Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of
precision sensors and systems, today announced its results for its
fiscal 2017 third quarter and nine fiscal months ended September
30, 2017.
Third Quarter Highlights:
- Growth in revenues to $62.8 million, up
15.3% year-over- year
- Earnings increased to $0.32 per diluted
share, compared to $0.08 reported last year
- Adjusted diluted EPS* increased 29% to
$0.27 compared to prior year $0.21
- Gross margin for the quarter is 38.6%
as compared to 37.2% in the prior year’s third quarter
- Operating margin for the quarter is
8.5%, adjusted operating margin* for the quarter is 9.2%
- Cash from operations was $7.5 million
with free cash flow* of $6.4 million
- Book-to-bill remains strong at 1.12,
continues to reflect broadly improving end-markets
Ziv Shoshani, Chief Executive Officer of VPG, commented, “Our
operating performance in the third quarter reveals our ability to
capitalize on an improved business climate across our end markets.
We had good margins, solid cash generation and continued to capture
opportunity, reflected in our steady, strong book-to-bill. We are
remaining focused and working hard to ensure we deliver sustained
progress.”
The Company grew third fiscal quarter 2017 net earnings
attributable to VPG stockholders to $4.3 million, or $0.32 per
diluted share, compared to $1.1 million, or $0.08 per diluted
share, in the third fiscal quarter of 2016. This growth was
achieved despite a foreign currency exchange rates headwind that
reduced net income by $0.4 million, or $0.03 per diluted share
relative to the third quarter of last year.
In the nine fiscal months ended September 30, 2017, net earnings
attributable to VPG stockholders grew to $9.9 million, or $0.73 per
diluted share, compared to $3.4 million, or $0.25 per diluted
share, in the nine fiscal months ended 2016. This growth was
achieved despite a negative impact from foreign currency exchange
rates of $2.1 million, or $0.16 per diluted share as compared to
the prior year’s nine-month period.
Included within Other Income (Expense) Other, for the fiscal
quarter ended September 30, 2017, is net proceeds of $1.5 million
related to a one time lease termination payment at the Company’s
Tianjin, People's Republic of China location. The relocation of
operations in Tianjin has been completed.
Third fiscal quarter 2017 adjusted net earnings attributable to
VPG stockholders grew 29% to $3.6 million, or $0.27 per diluted
share, compared to adjusted net earnings attributable to VPG
stockholders of $2.9 million, or $0.21 per diluted share, for the
comparable prior year period.
Nine fiscal months ended September 30, 2017 adjusted net
earnings attributable to VPG stockholders grew by 54% to $10.0
million, or $0.74 per diluted share, compared to adjusted net
earnings attributable to VPG stockholders of $6.5 million, or $0.49
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, to the most directly comparable U.S. GAAP
measures.
Segments
Foil Technology Products segment revenues grew 22.9% to $29.3
million in the third fiscal quarter of 2017, up from $23.9 million
in the third fiscal quarter of 2016 and approximately even
sequentially with the second fiscal quarter of 2017. The
year-over-year increase in revenues was attributable to precision
resistors growth in all regions within the test and measurement
market. The increase was also attributable to the advance sensors
products for the force measurement market in Asia and Pacific
Instruments products for avionics, military and space end markets
in the Americas.
Gross profit margin for the segment was 41.7% for the third
fiscal quarter of 2017 (41.9% excluding a purchase accounting
adjustment of $0.1 million for the Pacific Instruments
acquisition), up 5.5 percentage points from 36.2% (36.4% excluding
a purchase accounting adjustment of $0.1 million for the Pacific
Instruments acquisition) in the third fiscal quarter of 2016. The
year-over-year improvement in gross margin mainly reflects higher
volume and manufacturing efficiencies. Excluding the purchase
accounting adjustments, the third fiscal quarter gross profit
margin was consistent with the 41.9% reported in the second fiscal
quarter of 2017.
Force Sensors segment revenues grew 9.0% to $16.6 million in the
third fiscal quarter of 2017, up from $15.2 million in the third
fiscal quarter of 2016; sequential revenue increased 6.0% up from
$15.7 million in the second quarter of 2017. The year-over-year
increase in revenues was attributable to OEM customers in the
precision weighing end market in Europe. The increase in sequential
revenue was attributable to OEM customers in the force measurement
market and distribution customers for precision weighing in the
Americas and a positive exchange rate impact.
Gross profit margin for Force Sensors was 28.6% for the third
fiscal quarter of 2017, a decrease compared to 31.0% in the third
fiscal quarter of 2016 and 28.9% in the second fiscal quarter of
2017. Gross margins were down compared to the prior year period due
to manufacturing inefficiencies related to increased production at
our facility in India and the negative impact of foreign exchange
rates offset by an increase in volume. The third fiscal quarter
gross margin of 28.6% is consistent with the second fiscal quarter
of 2017.
Weighing and Control Systems segment revenues grew by 9.7% to
$16.9 million in the third fiscal quarter of 2017, up from $15.4
million in the third fiscal quarter of 2016; sequential revenue
decreased 2.7% from $17.4 million in the second fiscal quarter of
2017. The increased sales year-over-year are primarily attributable
to on-board weighing products in Europe and the Americas. The
sequential decrease in revenue is primarily due to the steel market
in Asia and process weighing in the Americas, partially offset by a
positive exchange rate impact.
Third fiscal quarter 2017 gross profit margin for the segment
was 43.1%, a decline from the third fiscal quarter of 2016 of 44.9%
and 45.8% reported in the second fiscal quarter of 2017. The
year-over-year decrease in gross margin was primarily due to
product mix while sequential gross margin declined due to a
decrease in volume and product mix.
Near-Term Outlook
“In light of an improved business environment, at constant third
fiscal quarter 2017 exchange rates, we expect net revenues in the
range of $61.5 million to $66.5 million for the fourth fiscal
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 ($7.5 million for the third fiscal
quarter of 2017), in excess of our capital expenditures ($1.2
million for the third fiscal quarter of 2017) net of proceeds, if
any, for the sale of assets ($0.1 million in the third fiscal
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 (November 7) 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 5140000, 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 10113277.
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
September 30, 2017 October 1, 2016 Net revenues
$ 62,805 $ 54,490 Costs of products sold
38,538 34,225 Gross profit
24,267 20,265 Gross profit margin
38.6 % 37.2
% Selling, general, and administrative expenses
18,525 16,917 Acquisition costs
— — Restructuring
costs
423 709 Operating income
5,319 2,639 Operating margin
8.5 % 4.8 %
Other income (expense): Interest expense
(472
) (377 ) Other
1,717 (44 ) Other
income (expense) - net
1,245 (421 )
Income before taxes
6,564 2,218 Income tax
expense
2,239 1,135 Net
earnings
4,325 1,083
Less: net earnings attributable to
noncontrolling interests
70 32 Net earnings attributable
to VPG stockholders
$ 4,255 $ 1,051
Basic earnings per share attributable to VPG stockholders
$ 0.32 $ 0.08 Diluted earnings per share attributable
to VPG stockholders
$ 0.32 $ 0.08 Weighted
average shares outstanding - basic
13,291 13,192 Weighted
average shares outstanding - diluted
13,470 13,422
VISHAY PRECISION GROUP, INC. Consolidated Condensed
Statements of Operations (Unaudited - In thousands, except per
share amounts)
Nine fiscal months ended September
30, 2017 October 1, 2016 Net revenues
$
184,911 $ 169,115 Costs of products sold
113,368 107,580 Gross profit
71,543 61,535 Gross profit margin
38.7 % 36.4
% Selling, general, and administrative expenses
55,551 53,409 Acquisition costs
— 414 Restructuring
costs
1,292 2,395 Operating
income
14,700 5,317 Operating margin
7.9 % 3.1
% Other income (expense): Interest expense
(1,392
) (1,076 ) Other
1,034 351
Other income (expense) - net
(358 )
(725 ) Income before taxes
14,342 4,592
Income tax expense
4,398 1,164
Net earnings
9,944 3,428 Less: net earnings
attributable to noncontrolling interests
75
29 Net earnings attributable to VPG stockholders
$ 9,869 $ 3,399 Basic earnings
per share attributable to VPG stockholders
$ 0.74 $
0.26 Diluted earnings per share attributable to VPG stockholders
$ 0.73 $ 0.25 Weighted average shares
outstanding - basic
13,253 13,185 Weighted average shares
outstanding - diluted
13,452 13,409
VISHAY
PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In
thousands)
September 30, 2017 December 31, 2016
(Unaudited) Assets Current assets: Cash and cash
equivalents
$ 69,891 $ 58,452 Accounts receivable,
net
43,037 34,270 Inventories: Raw materials
16,487
15,647 Work in process
22,215 21,115 Finished goods
20,561 19,559 Inventories, net
59,263 56,321 Prepaid expenses and other current assets
9,923 6,831 Total current assets
182,114 155,874 Property and equipment, at cost: Land
3,428 3,344 Buildings and improvements
49,491 48,454
Machinery and equipment
92,521 89,080 Software
7,787
7,441 Construction in progress
2,338 4,340 Accumulated
depreciation
(101,964 ) (97,374 )
Property and equipment, net
53,601 55,285 Goodwill
19,228 18,717 Intangible assets, net
21,025
21,585 Other assets
19,751
19,049 Total assets
$ 295,719 $ 270,510
Liabilities and equity Current liabilities:
Trade accounts payable
$ 9,673 $ 8,264 Payroll and
related expenses
14,992 11,978 Other accrued expenses
15,615 13,285 Income taxes
3,193 772 Current portion
of long-term debt
2,965 2,623
Total current liabilities
46,438 36,922 Long-term
debt, less current portion
30,017 33,529 Deferred income
taxes
809 735 Other liabilities
13,793 13,054 Accrued
pension and other postretirement costs
15,161
14,713 Total liabilities
106,218
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
192,364 190,373 Retained
earnings
38,600 28,731 Accumulated other comprehensive loss
(34,278 ) (40,337 ) Total Vishay
Precision Group, Inc. stockholders' equity
189,312 171,383
Noncontrolling interests
189 174
Total equity
189,501 171,557
Total liabilities and equity
$ 295,719 $
270,510
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Cash Flows (Unaudited - In
thousands)
Nine fiscal months ended September 30,
2017 October 1, 2016 Operating activities Net
earnings
$ 9,944 $ 3,428 Adjustments to reconcile net
earnings to net cash provided by operating activities: Depreciation
and amortization
7,977 8,416 Gain on disposal of property
and equipment
(193 ) (24 ) Share-based compensation
expense
959 465 Inventory write-offs for obsolescence
1,662 1,410 Deferred income taxes
264 (1,537 ) Other
(907 ) (862 ) Net changes in operating assets and
liabilities: Accounts receivable, net
(7,030 ) 2,139
Inventories, net
(3,280 ) (2,891 ) Prepaid expenses
and other current assets
(2,937 ) (1,848 ) Trade
accounts payable
1,176 453 Other current liabilities
7,166 (2,572 ) Net cash provided by operating
activities
14,801 6,577
Investing activities Capital expenditures
(4,366
) (6,266 ) Proceeds from sale of property and equipment
442 316 Purchase of business
—
(10,727 ) Net cash used in investing activities
(3,924 ) (16,677 )
Financing
activities Principal payments on long-term debt and capital
leases
(1,971 ) (1,599 ) Proceeds from revolving
facility
27,000 17,000 Payments on revolving facility
(27,000 ) (12,000 ) Distributions to noncontrolling
interests
(60 ) (12 ) Payments of employee taxes on
certain share-based arrangements
(303 )
(85 ) Net cash (used in) provided by financing activities
(2,334 ) 3,304 Effect of exchange rate changes on
cash and cash equivalents
2,896 288
Increase (decrease) in cash and cash equivalents
11,439 (6,508 ) Cash and cash equivalents at
beginning of period
58,452 62,641
Cash and cash equivalents at end of period
$
69,891 $ 56,133
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 Nine fiscal months ended September 30, 2017
October 1, 2016 September 30, 2017 October 1,
2016 Gross profit
$ 24,267 $ 20,265
$
71,543 $ 61,535 Gross profit margin
38.6 %
37.2 %
38.7 % 36.4 %
Reconciling items
affecting gross profit margin
Acquisition purchase accounting adjustments
42 46
42
537 Adjusted gross profit
$
24,309 $ 20,311
$ 71,585
$ 62,072 Adjusted gross profit margin
38.7 %
37.3 %
38.7 % 36.7 %
VISHAY
PRECISION GROUP, INC. Reconciliation of Consolidated Adjusted
Operating Margin (Unaudited - In thousands)
Fiscal
quarter ended Nine fiscal months ended September 30,
2017 October 1, 2016 September 30, 2017
October 1, 2016 Operating income
$ 5,319 $
2,639
$ 14,700 $ 5,317 Operating margin
8.5
% 4.8 %
7.9 % 3.1 %
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments
42 46
42
537 Acquisition costs
— —
— 414 Strategic alternative
evaluation costs
— 1,079
— 1,079 Restructuring costs
423 709
1,292 2,395
Adjusted operating income
$ 5,784 $ 4,473
$ 16,034 $ 9,742 Adjusted
operating margin
9.2 % 8.2 %
8.7 % 5.8
%
VISHAY PRECISION GROUP, INC. Reconciliation
of Adjusted Earnings Per Share (Unaudited - In thousands, except
per share data)
Fiscal quarter ended Nine fiscal
months ended September 30, 2017 October 1, 2016
September 30, 2017 October 1, 2016 Net earnings
attributable to VPG stockholders
$ 4,255 $ 1,051
$ 9,869 $ 3,399
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments
42 46
42
537 Acquisition costs
— —
— 414 Strategic alternative
evaluation costs
— 1,079
— 1,079 Restructuring costs
423 709
1,292 2,395
Reconciling items
affecting other income/expense
Net proceeds from lease termination
(1,544 ) —
(1,544 ) —
Less reconciling
items affecting income tax expense
Tax effect of reconciling items and discrete tax items
(394 ) 27
(339 )
1,317 Adjusted net earnings attributable to VPG
stockholders
$ 3,570 $ 2,858
$
9,998 $ 6,507 Adjusted net earnings per
diluted share
$ 0.27 $ 0.21
$ 0.74 $
0.49 Weighted average shares outstanding - diluted
13,470 13,422
13,452 13,409
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VPGFor InvestorsICR, Inc.James Palczynski,
203-682-8229jp@icrinc.comorFor MediaICR, Inc.Phil Denning,
646-277-1258phil.denning@icrinc.com
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