VPG Vishay Precision Group Inc

Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and systems, today announced its results for its fiscal 2018 second quarter ended June 30, 2018.

Second Quarter Highlights:

• Growth in revenues to $74.2 million, up 19% year-over-year
• Gross margin was 42.3% for the quarter as compared to 39.7% for the prior year period
• Operating income increased by 93% to $11.3 million as compared to $5.9 million in the prior year period
• Operating margin for the quarter was 15.2%, compared to 9.4% for the prior year period
• Earnings increased 111% to $0.57 per diluted share, compared to $0.27 reported last year
• Adjusted diluted EPS* increased 97% to $0.57, compared to prior year $0.29
• Book-to-bill remained strong at 1.13, reflecting healthy, stable end-markets

Ziv Shoshani, Chief Executive Officer of VPG, commented, “We continue to secure business opportunities across all of our end markets as reflected in our increased revenues. Our second quarter 2018 operating results reaffirmed that strong operating margins are firmly established in our enterprise when we execute our business strategy in a solid business environment, as we did again this quarter.”

The Company grew second fiscal quarter 2018 net earnings attributable to VPG stockholders to $7.7 million, or $0.57 per diluted share, compared to $3.6 million, or $0.27 per diluted share, in the second fiscal quarter of 2017. This growth was assisted by a foreign currency exchange rate in the second quarter of 2018 relative to the prior year period that increased net income by $0.2 million, or $0.01 per diluted share.

In the six fiscal months ended June 30, 2018, net earnings attributable to VPG stockholders grew to $12.7 million, or $0.94 per diluted share, compared to $5.6 million or $0.42 per diluted share, in the six fiscal months ended July 1, 2017. Foreign currency exchange rates for the six fiscal months ended June 30, 2018 had no impact on net income relative to the prior year period.

The second fiscal quarter 2018 adjusted net earnings attributable to VPG stockholders approximately doubled to $7.7 million, or $0.57 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $3.9 million, or $0.29 per diluted share, for the comparable prior year period.

Six fiscal months ended June 30, 2018 adjusted net earnings attributable to VPG stockholders approximately doubled to $12.7 million, or $0.94 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $6.4 million, or $0.48 per diluted share, for the comparable prior year period.

Segments

Foil Technology Products segment revenues grew 16.7% to $34.2 million in the second fiscal quarter of 2018, up from $29.3 million in the second fiscal quarter of 2017; sequential revenue was flat compared to the first quarter of 2018. The year-over-year increase in revenues was attributable to precision resistors growth in all regions for distribution and OEM customers, primarily for the test and measurement market. Additionally, strain gage products increased across all regions in the force measurement and test and measurement markets.

Gross profit margin for the Foil Technology Products segment was 46.1% for the second fiscal quarter of 2018, an increase compared to 41.9% in the second fiscal quarter of 2017 and an increase compared to 42.8% in the first fiscal quarter of 2018. The year-over-year increase in gross margin was due to an increase in volumes, labor efficiencies experienced in the second quarter of 2018 and a positive exchange rate impact. The sequential increase in gross margin was primarily attributable to labor and manufacturing efficiencies in the second quarter of 2018.

Force Sensors segment revenues grew 23.7% to $19.4 million in the second fiscal quarter of 2018, up from $15.7 million in the second fiscal quarter of 2017; sequential revenue increased slightly, up from $19.2 million in the first quarter of 2018. The year-over-year increase in revenues was mainly attributable to OEM customers in the force measurement and precision weighing markets primarily in the Americas.

Gross profit margin for the Force Sensors segment was 29.4% for the second fiscal quarter of 2018, an increase compared to 28.9% in the second fiscal quarter of 2017 and an increase compared to 27.3% in the first fiscal quarter of 2018. Gross margins were up compared to the prior year period primarily due to the volume increase experienced in the second fiscal quarter of 2018 partially offset by a negative exchange rate impact. The sequential increase in gross margins was primarily due to an increase in volume and freight savings experienced in the second fiscal quarter of 2018.

Weighing and Control Systems segment revenues grew by 19.1% to $20.7 million in the second fiscal quarter of 2018, up from $17.4 million in the second fiscal quarter of 2017; sequential revenue increased 4.9% from $19.7 million in the first fiscal quarter of 2018. The increased year-over-year revenues were attributable to all product lines in all regions, in addition to positive exchange rate impact. The sequential increase in revenue was primarily attributable to a volume increase mainly in the steel product line in Asia partially offset by lower volume in Europe for our on-board weighing and process weighing product lines as well as a negative exchange rate impact.

The second fiscal quarter 2018 gross profit margin for the segment was 48.0%, an increase compared to 45.8% from the second fiscal quarter of 2017 and 43.9% from the first fiscal quarter of 2018. The year-over-year increase in gross margin was primarily due to volume, positive exchange rate impact and cost savings. The sequential increase in gross margin was primarily due to the volume increase experienced in the second fiscal quarter of 2018.

Near-Term Outlook

“In light of a continued solid business environment, at constant second fiscal quarter 2018 exchange rates and taking into account the normal seasonality of our business, we expect net revenues in the range of $70 million to $77 million for the third fiscal quarter of 2018,” concluded Mr. Shoshani.

*Use of Non-GAAP Financial Information

We define “adjusted net earnings” as net earnings attributable to VPG stockholders before restructuring costs and associated tax effects. 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. Management believes that these measures are meaningful because they provide insight with respect to intrinsic operating results.

Conference Call and Webcast

A conference call will be held today (August 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 9209556, 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 10122235. 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; 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; significant developments from the recent and potential changes in tariffs and trade regulation; 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, 2017. 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 30, 2018

 

July 1, 2017

Net revenues

$ 74,231 $ 62,319

Costs of products sold

  42,865     37,560   Gross profit 31,366 24,759

Gross profit margin

42.3 % 39.7 %   Selling, general, and administrative expenses 19,990 18,591 Restructuring costs   61     315   Operating income 11,315 5,853 Operating margin 15.2 % 9.4 %   Other income (expense): Interest expense (478 ) (468 ) Other   (272 )   (571 ) Other income (expense) - net   (750 )   (1,039 )   Income before taxes 10,565 4,814   Income tax expense   2,882     1,198     Net earnings 7,683 3,616 Less: net earnings attributable to noncontrolling interests   (10 )   (3 ) Net earnings attributable to VPG stockholders $ 7,693   $ 3,619     Basic earnings per share attributable to VPG stockholders $ 0.57 $ 0.27 Diluted earnings per share attributable to VPG stockholders $ 0.57 $ 0.27   Weighted average shares outstanding - basic 13,464 13,257 Weighted average shares outstanding - diluted 13,513 13,446     VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts)     Six fiscal months ended June 30, 2018   July 1, 2017 Net revenues $ 147,322 $ 122,106 Costs of products sold   87,451     74,830   Gross profit 59,871 47,276 Gross profit margin 40.6 % 38.7 %   Selling, general, and administrative expenses 40,309 36,609 Restructuring costs   61     869   Operating income 19,501 9,798 Operating margin 13.2 % 8.0 %   Other income (expense): Interest expense (920 ) (920 ) Other   (921 )   (1,100 ) Other income (expense) - net   (1,841 )   (2,020 )   Income before taxes 17,660 7,778   Income tax expense   5,019     2,159     Net earnings 12,641 5,619 Less: net (earnings) loss attributable to noncontrolling interests   (40 )   5   Net earnings attributable to VPG stockholders $ 12,681   $ 5,614     Basic earnings per share attributable to VPG stockholders $ 0.95 $ 0.42 Diluted earnings per share attributable to VPG stockholders $ 0.94 $ 0.42   Weighted average shares outstanding - basic 13,409 13,233 Weighted average shares outstanding - diluted 13,511 13,442     VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)   June 30, 2018   December 31, 2017 (Unaudited) Assets Current assets: Cash and cash equivalents $ 74,713 $ 74,292 Accounts receivable, net 52,103 46,789 Inventories: Raw materials 19,502 16,601 Work in process 23,936 23,160 Finished goods 21,984 20,174 Inventories, net 65,422 59,935 Prepaid expenses and other current assets 11,660 10,299 Total current assets 203,898 191,315   Property and equipment, at cost: Land 3,412 3,434 Buildings and improvements 50,376 50,276 Machinery and equipment 97,772 95,158 Software 8,160 7,955 Construction in progress 2,172 2,252 Accumulated depreciation (107,399) (103,401) Property and equipment, net 54,493 55,674   Goodwill 18,799 19,181   Intangible assets, net 18,966 20,475   Other assets 18,743 19,906 Total assets $ 314,899 $ 306,551   Liabilities and equity Current liabilities: Trade accounts payable $ 11,049 $ 13,678 Payroll and related expenses 14,932 15,892 Other accrued expenses 16,758 15,952 Income taxes 2,888 2,515 Current portion of long-term debt 4,088 3,878 Total current liabilities 49,715 51,915   Long-term debt, less current portion 26,690 28,477 Deferred income taxes 2,300 2,300 Other liabilities 13,781 14,131 Accrued pension and other postretirement costs 16,115 16,424 Total liabilities 108,601 113,247   Commitments and contingencies   Equity: Common stock 1,307 1,288 Class B convertible common stock 103 103 Treasury stock (8,765) (8,765) Capital in excess of par value 195,668 192,904 Retained earnings 55,604 43,076 Accumulated other comprehensive loss (37,598) (35,450) Total Vishay Precision Group, Inc. stockholders equity 206,319 193,156 Noncontrolling interests (21) 148 Total equity 206,298 193,304 Total liabilities and equity $ 314,899 $ 306,551     VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Cash Flows

(Unaudited - In thousands)     Six fiscal months ended June 30, 2018   July 1, 2017 Operating activities Net earnings $ 12,641 $ 5,619 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,332 5,318 Gain on disposal of property and equipment (83 ) (141 ) Share-based compensation expense 801 492 Inventory write-offs for obsolescence 1,158 982 Deferred income taxes 1,086 (104 ) Other 455 (445 ) Net changes in operating assets and liabilities: Accounts receivable, net (6,141 ) (6,928 ) Inventories, net (7,304 ) (761 ) Prepaid expenses and other current assets (1,724 ) (1,397 ) Trade accounts payable (390 ) 1,020 Other current liabilities   1,536     3,676   Net cash provided by operating activities   7,367     7,331     Investing activities Capital expenditures (6,134 ) (3,146 ) Proceeds from sale of property and equipment   106     326   Net cash used in investing activities   (6,028 )   (2,820 )     Financing activities Principal payments on long-term debt and capital leases (3,847 ) (1,314 ) Proceeds from revolving facility 11,000 16,000 Payments on revolving facility (6,000 ) (16,000 ) Distributions to noncontrolling interests (129 ) (46 ) Payments of employee taxes on certain share-based arrangements   (801 )   (303 ) Net cash provided by (used in) financing activities 223 (1,663 ) Effect of exchange rate changes on cash and cash equivalents   (1,141 )   1,858   Increase in cash and cash equivalents 421 4,706   Cash and cash equivalents at beginning of period   74,292     58,452   Cash and cash equivalents at end of period $ 74,713   $ 63,158     Supplemental disclosure of non-cash investing transactions: Capital expenditures purchased $ (3,988 ) $ (3,146 ) Supplemental disclosure of non-cash financing transactions: Conversion of exchangeable notes to common stock $ (2,794 ) $ (1,303 )

 

  VISHAY PRECISION GROUP, INC. Reconciliation of Consolidated Adjusted Gross Profit Margin (Unaudited - In thousands)   Fiscal quarter ended     Six fiscal months ended June 30, 2018   July 1, 2017 June 30, 2018   July 1, 2017 Gross profit $ 31,366 $ 24,759 $ 59,871 $ 47,276 Gross profit margin 42.3 % 39.7 % 40.6 % 38.7 %           Adjusted gross profit $ 31,366   $ 24,759   $ 59,871   $ 47,276   Adjusted gross profit margin 42.3 % 39.7 % 40.6 % 38.7 %     VISHAY PRECISION GROUP, INC. Reconciliation of Consolidated Adjusted Operating Margin (Unaudited - In thousands)   Fiscal quarter ended Six fiscal months ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Operating income $ 11,315 $ 5,853 $ 19,501 $ 9,798 Operating margin 15.2 % 9.4 % 13.2 % 8.0 %  

Reconciling items affecting operating margin

Restructuring costs 61 315 61 869        

Adjusted operating income

$ 11,376   $ 6,168   $ 19,562   $ 10,667   Adjusted operating margin 15.3 % 9.9 % 13.3 % 8.7 %     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 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Net earnings attributable to VPG stockholders $ 7,693 $ 3,619 $ 12,681 $ 5,614  

Reconciling items affecting operating margin

Restructuring costs 61 315 61 869

Less reconciling items affecting income tax expense

Tax effect of reconciling items   9     13     9     56   Adjusted net earnings attributable to VPG stockholders $ 7,745   $ 3,921   $ 12,733   $ 6,427     Adjusted net earnings per diluted share $ 0.57 $ 0.29 $ 0.94 $ 0.48   Weighted average shares outstanding - diluted 13,513 13,446 13,511 13,442  

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VPGFor InvestorsICR, Inc.Michael Callahan, 203-682-8311michael.callahan@icrinc.comorFor MediaICR, Inc.Phil Denning, 646-277-1258phil.denning@icrinc.com