Second quarter net
revenues of $59.5 million, within guidance. Company files Form 10-Q
for the second quarter and first six months of fiscal
2015.
Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of
precision sensors and systems, today announced its results for its
second quarter fiscal 2015 and six months ended June 27, 2015.
Ziv Shoshani, VPG’s chief executive officer said, “We have
completed our review and analysis of certain adjustments to our
historical financial statements for a subsidiary located in India
as a result of certain transactions that were recorded for this
subsidiary in the local currency, the Indian rupee, instead of the
functional currency, the U.S. dollar, in prior periods extending
back to 2011. The impact of these prior period adjustments was not
material to any of these prior periods. As a result, we have made
adjustments to our financial statements to correct these and other
immaterial errors. The adjusted financial statements may be found
in Note 12 of our Form 10-Q, which we filed with the Securities and
Exchange Commission today.”
In commenting on second quarter fiscal 2015 financial results,
Mr. Shoshani added, “From a performance perspective, our revenues
continued to be significantly impacted by the negative effect of
foreign currency exchange rates of $5.1 million, compared to the
second quarter of 2014. At the same time, our new advanced sensor
product and on-board weighing systems continue to gain traction in
the marketplace. We remain focused on our strategy of enhancing
shareholder value.”
Net revenues for the second quarter of 2015 were $59.5 million,
representing an 8.7% decrease from $65.2 million of net revenues
for the comparable prior year period. Net revenues for the six
months ended June 27, 2015 were $116.1 million, representing an
8.1% decrease from the $126.4 million of net revenues for
comparable prior year period. Comparing sequential results, net
revenues for the second quarter of 2015 increased by $2.9 million,
or 5.1%, from $56.6 million in the first quarter of 2015.
Net earnings attributable to VPG stockholders for the second
quarter of 2015 were $1.5 million, or $0.11 per diluted share,
compared to net earnings attributable to VPG stockholders for the
second quarter of 2014 of $3.6 million, or $0.26 per diluted share.
Foreign currency exchange rates for the second quarter of 2015 as
compared to the prior year period had a negative impact on net
income of $0.4 million, or $0.03 per diluted share. Net earnings
attributable to VPG stockholders for the six months ended June 27,
2015 were $2.3 million, or $0.17 per diluted share, compared to net
earnings attributable to VPG stockholders of $4.8 million, or $0.34
per diluted share for the comparable prior year period. Foreign
currency exchange rates for the six months of 2015 as compared to
the prior year period had a negative impact on net income of $0.8
million, or $0.06 per diluted share.
Adjusted net earnings attributable to VPG stockholders for the
second quarter of 2015 were $1.8 million, or $0.13 per diluted
share, versus adjusted net earnings attributable to VPG
stockholders of $3.6 million, or $0.26 per diluted share for the
comparable prior year period. Net earnings attributable to VPG
stockholders for the second quarter of 2015 include $0.03 million
of KELK acquisition purchase accounting adjustments (which impacted
costs of products sold), $0.3 million of restructuring costs, and
$0.04 million of associated tax effects.
Adjusted net earnings attributable to VPG stockholders for the
six months ended June 27, 2015 were $2.7 million, or $0.19 per
diluted share, versus adjusted net earnings attributable to VPG
stockholders of $5.0 million, or $0.36 per diluted share for the
comparable prior year period. Net earnings attributable to VPG
stockholders for the six months ended June 27, 2015 include $0.03
million of KELK acquisition purchase accounting adjustments (which
impacted cost of products sold), $0.4 million of restructuring
costs, and $0.06 million of associated tax effects, versus $0.4
million of KELK acquisition purchase accounting adjustments and
restructuring costs, and $0.1 million of associated tax effects for
the comparable prior year period.
Segments
The Foil Technology Products segment revenues were $26.2 million
in the second quarter of 2015, down 6.7% from $28.0 million in the
second quarter last year, and up 4.4% from $25.1 million in the
first quarter of 2015. Net revenues were negatively impacted by the
effects of foreign currency exchange rates by $1.7 million in the
second quarter of 2015 as compared to the second quarter of 2014,
and were negatively impacted by $0.2 million as compared to the
first quarter of 2015. The gross profit margin for the segment
decreased to 39.6% for the second quarter of 2015 compared to 40.5%
in the second quarter last year, and down from 41.4% in the first
quarter of 2015. The gross profit margin decreased from the
comparable prior year period primarily due to the effects of
foreign currency exchange rates and additional headcount for
expansion of our advanced sensor platform. Despite an increase in
revenues, the sequential gross profit margin decrease was due
primarily to the effects of foreign currency exchange rates and
other costs.
The Force Sensors segment revenues of $15.6 million in the
second quarter of 2015 were down 7.9% compared to $17.0 million in
the second quarter last year, and were up 2.7% from $15.2 million
in the first quarter of 2015. Decreased year-over-year revenues are
attributable primarily to the effect of foreign currency exchange
rates of $0.9 million. The increase in sequential revenues is
attributable to higher volume. The gross profit margin for the
segment was 19.0% in the second quarter of 2015 versus 22.7% in the
second quarter of 2014 and 21.8% in the first quarter of 2015. The
gross profit margin for the quarter decreased from the comparable
prior year period primarily due to the effects of foreign currency
exchange rates. The sequential gross profit margin decreased due to
a reduction in inventory.
The Weighing and Control Systems segment revenues were $17.7
million in the second quarter of 2015, down 12.1% from $20.2
million in the second quarter last year, and up 8.6% from $16.3
million in the first quarter of 2015. Net revenues were negatively
impacted by the effects of foreign currency exchange rates of $2.4
million in the second quarter of 2015 as compared to the second
quarter of 2014. The sequential increase is attributable to volume
in our process weighing business. The gross profit margin for the
segment was 43.6% in the second quarter of 2015 versus 48.2% in the
second quarter of 2014 and 44.6% in the first quarter of 2015. The
year-over-year decrease in gross profit margin is primarily due to
the effects of foreign currency exchange rates and unfavorable
product mix. The sequential decrease in gross profit margin is
primarily due to higher freight costs and unfavorable product
mix.
Outlook
Mr. Shoshani concluded, “Assuming a similar exchange rate impact
to our revenues and given the normal seasonality in our business,
we expect net revenues in the range of $55 million to $60 million
for the third quarter of 2015.”
*Editor’s Note: We define adjusted net earnings as net
earnings attributable to VPG stockholders before acquisition
purchase accounting adjustments, restructuring costs, and
associated tax effects. ** For a reconciliation of GAAP to non-GAAP
financial information, refer to the quarterly financial tables.
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 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, changes in the current pace of economic recovery,
including if such recovery stalls or does not continue as expected;
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 ERP system and the associated impact on
manufacturing efficiencies and customer satisfaction; 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 lower-labor-cost countries; 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, 2014. 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
June 27, 2015 June 28, 2014 Net revenues
$ 59,508 $ 65,162 Costs of products sold
38,473 40,253 Gross profit
21,035 24,909 Gross profit margin
35.3 % 38.2
% Selling, general, and administrative expenses
18,396 19,897 Restructuring costs
304
7 Operating income
2,335 5,005 Operating
margin
3.9 % 7.7 % Other income (expense):
Interest expense
(173 ) (240 ) Other
(414 ) (247 ) Other income (expense) - net
(587 ) (487 ) Income before
taxes
1,748 4,518 Income tax expense
288 948 Net earnings
1,460 3,570 Less: net (loss) earnings attributable to
noncontrolling interests
(16 ) (8 ) Net
earnings attributable to VPG stockholders
$ 1,476
$ 3,578 Basic earnings per share attributable
to VPG stockholders
$ 0.11 $ 0.26 Diluted earnings
per share attributable to VPG stockholders
$ 0.11 $
0.26 Weighted average shares outstanding - basic
13,580 13,756 Weighted average shares outstanding - diluted
13,790 13,968
VISHAY PRECISION
GROUP, INC. Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)
Six
fiscal months ended June 27, 2015 June 28, 2014
Net revenues
$ 116,116 $ 126,402 Costs of
products sold
74,102 79,783
Gross profit
42,014 46,619 Gross profit margin
36.2
% 36.9 % Selling, general, and administrative
expenses
37,144 39,060 Restructuring costs
382
331 Operating income
4,488 7,228
Operating margin
3.9 % 5.7 % Other income
(expense): Interest expense
(360 ) (456 ) Other
(1,343 ) (683 ) Other income (expense)
- net
(1,703 ) (1,139 ) Income
before taxes
2,785 6,089 Income tax expense
478 1,277 Net earnings
2,307 4,812 Less: net (loss) earnings attributable to
noncontrolling interests
(29 ) 59
Net earnings attributable to VPG stockholders
$
2,336 $ 4,753 Basic earnings per share
attributable to VPG stockholders
$ 0.17 $ 0.35
Diluted earnings per share attributable to VPG stockholders
$ 0.17 $ 0.34 Weighted average shares
outstanding - basic
13,663 13,754 Weighted average shares
outstanding - diluted
13,875 13,963
VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance
Sheets (In thousands)
June 27, 2015
December 31,2014
(Unaudited)
Assets Current assets: Cash and cash equivalents
$
65,456 $ 79,642 Accounts receivable, net
38,250
37,427 Inventories: Raw materials
13,808 14,223 Work in
process
21,245 19,813 Finished goods
20,716
18,806 Inventories, net
55,769 52,842
Deferred income taxes
5,552 5,636 Prepaid expenses
and other current assets
9,394 10,361
Total current assets
174,421 185,908 Property
and equipment, at cost: Land
1,891 1,893 Buildings and
improvements
50,555 49,909 Machinery and equipment
79,948 78,500 Software
6,997 6,837 Construction in
progress
2,678 2,928 Accumulated depreciation
(91,820 ) (89,374 ) Property and equipment,
net
50,249 50,693 Goodwill
12,046 12,788
Intangible assets, net
15,416 17,381 Other
assets
20,352 20,393 Total
assets
$ 272,484 $ 287,163
Liabilities and equity Current liabilities: Trade accounts
payable
$ 8,780 $ 10,559 Payroll and related expenses
14,046 14,216 Other accrued expenses
14,776 16,902
Income taxes
127 2,133 Current portion of long-term debt
16,366 5,120 Total current
liabilities
54,095 48,930 Long-term debt, less
current portion
4,635 17,713 Deferred income taxes
610 638 Other liabilities
7,431 7,644 Accrued pension
and other postretirement costs
12,014
12,353 Total liabilities
78,785
87,278 Commitments and contingencies Equity:
Common stock
1,276 1,273 Class B convertible common stock
103 103 Treasury stock
(6,169 ) (32 ) Capital
in excess of par value
189,769 189,532 Retained earnings
37,671 35,335 Accumulated other comprehensive loss
(29,111 ) (26,560 ) Total Vishay Precision
Group, Inc. stockholders' equity
193,539 199,651
Noncontrolling interests
160 234
Total equity
193,699 199,885
Total liabilities and equity
$ 272,484 $
287,163
VISHAY PRECISION GROUP,
INC. Consolidated Condensed Statements of Cash Flows (Unaudited
- In thousands)
Six fiscal months ended June 27,
2015 June 28, 2014 Operating activities
Net earnings
$ 2,307 $ 4,812 Adjustments to reconcile
net earnings to net cash (used in) provided by operating
activities: Impairment of goodwill and indefinite-lived intangibles
Depreciation and amortization
5,524 5,783 (Gain) loss on
disposal of property and equipment
(1 ) 9 Share-based
compensation expense
416 485 Inventory write-offs for
obsolescence
916 562 Other
1,121 (54 ) Net changes in
operating assets and liabilities: Accounts receivable, net
(1,671 ) (4,857 ) Inventories, net
(4,345
) 346 Prepaid expenses and other current assets
943
(586 ) Trade accounts payable
(1,670 ) (281 ) Other
current liabilities
(3,589 ) (1,338 )
Net cash (used in) provided by operating activities
(49 ) 4,881
Investing
activities Capital expenditures
(5,037 ) (3,435 )
Proceeds from sale of property and equipment
65
63 Net cash used in investing activities
(4,972 ) (3,372 )
Financing
activities Principal payments on long-term debt and capital
leases
(1,810 ) (2,070 ) Purchase of treasury stock
(6,137 ) — Distributions to noncontrolling interests
(45 ) (43 ) Net cash used in financing
activities
(7,992 ) (2,113 ) Effect of exchange rate
changes on cash and cash equivalents
(1,173 )
250 Decrease in cash and cash equivalents
(14,186 ) (354 ) Cash and cash equivalents at
beginning of period
79,642 72,809
Cash and cash equivalents at end of period
$
65,456 $ 72,455
VISHAY PRECISION GROUP, INC. Reconciliation of
Consolidated Adjusted Gross Profit Margin (Unaudited - In
thousands)
Fiscal quarter ended Six fiscal months
ended June 27, 2015 June 28, 2014 June 27,
2015 June 28, 2014 Gross profit
$ 21,035 $
24,909
$ 42,014 $ 46,619 Gross profit margin
35.3 % 38.2 %
36.2 % 36.9 %
Reconciling items
affecting gross profit margin
Acquisition purchase accounting adjustments
26 2
26
41 Adjusted gross profit
$
21,061 $ 24,911
$ 42,040
$ 46,660 Adjusted gross profit margin
35.4 %
38.2 %
36.2 % 36.9 %
VISHAY
PRECISION GROUP, INC. Reconciliation of Adjusted Earnings Per
Share (Unaudited - In thousands, except per share data)
Fiscal quarter ended Six fiscal months ended June
27, 2015 June 28, 2014 June 27, 2015 June 28,
2014 Net earnings attributable to VPG stockholders
$
1,476 $ 3,578
$ 2,336 $ 4,753
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments
26 2
26
41 Restructuring costs
304 7
382 331
Reconciling items
affecting income tax expense
Tax effect of adjustments for purchase accounting and restructuring
costs
41 2
57
94 Adjusted net earnings attributable to VPG
stockholders
$ 1,765 $ 3,585
$
2,687 $ 5,031 Weighted average shares
outstanding - diluted
13,790 13,968
13,875 13,963
Adjusted net earnings per diluted share
$ 0.13
$ 0.26
$ 0.19 $ 0.36
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VPGWendy WilsonSenior Director Investor Relations and Corporate
Communications919-374-5501wendy.wilson@vpgsensors.com
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