Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of
precision sensors and systems, today announced its results for its
fiscal 2017 first quarter.
First Quarter Highlights:
- Revenues grow to $59.8 million, up 5.6%
versus last year and up 7.1% sequentially
- Diluted EPS increase to $0.15 compared
to prior year’s $0.04
- Adjusted diluted EPS increase to $0.19*
compared to prior year $0.13
- Cash from operations grows to $2.9
million; free cash flow of $1.1 million*
- Book-to-bill of 1.06 reflects improving
conditions in several end-markets
Ziv Shoshani, chief executive officer of VPG, commented, “We are
encouraged by a solid first quarter with all segments contributing
to year-over-year and sequential revenue growth. We are pleased to
see indications of an improved business environment in a number of
our key end markets – including test and measurement, avionics,
military and space, and steel – as reflected in a positive
book-to-bill of 1.06 at the end of the first quarter. Our ongoing
restructuring is driving profitability and cash flow improvements
and we will continue to work to capture efficiency opportunities,
better serve our customers and enhance our financial performance.
We have begun 2017 well and, as we progress through the year, we
believe we have an excellent opportunity to leverage our end market
growth and drive value to our shareholders.”
First quarter 2017 net earnings attributable to VPG stockholders
grew to $2.0 million, or $0.15 per diluted share, compared to $0.5
million, or $0.04 per diluted share, in the first fiscal quarter of
2016. Foreign currency exchange rates for the first quarter of
2017, as compared to the prior year period, had a negative impact
on net income of $0.9 million, or $0.07 per diluted share.
First quarter 2017 adjusted net earnings attributable to VPG
stockholders grew by 48.2% to $2.5 million, or $0.19 per diluted
share, compared to adjusted net earnings attributable to VPG
stockholders of $1.7 million, or $0.13 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 5.5% to $27.8
million in the first quarter of 2017, up from $26.3 million in the
first quarter of 2016; sequential growth was 9.3% up from $25.4
million in the fourth quarter of 2016. The year-over-year increase
in revenues was attributable to higher volume of $1.7 million, of
which $1.1 million is attributable to Pacific Instruments, acquired
on April 6, 2016; sequential growth was due to higher volume mainly
in precision resistors in the test and measurement market.
Gross profit margin for the segment was 41.4% for the first
quarter of 2017 compared to 42.3% in the first quarter of 2016 and
40.6% in the fourth quarter of 2016 (40.8% excluding the Pacific
acquisition purchase accounting adjustment of $0.1 million). The
gross profit margin for the quarter was down compared to the prior
year due to a negative exchange rate impact and inventory
reduction, partially offset by an increase in volume. The
sequential gross profit margin increase is mainly due to the
increase in volume.
Force Sensors segment revenues increased 4.3% to $15.5 million
in the first quarter of 2017, up from $14.8 million in the first
quarter of 2016; sequential growth was 4.7% up from $14.8 million
in the fourth quarter of 2016. The year-over-year increase in
revenues was attributable to higher volumes with OEM customers in
the precision agriculture and construction end markets, offset by a
negative exchange rate. The increase in sequential revenues was
attributable to higher volumes with OEM customers in the
construction end market. Gross profit margin in the first quarter
increased to 23.9% from 18.4% in the first quarter of 2016,
primarily as a result of higher volumes and successful cost
reduction programs. The slight sequential reduction from 25.3% in
the fourth quarter of 2016 was due to production ramp up and
related manufacturing costs.
Weighing and Control Systems segment revenues grew by 7.0% to
$16.6 million in the first quarter of 2017, up from $15.5 million
in the first quarter of 2016; sequential growth was 5.9% up from
$15.6 million in the fourth quarter of 2016. The increase in
year-over-year revenues was attributable to higher volumes
primarily in the steel end market, partially offset by a negative
exchange rate. The sequential increase in revenues was attributable
to an increase in volume in the on-board weighing product line.
First quarter 2017 gross profit margin increased to 44.3% from the
first quarter of 2016 of 38.3% (40.2% excluding the Stress-Tek
acquisition purchase accounting adjustment of $0.3 million). This
improvement was the result of higher volume and a favorable product
mix. The gross profit margin reduction from 46.5% reported in the
fourth quarter of 2016 is attributable to a volume increase offset
by an unfavorable product mix and, to a lesser extent, a reduction
in inventory.
Outlook
“In light of an improved business environment and at constant
first quarter 2017 exchange rates, we expect net revenues in the
range of $58 million to $63 million for the second 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, restructuring costs and associated tax effects. “Free
cash flow” is defined as the amount of cash generated from
operations ($2.9 million for the first quarter of 2017), in excess
of our capital expenditures ($2.0 million for the first quarter of
2017) net of proceeds, if any, for the sale of assets ($0.2 million
in the first 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 (May 9) 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 5120580, 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: 10104995.
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; 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 April 1, 2017 April 2, 2016 Net revenues
$ 59,787 $ 56,629 Costs of products sold
37,270 36,854 Gross profit
22,517 19,775 Gross
profit margin
37.7% 34.9% Selling, general, and
administrative expenses
18,226 18,048 Acquisition costs
— 62 Restructuring costs
554 675
Operating income
3,737 990 Operating margin
6.3% 1.7%
Other income (expense): Interest expense
(452) (328)
Other
(321) 425
Other income (expense) - net
(773) 97 Income before taxes
2,964 1,087 Income tax expense
961
591 Net earnings
2,003 496 Less: net earnings
attributable to noncontrolling interests
8 16
Net earnings attributable to VPG stockholders
$ 1,995
$ 480 Basic earnings per share attributable to VPG
stockholders
$ 0.15 $ 0.04 Diluted earnings per share
attributable to VPG stockholders
$ 0.15 $ 0.04
Weighted average shares outstanding - basic
13,210 13,178
Weighted average shares outstanding - diluted
13,438 13,399
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Balance Sheets (In thousands)
April 1,
2017 December 31, 2016 (Unaudited) Assets
Current assets: Cash and cash equivalents
$ 59,251 $
58,452 Accounts receivable, net
38,141 34,270 Inventories:
Raw materials
16,489 15,647 Work in process
20,227
21,115 Finished goods
19,307 19,559
Inventories, net
56,023 56,321 Prepaid expenses and
other current assets
8,997 6,831
Total current assets
162,412 155,874 Property and
equipment, at cost: Land
3,365 3,344 Buildings and
improvements
48,810 48,454 Machinery and equipment
91,063 89,080 Software
7,548 7,441 Construction in
progress
2,910 4,340 Accumulated depreciation
(98,389 ) (97,374 ) Property and equipment,
net
55,307 55,285 Goodwill
18,785 18,717
Intangible assets, net
21,259 21,585 Other
assets
19,616 19,049 Total
assets
$ 277,379 $ 270,510
Liabilities and equity Current liabilities: Trade
accounts payable
$ 9,754 $ 8,264 Payroll and related
expenses
13,568 11,978 Other accrued expenses
13,350
13,285 Income taxes
1,041 772 Current portion of long-term
debt
2,742 2,623 Total current
liabilities
40,455 36,922 Long-term debt, less
current portion
32,806 33,529 Deferred income taxes
805 735 Other liabilities
13,453 13,054 Accrued
pension and other postretirement costs
14,794
14,713 Total liabilities
102,313
98,953 Commitments and contingencies
Equity: Common stock
1,281 1,278 Class B convertible common
stock
103 103 Treasury stock
(8,765 ) (8,765 )
Capital in excess of par value
190,353 190,373 Retained
earnings
30,726 28,731 Accumulated other comprehensive loss
(38,812 ) (40,337 ) Total Vishay
Precision Group, Inc. stockholders' equity
174,886 171,383
Noncontrolling interests
180 174
Total equity
175,066 171,557
Total liabilities and equity
$ 277,379 $
270,510 VISHAY PRECISION
GROUP, INC. Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
Fiscal quarter ended
April 1, 2017 April 2, 2016 Operating
activities Net earnings
$ 2,003 $ 496 Adjustments
to reconcile net earnings to net cash provided by operating
activities: Depreciation and amortization
2,681 2,746 (Gain)
loss on disposal of property and equipment
(109 ) (15
) Share-based compensation expense
243 356 Inventory
write-offs for obsolescence
297 363 Deferred income taxes
(97 ) (17 ) Other
(359 ) (809 ) Net
changes in operating assets and liabilities: Accounts receivable,
net
(3,362 ) 915 Inventories, net
284 (866 )
Prepaid expenses and other current assets
(2,154 )
(795 ) Trade accounts payable
1,422 791 Other current
liabilities
2,032 (2,429 ) Net cash
provided by operating activities
2,881
736
Investing activities Capital expenditures
(1,962 ) (2,191 ) Proceeds from sale of property and
equipment
148 28 Net cash used
in investing activities
(1,814 ) (2,163
)
Financing activities Principal payments on
long-term debt and capital leases
(657 ) (531 )
Proceeds from revolving facility
7,000 — Payments on
revolving facility
(7,000 ) — Distributions to
noncontrolling interests
(2 ) (8 ) Payments of
employee taxes on certain share-based arrangements
(303 ) (85 ) Net cash used in financing
activities
(962 ) (624 ) Effect of exchange rate
changes on cash and cash equivalents
694
790 Increase (decrease) in cash and cash equivalents
799 (1,261 ) Cash and cash equivalents at beginning
of period
58,452 62,641 Cash and
cash equivalents at end of period
$ 59,251 $
61,380 VISHAY PRECISION
GROUP, INC. Reconciliation of Consolidated Adjusted Gross Profit
Margin (Unaudited - In thousands)
Fiscal quarter ended
April 1, 2017 April 2, 2016 Gross profit
$
22,517 $ 19,775 Gross profit margin
37.7 %
34.9 %
Reconciling items
affecting gross profit margin
Acquisition purchase accounting adjustments
— 296
Adjusted gross profit
$ 22,517 $ 20,071
Adjusted gross profit margin
37.7 % 35.4 %
VISHAY PRECISION GROUP, INC.
Reconciliation of Adjusted Earnings Per Share (Unaudited - In
thousands, except per share data)
Fiscal quarter ended
April 1, 2017 April 2, 2016 Net earnings attributable
to VPG stockholders
$ 1,995 $ 480
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments
— 296
Acquisition costs
— 62 Restructuring costs
554 675
Less reconciling
items affecting income tax expense
Tax effect of reconciling items and discrete tax items
42 (179 ) Adjusted net earnings attributable
to VPG stockholders
$ 2,507 $ 1,692
Adjusted net earnings per diluted share
$ 0.19
$ 0.13 Weighted average shares outstanding - diluted
13,438 13,399
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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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