VPG Reports Fiscal 2016 Third Quarter and Nine Month Results

Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and systems, today announced its results for its fiscal 2016 third quarter and nine months ended October 1, 2016.

Highlights:

Third quarter earnings per diluted share of $0.08.
Adjusted earnings per diluted share of $0.21.*
Cash generated from operations for the third quarter of 2016 was $6.3 million and free cash flow was $4.5 million.*
Force Sensors segment achieved gross profit margins of 31.0% in the third quarter of 2016 as compared to 21.0% in the third quarter of 2015.

“Our adjusted earnings per diluted share performance was $0.21 for the third quarter of 2016 as compared to adjusted earnings per diluted share of $0.18 in the third quarter of 2015, in spite of softer sales this quarter compared to the third quarter of 2015,” said Ziv Shoshani, VPG chief executive officer. “We also generated cash from operations of $6.3 million, with free cash flow of $4.5 million in the third quarter of 2016, which validates the effectiveness of our restructuring and cost reduction programs.”

Net earnings attributable to VPG stockholders for the third fiscal quarter of 2016 were $1.1 million, or $0.08 per diluted share, compared to net loss attributable to VPG stockholders for the third fiscal quarter of 2015 of ($1.9) million, or ($0.15) per diluted share. Net earnings attributable to VPG stockholders for the fiscal nine months ended October 1, 2016 were $3.4 million, or $0.25 per diluted share, compared to net earnings attributable to VPG stockholders of $0.4 million, or $0.03 per diluted share, for the comparable prior year period.

Adjusted net earnings attributable to VPG stockholders for the third fiscal quarter of 2016 were $2.9 million, or $0.21 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $2.4 million, or $0.18 per diluted share, for the comparable prior year period. Adjusted net earnings attributable to VPG stockholders for the fiscal nine months ended October 1, 2016 were $6.5 million, or $0.49 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $5.1 million, or $0.37 per diluted share, for the comparable prior year period. Adjusted net earnings for the fiscal quarter and fiscal nine months ended October 1, 2016 exclude, among other costs, $1.1 million of costs associated with the Company’s evaluation of strategic alternatives to enhance stockholder value. There are no assurances that the evaluation will result in any particular strategic alternative. The Company does not intend to comment on or disclose developments regarding the evaluation process unless it deems further disclosure is appropriate or required.

The following table reconciles the company's non-U.S. GAAP measures included in the press release, which are provided for comparison with other results, and the most directly comparable U.S. GAAP measures:

Reconciliation of Adjusted Earnings Per Share (Unaudited - In thousands, except per share data) Fiscal quarter ended Nine fiscal months ended October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Net earnings (loss) attributable to VPG stockholders $ 1,051 $ (1,943 ) $ 3,399 $ 393

Reconciling items affecting operating margin

Acquisition purchase accounting adjustments 46 - 537 26 Acquisition costs - - 414 - Strategic alternative evaluation costs 1,079 - 1,079 - Impairment of goodwill and indefinite-lived intangibles - 4,942 — 4,942 Restructuring costs 709 459 2,395 841

Reconciling items affecting income tax expense

Less tax effect of reconciling items and discrete tax items (27 ) (1,081 ) (1,317 ) (1,137 ) Adjusted net earnings attributable to VPG stockholders $ 2,858 $ 2,377 $ 6,507 $ 5,065 Adjusted net earnings per diluted share $ 0.21 $ 0.18 $ 0.49 $ 0.37 Weighted average shares outstanding - diluted 13,422 13,347 13,409 13,772

Segments

The Foil Technology Products segment revenues were $23.9 million in the third quarter of 2016, down 11.7% from $27.0 million in the third quarter of 2015, and down 5.9% from $25.4 million in the second quarter of 2016. Decreased year-over-year revenues were attributable to lower volume, partially offset by the additional volume from Pacific Instruments of $0.7 million and positive exchange rate impact of $0.3 million. The decrease in sequential revenues was also attributable to lower volumes. The gross profit margin for the segment was 36.2% for the third quarter of 2016 compared to 42.0% in the third quarter of 2015 and 36.8% in the second quarter of 2016. The gross profit margin for the quarter compared to the comparable prior year period and the second quarter of 2016 decreased primarily due to lower volume.

The Force Sensors segment revenues were $15.2 million in the third quarter of 2016, up 4.5% from $14.6 million in the third quarter of 2015, and down 1.1% from $15.4 million in the second quarter of 2016. The increase in year-over-year revenues was attributable to an increase in volume offset by negative exchange rate impact of $0.3 million. Excluding the effects of foreign currency, the sequential revenues were flat. The gross profit margin for the segment was 31.0% in the third quarter of 2016, compared to 21.0% in the third quarter of 2015 and 29.0% in the second quarter of 2016. The gross profit margin for the quarter increased from the comparable prior year period primarily due to the increase in volume and the realization of cost savings from our previously announced cost reduction programs. The sequential gross profit margin increase was due to favorable product mix.

The Weighing and Control Systems segment revenues were $15.4 million in the third quarter of 2016, down 1.0% from $15.6 million in the third quarter of 2015, and down 10.6% from $17.2 million in the second quarter of 2016. Decreased year-over-year revenues were attributable to a negative exchange rate impact of $0.5 million and decrease in volumes, offset by the acquisition of Stress-Tek. The sequential decrease in revenues was attributable to a decrease in volume coupled with negative exchange rate impact of $0.4 million. The gross profit margin for the segment was 44.9% in the third quarter of 2016 compared to 45.4% in the third quarter of 2015 and 44.7% in the second quarter of 2016 (45.6% excluding the Stress-Tek acquisition purchase accounting adjustment of $0.1 million). Excluding foreign currency, the gross profit margin for the quarter was flat compared to the prior year period. The sequential gross profit margin decrease was due to the decrease in volume.

Outlook

“In light of global economic conditions and the continued strength of the U.S. dollar compared to other currencies, we expect net revenues in the range of $55 million to $60 million for the fourth quarter of 2016,” concluded Mr. Shoshani. “We are updating our expectation for fiscal year 2016 adjusted diluted earnings per share to be in the range of $0.70 to $0.75, at constant exchange rates as of the third quarter of 2016.”

*Editor’s Note

We define adjusted net earnings as net earnings attributable to VPG stockholders before acquisition purchase accounting adjustments, acquisition costs, restructuring costs, strategic alternative evaluation costs, impairment of goodwill and indefinite-lived intangibles and associated tax effects. Free cash flow is defined as the amount of cash generated from operations ($6.3 million for the third quarter of 2016), in excess of our capital expenditures ($1.8 million for the third quarter of 2016) and net of proceeds, if any, for the sale of assets (none in the third quarter of 2016). 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 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 7373887, 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: 10094433. 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 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; 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 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-cost countries; resources expended in connection with evaluation of strategic alternatives to enhance stockholder value ; 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, 2015. 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 October 1, 2016 September 26, 2015 Net revenues $ 54,490 $ 57,149 Costs of products sold 34,225 35,699 Gross profit 20,265 21,450 Gross profit margin 37.2 % 37.5 % Selling, general, and administrative expenses 16,917 17,760 Impairment of goodwill and indefinite-lived intangibles - 4,942 Restructuring costs 709 459 Operating income (loss) 2,639 (1,711 ) Operating margin 4.8 % -3.0 % Other income (expense): Interest expense (377 ) (158 ) Other (44 ) (387 ) Other income (expense) - net (421 ) (545 ) Income (loss) before taxes 2,218 (2,256 ) Income tax expense (benefit) 1,135 (304 ) Net earnings (loss) 1,083 (1,952 ) Less: net earnings (loss) attributable to noncontrolling interests 32 (9 ) Net earnings (loss) attributable to VPG stockholders $ 1,051 $ (1,943 ) Basic earnings (loss) per share attributable to VPG stockholders $ 0.08 $ (0.15 ) Diluted earnings (loss) per share attributable to VPG stockholders $ 0.08 $ (0.15 ) Weighted average shares outstanding - basic 13,192 13,347 Weighted average shares outstanding - diluted 13,422 13,347 VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts) Nine fiscal months ended October 1, 2016 September 26, 2015 Net revenues $ 169,115 $ 173,265 Costs of products sold 107,580 109,801 Gross profit 61,535 63,464 Gross profit margin 36.4 % 36.6 % Selling, general, and administrative expenses 53,409 54,904 Acquisition costs 414 - Impairment of goodwill and indefinite-lived intangibles — 4,942 Restructuring costs 2,395 841 Operating income 5,317 2,777 Operating margin 3.1 % 1.6 % Other income (expense): Interest expense (1,076 ) (518 ) Other 351 (1,730 ) Other income (expense) - net (725 ) (2,248 ) Income before taxes 4,592 529 Income tax expense 1,164 174 Net earnings 3,428 355 Less: net earnings (loss) attributable to noncontrolling interests 29 (38 ) Net earnings attributable to VPG stockholders $ 3,399 $ 393 Basic earnings per share attributable to VPG stockholders $ 0.26 $ 0.03 Diluted earnings per share attributable to VPG stockholders $ 0.25 $ 0.03 Weighted average shares outstanding - basic 13,185 13,558 Weighted average shares outstanding - diluted 13,409 13,772 VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands) October 1, 2016 December 31, 2015 (Unaudited) Assets Current assets: Cash and cash equivalents $ 56,133 $ 62,641 Accounts receivable, net 34,889 35,553 Inventories: Raw materials 16,119 15,062 Work in process 21,913 20,289 Finished goods 20,300 20,849 Inventories, net 58,332 56,200 Prepaid expenses and other current assets 9,678 7,814 Assets held for sale 2,043 - Total current assets 161,075 162,208 Property and equipment, at cost: Land 3,498 3,639 Buildings and improvements 46,128 55,003 Machinery and equipment 88,697 84,409 Software 7,379 7,284 Construction in progress 3,199 2,288 Accumulated depreciation (94,521 ) (95,992 ) Property and equipment, net 54,380 56,631 Goodwill 19,305 12,603 Intangible assets, net 22,438 17,683 Other assets 14,789 14,622 Total assets $ 271,987 $ 263,747 Liabilities and equity Current liabilities: Trade accounts payable $ 8,687 $ 8,004 Payroll and related expenses 12,854 13,888 Other accrued expenses 15,607 16,604 Income taxes 1,387 527 Current portion of long-term debt 2,277 2,120 Total current liabilities 40,812 41,143 Long-term debt, less current portion 34,457 31,037 Deferred income taxes 623 334 Other liabilities 7,892 7,195 Accrued pension and other postretirement costs 11,309 11,597 Total liabilities 95,093 91,306 Commitments and contingencies Equity: Common stock 1,278 1,276 Class B convertible common stock 103 103 Treasury stock (8,765 ) (8,765 ) Capital in excess of par value 190,801 190,436 Retained earnings 25,726 22,327 Accumulated other comprehensive loss (32,451 ) (33,121 ) Total Vishay Precision Group, Inc. stockholders' equity 176,692 172,256 Noncontrolling interests 202 185 Total equity 176,894 172,441 Total liabilities and equity $ 271,987 $ 263,747 VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Cash Flows (Unaudited - In thousands) Nine fiscal months ended October 1, 2016 September 26, 2015 Operating activities Net earnings $ 3,428 $ 355 Adjustments to reconcile net earnings to net cash provided by operating activities: Impairment of goodwill and indefinite-lived intangibles - 4,942 Depreciation and amortization 8,416 8,142 (Gain) loss on disposal of property and equipment (24 ) 14 Share-based compensation expense 465 796 Inventory write-offs for obsolescence 1,410 1,190 Deferred income taxes (1,537 ) (914 ) Other (862 ) 2,190 Net changes in operating assets and liabilities: Accounts receivable, net 2,139 (1,182 ) Inventories, net (2,891 ) (5,159 ) Prepaid expenses and other current assets (1,848 ) 290 Trade accounts payable 453 (2,256 ) Other current liabilities (2,657 ) (3,104 ) Net cash provided by operating activities 6,492 5,304 Investing activities Capital expenditures (6,266 ) (7,508 ) Proceeds from sale of property and equipment 316 117 Purchase of business (10,727 ) - Net cash used in investing activities (16,677 ) (7,391 ) Financing activities Principal payments on long-term debt and capital leases (1,599 ) (3,839 ) Proceeds from revolving facility 17,000 - Payments on revolving facility (12,000 ) - Purchase of treasury stock - (8,733 ) Distributions to noncontrolling interests (12 ) (58 ) Net cash provided by (used in) financing activities 3,389 (12,630 ) Effect of exchange rate changes on cash and cash equivalents 288 (1,751 ) Decrease in cash and cash equivalents (6,508 ) (16,468 ) Cash and cash equivalents at beginning of period 62,641 79,642 Cash and cash equivalents at end of period $ 56,133 $ 63,174 VISHAY PRECISION GROUP, INC. Reconciliation of Consolidated Adjusted Gross Profit Margin (Unaudited - In thousands) Fiscal quarter ended Nine fiscal months ended October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Gross profit $ 20,265 $ 21,450 $ 61,535 $ 63,464

Gross profit margin

37.2 % 37.5 % 36.4 % 36.6 %

Reconciling items affecting gross profit margin

Acquisition purchase accounting adjustments 46 - 537 26 Adjusted gross profit $ 20,311 $ 21,450 $ 62,072 $ 63,490 Adjusted gross profit margin 37.3 % 37.5 % 36.7 % 36.6 % VISHAY PRECISION GROUP, INC. Reconciliation of Adjusted Earnings Per Share (Unaudited - In thousands, except per share data) Fiscal quarter ended Nine fiscal months ended October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Net earnings (loss) attributable to VPG stockholders $ 1,051 $ (1,943 ) $ 3,399 $ 393

Reconciling items affecting operating margin

Reconciling items affecting income tax expense