Vishay Precision Group, Inc. (NYSE:VPG), a leading producer of
precision sensors and sensors-based systems, today announced its
results for its fiscal 2018 fourth quarter and twelve fiscal months
ended December 31, 2018.
Fourth Quarter Highlights:
- Growth in revenues to $77.0 million, up
10.9% year-over-year
- Earnings were $0.25 per diluted share,
compared to $0.33 reported last year
- Adjusted diluted EPS* increased to
$0.54 compared to prior year $0.39
- Operating margin for the quarter is
9.2%, as compared to 10.3% reported last year
- Adjusted operating margin* for the
quarter is 12.9%, as compared to 11.5% reported last year
- Cash from operations was $17.4 million
with free cash flow* of $12.8 million
2018 Full Year Highlights:
- Growth in revenues to $299.8 million,
up 17.9% year-over-year
- Earnings increased to $1.75 per diluted
share, compared to $1.07 reported last year
- Adjusted diluted EPS* increased to
$2.05 compared to prior year $1.14
- Operating margin for the year is 12.4%,
as compared to 8.8% reported last year
- Adjusted operating margin* for the year
is 13.5% as compared to 9.7% reported last year
- Cash from operations was $35.4 million
with free cash flow* of $21.0 million
Ziv Shoshani, Chief Executive Officer of VPG, commented, “Our
continued focus on execution delivered solid revenues and net
earnings for the fourth quarter and full year 2018. Free cash for
the fourth quarter and full year 2018 was strong demonstrating good
execution and cost discipline. We remain dedicated to delivering
revenues, margins and net earnings to continue to enhance long-term
shareholder value."
The Company's fourth fiscal quarter 2018 net earnings
attributable to VPG stockholders were $3.4 million, or $0.25 per
diluted share, compared to $4.5 million, or $0.33 per diluted
share, in the fourth fiscal quarter of 2017. Foreign currency
exchange rates for the fourth quarter of 2018 increased net income
by $0.7 million, or $0.05 per diluted share, relative to the prior
year period.
In the twelve fiscal months ended December 31, 2018, net
earnings attributable to VPG stockholders grew to $23.6 million, or
$1.75 per diluted share, compared to $14.3 million, or $1.07 per
diluted share, in the twelve fiscal months ended December 31, 2017.
Foreign currency exchange rates for the twelve fiscal months ended
December 31, 2018 increased net income by $0.6 million or
$0.05 per diluted share relative to the prior year period.
The fourth fiscal quarter 2018 adjusted net earnings
attributable to VPG stockholders increased to $7.3 million, or
$0.54 per diluted share, compared to adjusted net earnings
attributable to VPG stockholders of $5.3 million, or $0.39 per
diluted share, for the comparable prior year period.
In the twelve fiscal months ended December 31, 2018,
adjusted net earnings attributable to VPG stockholders increased to
$27.8 million, or $2.05 per diluted share, compared to adjusted net
earnings attributable to VPG stockholders of $15.3 million, or
$1.14 per diluted share, for the comparable prior year period.
Included as an adjustment to net earnings attributable to VPG
stockholders for the twelve fiscal months ended December 31, 2017,
were net proceeds of $1.5 million related to a one time lease
termination payment at the Company's Tianjin, People's Republic of
China location.
Non-cash Impairment Charge
As a result of our regular review of goodwill and
indefinite-lived intangible assets during the fourth quarter of
each year, we recorded a $2.8 million pre-tax, non-cash impairment
charge to reduce the carrying value of the goodwill and
indefinite-lived intangible assets related to our Pacific
Instruments business, which is part of the Foil Technology Products
reporting segment. This charge is preliminary and could change as
it is finalized when we file our 2018 Form 10-K with the SEC.
Segments
Foil Technology Products segment revenues grew 22.9% to $36.7
million in the fourth fiscal quarter of 2018, up from $29.9 million
in the fourth fiscal quarter of 2017; sequential revenue increased
2.3% from $35.9 million in the third quarter of 2018. The
year-over-year increase in revenues was attributable to precision
resistor products in all regions for distribution and EMS
customers, primarily in the test and measurement and avionics,
military and space markets. In addition, advance sensors products
in Asia for OEM customers in the force measurement market and
Pacific Instruments products in the Americas for end users
customers in the avionics, military and space market contributed to
the increase. The sequential increase in revenue was primarily
attributable to precision resistor products in Asia for EMS and
distribution customers in the test and measurement and avionics,
military and space markets.
Gross profit margin for the Foil Technology Products segment was
42.0% for the fourth fiscal quarter of 2018, an increase compared
to 39.3% in the fourth fiscal quarter of 2017, and a decrease
compared to 43.9% in the third fiscal quarter of 2018. The
year-over-year increase in gross profit margin was primarily due to
an increase in volume. Sequentially, gross profit margin decreased
due to higher supplies and tooling and repairs and maintenance
costs, manufacturing inefficiencies, partially offset by an
increase in volume.
Force Sensors segment revenues decreased 4.1% to $17.0 million
in the fourth fiscal quarter of 2018, down from $17.7 million in
the fourth fiscal quarter of 2017; sequential revenue decreased
3.4%, from $17.6 million in the third quarter of 2018. The
year-over-year decrease in revenues was mainly attributable to
distribution customers in the force measurement market, primarily
in the Americas. The sequential decrease in revenue was mainly
attributable to distribution customers in the precision weighing
market, mainly in the Americas.
Gross profit margin for the Force Sensors segment was 26.6% for
the fourth fiscal quarter of 2018, a decrease compared to 29.5% in
the fourth fiscal quarter of 2017, and an increase compared to
25.9% in the third fiscal quarter of 2018. The year-over-year
decrease in gross profit margin was primarily due to an increase in
wages, the U.S. imposition of tariffs on goods from China, and a
reduction in inventory. Sequentially, gross profit margin increased
due to manufacturing efficiencies, partially offset by a reduction
in volume.
Weighing and Control Systems segment revenues grew by 6.5% to
$23.2 million in the fourth fiscal quarter of 2018, up from $21.8
million in the fourth fiscal quarter of 2017; sequential revenue
increased 5.8% from $22.0 million in the third fiscal quarter of
2018. The increase in revenues year-over-year was primarily
attributable to the steel product line in Asia and process weighing
product line in the Americas and Europe. The sequential increase in
revenue was primarily attributable to a volume increase in the
steel product line in Asia and process weighing product line in
Europe, partially offset by a reduction in volume for the steel
product line in Europe.
Gross profit margin for the Weighing and Control Systems segment
was 46.8% for the fourth fiscal quarter of 2018, an increase
compared to 44.8% from the fourth fiscal quarter of 2017, and an
increase compared to 46.6% from the third fiscal quarter of 2018.
The year-over-year increase in gross profit margin was primarily
due to the increase in volume. Sequential gross profit margin
increased due to an increase in volume.
Near-Term Outlook
“In light of a continued stable business environment, at
constant fourth fiscal quarter 2018 exchange rates, we expect net
revenues in the range of $72 million to $78 million for the first
fiscal quarter of 2019,” concluded Mr. Shoshani.
*Use of Non-GAAP Financial Information
We define “adjusted net earnings” as net earnings attributable
to VPG stockholders before restructuring costs, impairment of
goodwill and indefinite-lived intangibles, pension settlement,
acquisition purchase accounting adjustments, net proceeds from
lease termination and associated tax effects. "Free cash flow" for
the fourth fiscal quarter of 2018 is defined as the amount of cash
generated from operations ($17.4 million), in excess of our capital
expenditures ($4.6 million), net of proceeds, if any, from the sale
of assets ($0.0 million). "Free cash flow" for the fiscal year of
2018 is defined as the amount of cash generated from operations
($35.4 million) in excess of our capital expenditures ($14.5
million), net of proceeds, if any, from the sale of assets ($0.1
million). 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 GAAP measures.
Management believes that these non-GAAP financial measures are
meaningful because they provide insight with respect to intrinsic
operating results.
Conference Call and Webcast
A conference call will be held today (February 20) 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 0417825, 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 10127465.
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;
political, economic and military instability in the countries in
which we operate; 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 Statements of Operations (Unaudited - In thousands,
except per share amounts)
Fiscal quarter ended
December 31, 2018 December 31, 2017 Net revenues
$ 76,982 $ 69,439 Costs of products sold
46,166 42,699 Gross profit
30,816
26,740 Gross profit margin
40.0 % 38.5 %
Selling, general, and administrative expenses
20,905 18,828
Impairment of goodwill and indefinite-lived intangibles
2,820 — Restructuring costs
— 752
Operating income
7,091 7,160 Operating margin
9.2
% 10.3 % Other income (expense): Interest expense
(405 ) (450 ) Other
(403 ) (489 ) Other
(expense) income - net
(808 ) (939 ) Income
before taxes
6,283 6,221 Income tax expense
2,846 1,771 Net earnings
3,437
4,450 Less: net earnings attributable to noncontrolling interests
19 (26 ) Net earnings attributable to VPG
stockholders
$ 3,418 $ 4,476
Basic earnings per share attributable to VPG stockholders
$
0.25 $ 0.34 Diluted earnings per share attributable to VPG
stockholders
$ 0.25 $ 0.33 Weighted average
shares outstanding - basic
13,474 13,292 Weighted average
shares outstanding - diluted
13,595 13,529
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Operations (Unaudited - In thousands,
except per share amounts)
Years ended December 31,
2018 December 31, 2017 Net revenues
$
299,794 $ 254,350 Costs of products sold
178,527
156,067 Gross profit
121,267 98,283 Gross
profit margin
40.5 % 38.6 % Selling, general,
and administrative expenses
80,935 73,751 Impairment of
goodwill and indefinite-lived intangibles
2,820 —
Restructuring costs
289 2,044 Operating income
37,223 22,488 Operating margin
12.4 % 8.8 %
Other income (expense): Interest expense
(1,738
) (1,842 ) Other
(1,496 ) (83 ) Other
(expense) income - net
(3,234 ) (1,925 )
Income before taxes
33,989 20,563 Income tax expense
10,344 6,169 Net earnings
23,645
14,394 Less: net earnings attributable to noncontrolling interests
(1 ) 49 Net earnings attributable to VPG
stockholders
$ 23,646 $ 14,345
Basic earnings per share attributable to VPG stockholders
$
1.76 $ 1.08 Diluted earnings per share attributable to VPG
stockholders
$ 1.75 $ 1.07 Weighted average
shares outstanding - basic
13,439 13,262 Weighted average
shares outstanding - diluted
13,535 13,471
VISHAY PRECISION GROUP, INC.
Consolidated Balance Sheets (In thousands, except per share
amounts)
December 31, 2018 December 31, 2017
(Unaudited)
Assets Current assets: Cash and cash equivalents
$ 90,159 $ 74,292 Accounts receivable, net of
allowances for doubtful accounts
53,156 46,789 Inventories:
Raw materials
18,052 16,601 Work in process
22,007
23,160 Finished goods
22,182 20,174
Inventories, net
62,241 59,935 Prepaid expenses and other
current assets
9,314 10,299 Total current
assets
214,870 191,315 Property and equipment, at
cost: Land
3,390 3,434 Buildings and improvements
51,055 50,276 Machinery and equipment
105,840 95,158
Software
8,532 7,955 Construction in progress
2,157
2,252 Accumulated depreciation
(111,555 ) (103,401 )
Property and equipment, net
59,419 55,674 Goodwill
16,141 19,181 Intangible assets, net
17,656
20,475 Other assets
18,297 19,906 Total
assets
$ 326,383 $ 306,551
VISHAY PRECISION GROUP, INC.
Consolidated Balance Sheets (In thousands, except per share
amounts)
December 31, 2018 December 31, 2017
(Unaudited)
Liabilities and equity Current liabilities:
Trade accounts payable
$ 11,461 $ 13,678 Payroll and
related expenses
17,757 15,892 Other accrued expenses
17,031 15,952 Income taxes
3,879 2,515 Current
portion of long-term debt
4,654 3,878 Total
current liabilities
54,782 51,915 Long-term debt,
less current portion
22,421 28,477 Deferred income taxes
2,200 2,300 Other liabilities
13,545 14,131 Accrued
pension and other postretirement costs
14,982 16,424
Total liabilities
107,930 113,247
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
196,666 192,904 Retained earnings
66,569
43,076 Accumulated other comprehensive loss
(37,465 )
(35,450 ) Total Vishay Precision Group, Inc. stockholders' equity
218,415 193,156 Noncontrolling interests
38
148 Total equity
218,453 193,304 Total
liabilities and equity
$ 326,383 $ 306,551
VISHAY PRECISION
GROUP, INC. Consolidated Statements of Cash Flows (Unaudited -
In thousands)
Years ended December 31, 2018
December 31, 2017 Operating activities Net earnings
$ 23,645 $ 14,394 Adjustments to reconcile net
earnings to net cash provided by operating activities: Impairment
of goodwill and indefinite-lived intangibles
2,820 —
Depreciation and amortization
10,631 10,626 (Gain) loss on
disposal of property and equipment
(120 ) (195 )
Share-based compensation expense
1,799 1,499 Inventory
write-offs for obsolescence
1,876 2,065 Deferred income
taxes
1,011 1,890 Other
819 893 Net changes in
operating assets and liabilities Accounts receivable
(7,757
) (10,537 ) Inventories
(5,095 ) (4,307 )
Prepaid expenses and other current assets
588 (3,260 ) Trade
accounts payable
(819 ) 2,009 Other current
liabilities
5,981 7,652 Net cash provided by
operating activities
35,379 22,729
Investing activities Capital expenditures
(14,521
) (6,960 ) Proceeds from sale of property and equipment
132 541 Net cash used in investing activities
(14,389
) (6,419 )
Financing activities Principal
payments on long-term debt
(5,603 ) (2,628 ) Proceeds
from revolving facility
22,000 41,000 Payments on revolving
facility
(19,000 ) (41,000 ) Distributions to
noncontrolling interests
(109 ) (75 ) Payments of
employee taxes on certain share-based arrangements
(801
) (303 ) Net cash (used in) provided by financing activities
(3,513 ) (3,006 ) Effect of exchange rate changes on
cash and cash equivalents
(1,610 ) 2,536
Increase (decrease) in cash and cash equivalents
15,867
15,840 Cash and cash equivalents at beginning of year
74,292 58,452 Cash and cash equivalents at end
of year
$ 90,159 $ 74,292
Supplemental disclosure of investing transactions: Capital
expenditures purchased
$ (13,239 ) $ (10,092 )
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 Years ended December 31, 2018 December
31, 2017 December 31, 2018 December 31, 2017
Gross profit
$ 30,816 $ 26,740
$
121,267 $ 98,283 Gross profit margin
40.0 %
38.5 %
40.5 % 38.6 %
Reconciling items
affecting gross profit margin
Acquisition purchase accounting adjustments
— 49
— 91
Adjusted gross profit
$
30,816 $ 26,789
$ 121,267
$ 98,374 Adjusted gross profit margin
40.0 %
38.6 %
40.5 % 38.7 %
VISHAY
PRECISION GROUP, INC. Reconciliation of Consolidated Adjusted
Operating Margin (Unaudited - In thousands)
Fiscal
quarter ended Years ended December 31, 2018
December 31, 2017 December 31, 2018 December 31,
2017 Operating income
7,091 7,160
$ 37,223
22,488 Operating margin
9.2 % 10.3 %
12.4
% 8.8 %
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments
— 49
— 91
Impairment of goodwill and indefinite-lived intangibles **
2,820 —
2,820 — Restructuring costs
— 752
289 2,044 Adjusted operating
income
$ 9,911 $ 7,961
$
40,332 $ 24,623 Adjusted operating margin
12.9 % 11.5 %
13.5 % 9.7 % **
preliminary and subject to change as it is finalized when the
Company files its 2018 Form 10-K with the SEC
VISHAY PRECISION
GROUP, INC. Reconciliation of Adjusted Earnings Per Share
(Unaudited - In thousands, except per share data)
Fiscal
quarter ended Years ended December 31, 2018
December 31, 2017 December 31, 2018 December 31,
2017 Net earnings attributable to VPG stockholders
$
3,418 $ 4,476
$ 23,646 $ 14,345
Reconciling items
affecting operating margin
Acquisition purchase accounting adjustments
— 49
— 91
Impairment of goodwill and indefinite-lived intangibles **
2,820 —
2,820 — Restructuring costs
— 752
289 2,044
Reconciling items
affecting other income/expense
UK pension settlement
673 —
673 — Net proceeds from
lease termination
— —
— (1,544 ) Tax rebate
—
189
— 189
Less reconciling
items affecting income tax expense
Tax effect of reconciling items and discrete tax items
(377
) 165
(333 ) (174 ) Adjusted net
earnings attributable to VPG stockholders
$ 7,288
$ 5,301
$ 27,761 $ 15,299
Weighted average shares outstanding - diluted
13,595
13,529
13,535 13,471 Adjusted net earnings per
diluted share
$ 0.54 $ 0.39
$ 2.05 $
1.14 ** preliminary and subject to change as it is finalized when
the Company files its 2018 Form 10-K with the SEC
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version on businesswire.com: https://www.businesswire.com/news/home/20190220005267/en/
For InvestorsICR, Inc.Michael Callahan,
203-682-8311michael.callahan@icrinc.comFor MediaICR,
Inc.Phil Denning, 646-277-1258phil.denning@icrinc.com
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