9,235     $ 7,035     $ 6,646     $ 0.52   $ 0.49  
As Adjusted - Non GAAP Margins   41.9 %     41.0 %     11.4 %     10.5 %                

 

VISHAY PRECISION GROUP, INC.        
Reconciliation of Adjusted Gross Profit by segment        
(Unaudited - In thousands)          
           
  Fiscal quarter ended
  April 1, 2023   April 2, 2022   December 31, 2022
Sensors          
As reported - GAAP $ 15,144     $ 14,286     $ 13,645  
As reported - GAAP Margins   41.2 %     37.8 %     37.6 %
Start-up costs         150        
COVID-19 impact $     $ 121     $  
As Adjusted - Non GAAP $ 15,144     $ 14,557     $ 13,645  
As Adjusted - Non GAAP Margins   41.2 %     38.6 %     37.6 %
           
Weighing Solutions          
As reported - GAAP $ 11,129     $ 12,079     $ 11,043  
As reported - GAAP Margins   34.9 %     36.9 %     33.4 %
As Adjusted - Non GAAP $ 11,129     $ 12,079     $ 11,043  
As Adjusted - Non GAAP Margins   34.9 %     36.9 %     33.4 %
           
Measurement Systems          
As reported - GAAP $ 10,926     $ 8,885     $ 15,009  
As reported - GAAP Margins   53.9 %     51.8 %     55.9 %
Acquisition purchase accounting adjustments   49       371       240  
COVID-19 impact $     $ 17     $  
As Adjusted - Non GAAP $ 10,975     $ 9,273     $ 15,249  
As Adjusted - Non GAAP Margins   54.1 %     54.1 %     56.8 %

 

VISHAY PRECISION GROUP, INC.        
Reconciliation of Adjusted EBITDA        
(Unaudited - In thousands)          
  Fiscal quarter ended
  April 1, 2023   April 2, 2022   December 31, 2022
Net earnings attributable to VPG stockholders $ 6,964     $ 6,356     $ 8,834  
Interest Expense   997       329       876  
Income tax expense   2,220       1,741       1,884  
Depreciation   2,919       2,853       2,882  
Amortization   939       970       952  
EBITDA   14,039     $ 12,249     $ 15,428  
EBITDA MARGIN   15.8 %     14.0 %     16.0 %
Acquisition purchase accounting adjustments   49       371       240  
Restructuring costs   116       261       188  
COVID-19 impact         138        
Start-up costs         150        
Foreign currency exchange (gain)/loss   (62 )     (554 )     1,616  
ADJUSTED EBITDA $ 14,142     $ 12,615     $ 17,472  
ADJUSTED EBITDA MARGIN   15.9 %     14.4 %     18.2 %

 


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Source: Vishay Precision Group