Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of
precision sensors and systems, today announced its results for its
fiscal 2017 second quarter and six fiscal months ended July 1,
2017.
Second Quarter Highlights:
- Growth in revenues to $62.3 million, up
7.5% year-over- year and up 4.2% sequentially
- Gross margin for the quarter is
39.7%
- Operating margin for the quarter is
9.1%, adjusted operating margin* for the quarter is 9.6%
- Earnings increased to $0.27 per diluted
share, compared to $0.14 reported last year
- Adjusted diluted EPS* increased to
$0.29 compared to prior year $0.15
- Cash from operations was $4.4 million
with free cash flow* of $3.4 million
- Book-to-bill of 1.08 continues to
reflect broadly improving end-markets
Ziv Shoshani, Chief Executive Officer of VPG, commented, “Our
operating performance continues to reveal the benefits of
successful prior restructuring and an improved business climate.
Our growth and profitability gains in the quarter were broad-based
and each segment contributed to our performance year-over-year. We
expect our current business performance will drive value to our
shareholders.”
The Company grew second quarter 2017 net earnings attributable
to VPG stockholders to $3.6 million, or $0.27 per diluted share,
compared to $1.9 million, or $0.14 per diluted share, in the second
fiscal quarter of 2016. This growth was achieved despite a foreign
currency exchange rates headwind in the second quarter of 2017
relative to the prior year period that reduced net income by $0.8
million, or $0.06 per diluted share.
In the six fiscal months ended July 1, 2017, net earnings
attributable to VPG stockholders grew to $5.6 million, or $0.42 per
diluted share, compared to $2.3 million, or $0.18 per diluted
share, in the six months ended 2016. Foreign currency exchange
rates for the six fiscal months ended July 1, 2017 had a negative
impact on net income of $1.7 million, or $0.13 per diluted share as
compared to the prior year’s first half.
Second quarter 2017 adjusted net earnings attributable to VPG
stockholders nearly doubled to $3.9 million, or $0.29 per diluted
share, compared to adjusted net earnings attributable to VPG
stockholders of $2.0 million, or $0.15 per diluted share, for the
comparable prior year period.
Six fiscal months ended July 1, 2017 adjusted net earnings
attributable to VPG stockholders grew by 76% to $6.4 million, or
$0.48 per diluted share, compared to adjusted net earnings
attributable to VPG stockholders of $3.6 million, or $0.27 per
diluted share, for the comparable prior year period.
The reconciliation table within this release reconciles the
Company's non-GAAP measures, which are provided for comparison with
other results, and the most directly comparable U.S. GAAP
measures.
Segments
Foil Technology Products segment revenues grew 15.6% to $29.3
million in the second quarter of 2017, up from $25.4 million in the
second quarter of 2016; sequential growth was 5.6%, up from $27.8
million in the first quarter of 2017. The year-over-year increase
in revenues was attributable to precision resistors growth in Asia
within the test and measurement market along with instrumentation
growth in the U.S. within the avionics, military and space markets
for the Pacific Instruments product line. Sequentially, the
increase in revenue is primarily attributable to increased sales
from the Pacific Instruments product line in the avionics, military
and space end markets in the U.S.
Gross profit margin for the segment was 41.9% for the second
quarter of 2017, up 5.1 percentage points compared to 36.8% in the
second quarter of 2016. The second quarter gross profit margin is
slightly improved from the 41.4% reported in the first quarter of
2017. The year-over-year improvement in gross margin mainly
reflects higher volume and manufacturing efficiencies.
Force Sensors segment revenues grew 1.7% to $15.7 million in the
second quarter of 2017, up from $15.4 million in the second quarter
of 2016; sequential revenue increased 1.2%, up from $15.5 million
in the first quarter of 2017. The year-over-year increase in
revenues was attributable to OEM customers in the precision
agriculture end market, partially offset by a negative exchange
rate. The increase in sequential revenue of $0.2 million was
attributable to a positive exchange rate impact.
Gross profit margin for Force Sensors was 28.9% for the second
quarter of 2017, flat compared to 29.0% in the second quarter of
2016, but up significantly from the 23.9% margin reported in the
first quarter of 2017. The sequential gross profit margin increase
was primarily due to an increase in inventory.
Weighing and Control Systems segment revenues grew by 0.7% to
$17.4 million in the second quarter of 2017, up from $17.2 million
in the second quarter of 2016; sequential growth was 4.8%, up from
$16.6 million in the first quarter of 2017. The increased sales
year-over-year are primarily attributable to stronger demand in the
steel end market and process weighing in Europe, with some offset
from a negative exchange rate. The sequential increase in revenue
is primarily due to the steel market in Asia, and process weighing
in the U.S., offset by a reduction in on-board weighing product
lines.
Second quarter 2017 gross profit margin in the segment increased
to 45.8% from the second quarter of 2016 of 44.7% (and as compared
to 45.6% excluding a purchase accounting adjustment of $0.2 million
for the Stress-Tek acquisition). Excluding the purchase accounting
adjustment, the year-over-year gross profit margin was flat. The
gross profit margin increase from 44.3% reported in the first
quarter of 2017 was attributable to higher volume.
Near-Term Outlook
“In light of an improved business environment, at constant
second quarter 2017 exchange rates and taking into account the
normal seasonality of our business, we expect net revenues in the
range of $60 million to $65 million for the third quarter of 2017,”
concluded Mr. Shoshani.
*Use of Non-GAAP Financial Information
We define “adjusted net earnings” as net earnings attributable
to VPG stockholders before acquisition purchase accounting
adjustments, acquisition costs, restructuring costs and associated
tax effects. “Adjusted gross margin” is defined as gross margin
before acquisition purchase accounting adjustments. “Adjusted
operating margin” is defined as operating margin before acquisition
purchase accounting adjustments, acquisition costs and
restructuring costs. “Free cash flow” is defined as the amount of
cash generated from operations ($4.4 million for the second quarter
of 2017), in excess of our capital expenditures ($1.2 million for
the second quarter of 2017) net of proceeds, if any, for the sale
of assets ($0.2 million in the second quarter of 2017). For a
reconciliation of GAAP to non-GAAP financial information, refer to
the quarterly financial tables.
Conference Call and Webcast
A conference call will be held today (August 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 2478127, 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 10110677.
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 (including the acquisitions of
Stress-Tek and Pacific Instruments); 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, 2016. 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
July 1, 2017 July 2, 2016 Net revenues
$
62,319 $ 57,996 Costs of products sold
37,560
36,501 Gross profit
24,759 21,495 Gross
profit margin
39.7 % 37.1 % Selling, general,
and administrative expenses
18,800 18,444 Acquisition costs
- 352 Restructuring costs
315
1,011 Operating income
5,644 1,688 Operating margin
9.1 % 2.9 % Other income (expense): Interest
expense
(468 ) (371 ) Other
(362
) (30 ) Other income (expense) - net
(830 ) (401 ) Income before taxes
4,814 1,287 Income tax expense (benefit)
1,198 (562 ) Net earnings
3,616
1,849 Less: net loss attributable to noncontrolling interests
(3 ) (19 ) Net earnings attributable to
VPG stockholders
$ 3,619 $ 1,868
Basic earnings per share attributable to VPG stockholders
$
0.27 $ 0.14 Diluted earnings per share attributable to VPG
stockholders
$ 0.27 $ 0.14 Weighted average
shares outstanding - basic
13,257 13,184 Weighted average
shares outstanding - diluted
13,446 13,405
VISHAY PRECISION GROUP, INC. Consolidated Condensed
Statements of Operations (Unaudited - In thousands, except per
share amounts)
Six fiscal months ended July 1,
2017 July 2, 2016 Net revenues
$ 122,106 $
114,625 Costs of products sold
74,830
73,355 Gross profit
47,276 41,270 Gross profit margin
38.7 % 36.0 % Selling, general, and
administrative expenses
37,026 36,492 Acquisition costs
- 414 Restructuring costs
869
1,686 Operating income
9,381 2,678 Operating margin
7.7 % 2.3 % Other income (expense): Interest
expense
(920 ) (699 ) Other
(683
) 395 Other income (expense) - net
(1,603 ) (304 ) Income before taxes
7,778 2,374 Income tax expense
2,159
29 Net earnings
5,619 2,345
Less: net earnings (loss) attributable to noncontrolling interests
5 (3 ) Net earnings attributable to VPG
stockholders
$ 5,614 $ 2,348
Basic earnings per share attributable to VPG stockholders
$
0.42 $ 0.18 Diluted earnings per share attributable to VPG
stockholders
$ 0.42 $ 0.18 Weighted average
shares outstanding - basic
13,233 13,181 Weighted average
shares outstanding - diluted
13,442 13,402
VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance
Sheets (In thousands)
July 1, 2017 December 31, 2016
(Unaudited) Assets Current assets: Cash and cash
equivalents
$ 63,158 $ 58,452 Accounts receivable,
net
42,376 34,270 Inventories: Raw materials
16,046
15,647 Work in process
20,640 21,115 Finished goods
20,223 19,559 Inventories, net
56,909 56,321 Prepaid expenses and other current assets
8,261 6,831 Total current assets
170,704 155,874 Property and equipment, at cost: Land
3,399 3,344 Buildings and improvements
49,958 48,454
Machinery and equipment
91,487 89,080 Software
7,646
7,441 Construction in progress
2,353 4,340 Accumulated
depreciation
(100,421 ) (97,374 )
Property and equipment, net
54,422 55,285 Goodwill
18,934 18,717 Intangible assets, net
21,046
21,585 Other assets
19,949
19,049 Total assets
$ 285,055 $ 270,510
Liabilities and equity Current liabilities:
Trade accounts payable
$ 9,447 $ 8,264 Payroll and
related expenses
13,296 11,978 Other accrued expenses
14,335 13,285 Income taxes
2,306 772 Current portion
of long-term debt
2,853 2,623
Total current liabilities
42,237 36,922 Long-term
debt, less current portion
30,763 33,529 Deferred income
taxes
813 735 Other liabilities
13,776 13,054 Accrued
pension and other postretirement costs
14,999
14,713 Total liabilities
102,588
98,953 Commitments and contingencies
Equity: Common stock
1,288 1,278 Class B convertible common
stock
103 103 Treasury stock
(8,765 ) (8,765 )
Capital in excess of par value
191,897 190,373 Retained
earnings
34,345 28,731 Accumulated other comprehensive loss
(36,534 ) (40,337 ) Total Vishay
Precision Group, Inc. stockholders' equity
182,334 171,383
Noncontrolling interests
133 174
Total equity
182,467 171,557
Total liabilities and equity
$ 285,055 $
270,510
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Cash Flows (Unaudited - In
thousands)
Six fiscal months ended July 1,
2017 July 2, 2016 Operating activities Net
earnings
$ 5,619 $ 2,345 Adjustments to reconcile net
earnings to net cash provided by operating activities: Depreciation
and amortization
5,318 5,640 Gain on disposal of property
and equipment
(141 ) (31 ) Share-based compensation
expense
492 547 Inventory write-offs for obsolescence
982 865 Deferred income taxes
(104 ) (1,540 )
Other
(445 ) (804 ) Net changes in operating assets
and liabilities: Accounts receivable, net
(6,928 )
991 Inventories, net
(761 ) (1,681 ) Prepaid expenses
and other current assets
(1,397 ) (879 ) Trade
accounts payable
1,020 91 Other current liabilities
3,676 (5,271 ) Net cash provided by operating
activities
7,331 273
Investing activities Capital expenditures
(3,146
) (4,434 ) Proceeds from sale of property and equipment
326 250 Purchase of business
-
(10,727 ) Net cash used in investing activities
(2,820 ) (14,911 )
Financing
activities Principal payments on long-term debt and capital
leases
(1,314 ) (1,064 ) Proceeds from revolving
facility
16,000 11,000 Payments on revolving facility
(16,000 ) (6,000 ) Distributions to noncontrolling
interests
(46 ) (8 ) Payments of employee taxes on
certain share-based arrangements
(303 )
(85 ) Net cash used in financing activities
(1,663 )
3,843 Effect of exchange rate changes on cash and cash equivalents
1,858 377 Increase (decrease) in
cash and cash equivalents
4,706 (10,418 ) Cash and
cash equivalents at beginning of period
58,452
62,641 Cash and cash equivalents at end of period
$ 63,158 $ 52,223
Supplemental disclosure of non-cash financing transactions:
Conversion of exchangeable notes to common stock
$
(1,303 ) $ -
VISHAY
PRECISION GROUP, INC. Reconciliation of Consolidated Adjusted
Gross Profit Margin (Unaudited - In thousands)
Fiscal quarter
ended Six fiscal months ended July 1, 2017
July 2, 2016 July 1, 2017 July 2, 2016 Gross
profit
$ 24,759 $ 21,495
$ 47,276 $
41,270 Gross profit margin
39.7 % 37.1 %
38.7
% 36.0 %
Reconciling items
affecting gross profit margin
Acquisition purchase accounting adjustments
— 195
—
491 Adjusted gross profit
$
24,759 $ 21,690
$ 47,276
$ 41,761 Adjusted gross profit margin
39.7 %
37.4 %
38.7 % 36.4 %
VISHAY PRECISION GROUP, INC. Reconciliation of Consolidated
Adjusted Operating Margin (Unaudited - In thousands)
Fiscal quarter ended Six fiscal months ended July
1, 2017 July 2, 2016 July 1, 2017 July 2,
2016 Operating income
$ 5,644 $ 1,688
$
9,381 $ 2,678 Operating margin
9.1 % 2.9 %
7.7 % 2.3 %
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments
— 195
—
491 Acquisition costs
— 352
— 414 Restructuring costs
315 1,011
869 1,686
Adjusted operating income
$ 5,959 $ 3,246
$ 10,250 $ 5,269 Adjusted
operating margin
9.6 % 5.6 %
8.4 % 4.6
%
VISHAY PRECISION GROUP, INC.
Reconciliation of Adjusted Earnings Per Share (Unaudited - In
thousands, except per share data)
Fiscal quarter ended
Six fiscal months ended July 1, 2017 July 2,
2016 July 1, 2017 July 2, 2016 Net earnings
attributable to VPG stockholders
$ 3,619 $ 1,868
$ 5,614 $ 2,348
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments
— 195
—
491 Acquisition costs
— 352
— 414 Restructuring costs
315 1,011
869 1,686
Less reconciling
items affecting income tax expense
Tax effect of reconciling items and discrete tax items
13 1,469
56
1,290 Adjusted net earnings attributable to VPG stockholders
$ 3,921 $ 1,957
$ 6,427
$ 3,649 Adjusted net earnings per diluted
share
$ 0.29 $ 0.15
$ 0.48 $ 0.27
Weighted average shares outstanding - diluted
13,446
13,405
13,442 13,402
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VPGFor InvestorsICR, Inc.James Palczynski,
203-682-8229jp@icrinc.comorFor MediaICR, Inc.Phil Denning,
646-277-1258phil.denning@inrinc.com
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