Vishay Precision Group, Inc. (NYSE:VPG), a leading producer of
precision sensors and systems, today announced its results for its
fiscal 2016 fourth quarter and twelve months ended December 31,
2016.
Fourth Quarter Highlights:
- Fourth quarter earnings per diluted
share of $0.22.
- Fourth quarter adjusted earnings per
diluted share of $0.26.*
- Cash generated from operations for the
fourth quarter was $4.9 million and free cash flow was $4.7
million.*
- Book-to-bill was 1.16 for the fourth
quarter of 2016.
“Our adjusted earnings per diluted share performance was $0.26
for the fourth quarter of 2016 as compared to adjusted earnings per
diluted share of $0.20 in the fourth quarter of 2015, in spite of
softer sales this quarter compared to the fourth quarter of 2015,”
said Ziv Shoshani, VPG chief executive officer. “We also generated
cash from operations of $4.9 million, with free cash flow of $4.7
million, which reflects our restructuring and cost reduction
programs.”
Net earnings attributable to VPG stockholders for the fourth
fiscal quarter of 2016 were $3.0 million, or $0.22 per diluted
share, compared to a net loss attributable to VPG stockholders for
the fourth fiscal quarter of 2015 of ($13.4) million, or ($1.02)
per diluted share. Net earnings attributable to VPG stockholders
for the fiscal twelve months ended December 31, 2016 were $6.4
million, or $0.48 per diluted share, compared to a net loss
attributable to VPG stockholders of ($13.0) million, or ($0.96) per
diluted share, for the comparable prior year period. The prior year
results include a $12.4 million non-cash income tax charge recorded
in the fourth quarter of 2015 related to a valuation allowance
recorded against certain deferred tax assets and a $4.9 million
non-cash write down for impairment of goodwill related to the steel
business recorded in the third quarter of 2015.
Adjusted net earnings attributable to VPG stockholders for the
fourth fiscal quarter of 2016 were $3.4 million, or $0.26 per
diluted share, compared to adjusted net earnings attributable to
VPG stockholders of $2.7 million, or $0.20 per diluted share, for
the comparable prior year period. Adjusted net earnings
attributable to VPG stockholders for the fiscal twelve months ended
December 31, 2016 were $9.9 million, or $0.74 per diluted share,
compared to adjusted net earnings attributable to VPG stockholders
of $7.7 million, or $0.57 per diluted share, for the comparable
prior year period. Adjusted net earnings for the fiscal quarter and
fiscal twelve months ended December 31, 2016 exclude, among other
costs, $0.3 million and $1.3 million respectively, of costs
associated with the Company’s evaluation of strategic alternatives.
The evaluation process did not result in the adoption of any
particular strategic alternative other than the Company’s continued
execution of its business plan. It is not expected that the costs
associated with the evaluation, which consisted principally of
professional fees, will be continuing at this time.
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 Years ended December
31, 2016 December 31, 2015 December 31, 2016
December 31, 2015 Net earnings (loss) attributable to VPG
stockholders $ 3,005 $ (13,401) $ 6,404 $ (13,008)
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments 49 146 586 172
Acquisition costs 80 185 494 185 Strategic alternative evaluation
costs 265 — 1,344 — Gain on sale of building (837) — (837) —
Impairment of goodwill and indefinite-lived intangibles — — — 4,942
Restructuring costs 271 3,620 2,666 4,461
Less reconciling
items affecting income tax expense
Tax effect of reconciling items and discrete tax items (597)
(12,118) 719 (10,980) Adjusted net earnings
attributable to VPG stockholders $ 3,430 $ 2,668 $ 9,938 $ 7,732
Weighted average shares outstanding - diluted 13,450 13,170
13,419 13,485 Adjusted net earnings per diluted share $ 0.26
$ 0.20 $ 0.74 $ 0.57
Included in the discrete tax items for the fiscal 2016 fourth
quarter and twelve months ended December 31, 2016 is a $0.9
million tax benefit recorded related to a favorable fourth quarter
2016 settlement of an Israeli tax audit, offset by a series of
correcting adjustments totaling $0.8 million to certain deferred
tax accounts in various tax jurisdictions related to prior period
balances.
Sale of Building
The Company recorded a $0.8 million gain on the sale of its
property in Karmiel, Israel. The proceeds of $3.7 million were
received in the fourth quarter of 2016.
Segments
The Foil Technology Products segment revenues were $25.4 million
in the fourth quarter of 2016, down 3.2% from $26.2 million in the
fourth quarter of 2015, and up 6.5% from $23.9 million in the third
quarter of 2016. Decreased year-over-year revenues were
attributable to lower volume, partially offset by the additional
volume from Pacific Instruments of $2.2 million. The increase in
sequential revenues was attributable to higher volumes. The gross
profit margin for the segment was 40.6% for the fourth quarter of
2016 (40.8% excluding the Pacific acquisition purchase accounting
adjustment of $0.1 million) compared to 36.5% in the fourth quarter
of 2015 and 36.2% in the third quarter of 2016 (36.4% excluding the
Pacific acquisition purchase accounting adjustment of $0.1
million). The gross profit margin for the quarter increased from
the comparable prior year period due to variable cost savings from
operating efficiencies and the cost savings from our previously
announced cost reduction programs, offset by a decrease in volume.
The sequential gross profit margin increase is due to the increase
in volume and variable cost savings from operating
efficiencies.
The Force Sensors segment revenues were $14.8 million in the
fourth quarter of 2016, down 5.2% from $15.6 million in the fourth
quarter of 2015, and down 3.0% from $15.2 million in the third
quarter of 2016. The decrease in year-over-year revenues was
attributable to lower volume and negative exchange rate impact of
$0.3 million. The decrease in sequential revenues was also
attributable to lower volumes and negative exchange rate impact of
$0.1 million. The gross profit margin for the segment was 25.3% in
the fourth quarter of 2016, compared to 20.2% in the fourth quarter
of 2015 and 31.0% in the third quarter of 2016. The gross profit
margin for the quarter increased from the comparable prior year
period primarily due to variable cost savings from operating
efficiencies and the cost savings from our previously announced
cost reduction programs. The sequential gross profit margin
decrease was due to the decrease in volume, product mix and a
reduction in inventory.
The Weighing and Control Systems segment revenues were $15.6
million in the fourth quarter of 2016, down 8.5% from $17.1 million
in the fourth quarter of 2015, and up 1.5% from $15.4 million in
the third quarter of 2016. Decreased year-over-year revenues were
attributable to a negative exchange rate impact of $0.7 million and
a decrease in volume, offset by the impact of additional volume
from the acquisition of Stress-Tek of $1.9 million. The sequential
increase in revenues was primarily attributable to an increase in
volume, despite the negative exchange rate impact of $0.4 million.
The gross profit margin for the segment was 46.5% in the fourth
quarter of 2016 compared to 47.0% in the fourth quarter of 2015
(47.8% excluding the Kelk acquisition purchase accounting
adjustment of $0.2 million) and 44.9% in the third quarter of 2016.
The decline in the gross profit margin for the quarter compared to
the prior year period was due to the decline in volume. The
sequential gross profit margin increase was due to volume and
product mix.
Outlook
“In light of global economic conditions and at a constant fourth
quarter 2016 exchange rates, we expect net revenues in the range of
$55 million to $60 million for the first quarter of 2017,”
concluded Mr. Shoshani.
*Editor’s Note
We define “adjusted net earnings” as net earnings attributable
to VPG stockholders before acquisition purchase accounting
adjustments, restructuring costs, strategic alternative evaluation
costs, gain on sale of building, impairment of goodwill and
indefinite-lived intangibles and associated tax effects. “Free cash
flow” is defined as the amount of cash generated from operations
($4.9 million for the fourth quarter of 2016), in excess of our
capital expenditures ($4.1 million for the fourth quarter of 2016)
net of proceeds, if any, for the sale of assets ($3.9 million in
the fourth 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 (February 21) 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 8102218, 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: 10098939.
The replay will also be available on the investor relations page of
the VPG website at www.vpgsensors.com for a limited time.
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Operations (Unaudited - In thousands,
except per share amounts)
Fiscal quarter ended
December 31, 2016 December 31, 2015 Net revenues
$ 55,814 $ 58,913 Costs of products sold
34,540 38,148 Gross profit
21,274 20,765 Gross
profit margin
38.1% 35.2% Selling, general, and
administrative expenses
15,529 16,378 Acquisition costs
80 185 Restructuring costs
271 3,620
Operating income
5,394 582 Operating margin
9.7% 1.0%
Other income (expense): Interest expense
(410) (253)
Other
31 (352) Other (expense) income - net
(379) (605) Income (loss) before taxes
5,015 (23) Income tax expense
2,035
13,326 Net earnings (loss)
2,980 (13,349)
Less: net (loss) earnings attributable to noncontrolling interests
(25) 52 Net earnings (loss) attributable to
VPG stockholders
$ 3,005 $ (13,401) Basic
earnings (loss) per share attributable to VPG stockholders
$
0.23 $ (1.02) Diluted earnings (loss) per share attributable
to VPG stockholders
$ 0.22 $ (1.02) Weighted
average shares outstanding - basic
13,192 13,170 Weighted
average shares outstanding - diluted
13,450 13,170
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Operations
(Unaudited - In thousands, except per
share amounts)
Years ended
December 31, 2016
December 31, 2015
Net revenues
$ 224,929 $ 232,178 Costs of products
sold
142,120 147,949 Gross profit
82,809 84,229 Gross profit margin
36.8% 36.3%
Selling, general, and administrative expenses
68,938 71,282
Acquisition costs
494 185 Impairment of goodwill and
indefinite-lived intangibles
— 4,942 Restructuring costs
2,666 4,461 Operating income
10,711
3,359 Operating margin
4.8% 1.4% Other income
(expense): Interest expense
(1,486) (771) Other
382 (2,082) Other (expense) income - net
(1,104) (2,853) Income before taxes
9,607 506 Income tax expense
3,199
13,500 Net earnings (loss)
6,408 (12,994)
Less: net earnings attributable to noncontrolling interests
4 14 Net earnings (loss) attributable to VPG
stockholders
$ 6,404 $ (13,008) Basic earnings
(loss) per share attributable to VPG stockholders
$
0.49 $ (0.96) Diluted earnings (loss) per share attributable
to VPG stockholders
$ 0.48 $ (0.96) Weighted
average shares outstanding - basic
13,187 13,485 Weighted
average shares outstanding - diluted
13,419 13,485
VISHAY PRECISION GROUP, INC.
Consolidated Balance Sheets (In thousands, except per share
amounts)
December 31, 2016 December 31, 2015
(Unaudited) Assets Current assets: Cash and cash
equivalents
$ 58,452 $ 62,641 Accounts receivable,
net of allowances for doubtful accounts
34,270 35,553
Inventories: Raw materials
15,647 15,062 Work in process
21,115 20,289 Finished goods
19,559
20,849 Inventories, net
56,321 56,200 Prepaid expenses and
other current assets
6,831 7,814 Total current
assets
155,874 162,208 Property and equipment, at
cost: Land
3,344 3,639 Buildings and improvements
48,454 55,003 Machinery and equipment
89,080 84,409
Software
7,441 7,284 Construction in progress
4,340
2,288 Accumulated depreciation
(97,374)
(95,992) Property and equipment, net
55,285 56,631
Goodwill
18,717 12,603 Intangible assets, net
21,585 17,683 Other assets
19,049
14,622 Total assets
$ 270,510 $ 263,747
Liabilities and equity Current liabilities: Trade
accounts payable
$ 8,264 $ 8,004 Payroll and related
expenses
11,978 13,888 Other accrued expenses
13,285
16,604 Income taxes
772 527 Current portion of long-term
debt
2,623 2,120 Total current liabilities
36,922 41,143 Long-term debt, less current portion
33,529 31,037 Deferred income taxes
735 334 Other
liabilities
13,054 7,195 Accrued pension and other
postretirement costs
14,713 11,597 Total
liabilities
98,953 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
190,373 190,436 Retained earnings
28,731 22,327
Accumulated other comprehensive loss
(40,337)
(33,121) Total Vishay Precision Group, Inc. stockholders' equity
171,383 172,256 Noncontrolling interests
174
185 Total equity
171,557 172,441 Total
liabilities and equity
$ 270,510 $ 263,747
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Cash Flows (Unaudited - In thousands)
Years ended December 31, 2016 December 31,
2015 Operating activities Net earnings (loss)
$
6,408 $ (12,994) Adjustments to reconcile net earnings to
net cash provided by operating activities: Impairment of goodwill
and indefinite-lived intangibles
— 4,942 Depreciation and
amortization
11,149 11,097 (Gain) loss on disposal of
property and equipment
(823) 15 Share-based compensation
expense
37 1,083 Inventory write-offs for obsolescence
1,755 1,354 Deferred income taxes
(612) 10,013 Other
(1,216) 2,182 Net changes in operating assets and
liabilities, net of acquisition: Accounts receivable
1,322
982 Inventories
(1,968) (3,961) Prepaid expenses and other
current assets
955 2,799 Trade accounts payable
237
(2,550) Other current liabilities
(5,824)
(1,034) Net cash provided by operating activities
11,420 13,928
Investing activities
Capital expenditures
(10,425) (9,978) Proceeds from sale of
property and equipment
4,203 117 Purchase of business
(10,626) (20,022) Net cash used in investing
activities
(16,848) (29,883)
Financing activities Proceeds from long-term debt
—
29,000 Repayments of principal upon termination of long-term debt
— (14,000) Principal payments on long-term debt
(2,133) (4,119) Debt issuance costs
— (453) Proceeds
from revolving facility
25,000 — Payments on revolving
facility
(20,000) — Purchase of treasury stock
—
(8,733) Distributions to noncontrolling interests
(15) (63) Net cash provided by financing activities
2,852 1,632 Effect of exchange rate changes on cash and cash
equivalents
(1,613) (2,678) Decrease in cash
and cash equivalents
(4,189) (17,001) Cash and cash
equivalents at beginning of year
62,641 79,642
Cash and cash equivalents at end of year
$ 58,452 $
62,641
VISHAY PRECISION GROUP, INC. Reconciliation of Consolidated
Adjusted Gross Profit Margin (Unaudited - In thousands)
Fiscal quarter ended Years ended December 31,
2016 December 31, 2015 December 31, 2016
December 31, 2015 Gross profit $ 21,274 $ 20,765 $ 82,809 $
84,229 Gross profit margin 38.1% 35.2% 36.8% 36.3%
Reconciling items
affecting gross profit margin
Acquisition purchase accounting adjustments 49 146 586 172
Adjusted gross profit $ 21,323 $ 20,911 $
83,395 $ 84,401 Adjusted gross profit margin 38.2% 35.5% 37.1%
36.4%
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; 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170221005576/en/
VPGWilliam M. Clancy, 484-321-5306Executive Vice President and
Chief Financial Officerbill.clancy@vpgsensors.com
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