Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of
precision sensors and sensor-based systems, today announced its
results for its fiscal 2019 second quarter ended June 29, 2019.
Second Quarter Highlights:
- Gross profit margin of 40.4%.
- Operating margin of 11.4%, adjusted operating margin* of
12.3%.
- Net earnings per diluted share of $0.41, adjusted net earnings
per diluted share* of $0.45.
- Cash from operations of $8.9 million with free cash flow* of
$6.7 million.
Ziv Shoshani, Chief Executive Officer of VPG, commented, “We
have delivered a solid operating margin and cash generation for
this quarter. Despite the current macro environment, we have
reported two consecutive years of above average, double digit
growth, the benefits of the work we have done to optimize our
global operations continue to benefit our operating results. This
effect has enabled us to continue to drive margin performance
across our segments, and we remain positioned to deploy capital to
value generating opportunities to drive incremental returns.”
The Company's second fiscal quarter 2019 net earnings
attributable to VPG stockholders was $5.6 million, or $0.41 per
diluted share, compared to $7.7 million, or $0.57 per diluted
share, in the second fiscal quarter of 2018. Foreign currency
exchange rates for the second quarter of 2019 decreased net income
by $0.2 million, or $0.02 per diluted share, relative to the prior
year period.
In the six fiscal months ended June 29, 2019, net earnings
attributable to VPG stockholders grew to $13.8 million, or $1.02
per diluted share, compared to $12.7 million, or $0.94 per diluted
share in the six fiscal months ended June 30, 2018. Foreign
currency exchange rates for the six fiscal months of 2019 increased
net income by $0.1 million, or $0.01 per diluted share, relative to
the prior year period.
The second fiscal quarter 2019 adjusted net earnings*
attributable to VPG stockholders was $6.2 million, or $0.45 per
diluted share, compared to $7.7 million, or $0.57 per diluted share
in the second fiscal quarter of 2018.
In the six fiscal months ended June 29, 2019, adjusted net
earnings* attributable to VPG stockholders was $14.4 million, or
$1.06 per diluted share compared to $12.7 million, or $0.94 per
diluted share in the six fiscal months ended June 30, 2018.
Segments
Foil Technology Products segment revenues decreased 3.5% to
$33.0 million in the second fiscal quarter of 2019, down from $34.2
million in the second fiscal quarter of 2018; sequential revenue
decreased 10.9% compared to $37.0 million in the first quarter of
2019. The year-over-year decrease in revenues was attributable to
Pacific Instruments products in the Americas for end user customers
in the avionics, military and space market and strain gage products
in the test and measurement and force measurement end markets,
primarily in the Americas. This was partially offset by a revenue
increase in the Advanced Sensors products in the force measurement
market in Asia. The sequential decrease in revenues was
attributable to Pacific Instruments products for end user customers
in the avionics, military and space market in the Americas.
Gross profit margin for the Foil Technology Products segment was
43.6% for the second fiscal quarter of 2019, a decrease compared to
46.1% in the second fiscal quarter of 2018, and a decrease compared
to 44.7% in the first fiscal quarter of 2019. The year-over-year
decrease in gross profit margin was primarily due to a decrease in
volume, the impact of negative exchange rates, and an increase in
wages and manufacturing costs. The sequential decrease in gross
profit margin was primarily due to a decrease in volume.
Force Sensors segment revenues declined 15.5% to $16.3 million
in the second fiscal quarter of 2019, compared to $19.4 million in
the second fiscal quarter of 2018; sequential revenue declined
2.3%, compared to $16.7 million in the first quarter of 2019. The
year-over-year decrease in revenues was mainly attributable to OEM
customers in the force measurement market, primarily in the
Americas. The sequential decrease in revenues was mainly
attributable to OEM customers in the force measurement end market
in the Americas and OEM customers in the medical end market in
Europe, partially offset by an increase in revenues from OEM
customers in the medical end market in the Americas.
Gross profit margin for the Force Sensors segment was 26.9% for
the second fiscal quarter of 2019, a decrease compared to 29.4% in
the second fiscal quarter of 2018, and a decrease compared to 30.2%
in the first fiscal quarter of 2019. The year-over-year decrease in
gross profit margin was primarily due to a decrease in volume.
Sequentially, gross profit margin decreased due to a decrease in
volume, impact of negative exchange rates, and a one-time
charge.
Weighing and Control Systems segment revenues grew by 4.1% to
$21.5 million in the second fiscal quarter of 2019, up from $20.7
million in the second fiscal quarter of 2018; sequential revenue
decreased 5.4% from $22.7 million in the first fiscal quarter of
2019. The increase in revenues year-over-year was primarily
attributable to the steel product line in Europe and the on board
weighing products in Europe and the Americas. The sequential
decrease in revenue was primarily attributable to a decrease in the
steel product line in Europe and the Americas and process weighing
products in Europe, partially offset by an increase in on-board
weighing products mainly in the Americas.
The second fiscal quarter 2019 gross profit margin for the
Weighing and Control Systems segment was 45.6%, a decrease compared
to 48.0% from the second fiscal quarter of 2018, and a decrease
compared to 50.2% from the first fiscal quarter of 2019. The
year-over-year decrease in gross profit margin was primarily due to
an increase in wages, higher manufacturing costs, and the impact of
negative exchange rates, partially offset by an increase in volume,
with an unfavorable product mix. Sequential gross profit margin
decrease was primarily due to lower volume with an unfavorable
product mix.
Near-Term Outlook
“Given the current business environment and our most recent
order intake, at constant second fiscal quarter 2019 exchange
rates, we expect net revenues in the range of $67 million to $73
million for the third fiscal quarter of 2019,” concluded Mr.
Shoshani.
*Use of Non-GAAP Financial Information
We define "adjusted operating margin" as operating margin before
restructuring costs and executive severance costs. We define
“adjusted earnings ” and "adjusted earnings per share" as net
earnings attributable to VPG stockholders before restructuring
costs, executive severance costs, and associated tax effects. We
define "free cash flow" as the amount of cash generated from
operations ($8.9 million for the second fiscal quarter of 2019), in
excess of our capital expenditures ($(2.4) million for the second
fiscal quarter of 2019) net of proceeds, if any, from the sale of
assets ($0.2 million for the second fiscal quarter of 2019).
Conference Call and Webcast
A conference call will be held today (August 6) 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 6252344, 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 10133115.
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 identifying, negotiating and
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, 2018. 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 29, 2019
June 30, 2018
Net revenues
$
70,870
$
74,231
Costs of products sold
42,261
42,865
Gross profit
28,609
31,366
Gross profit margin
40.4
%
42.3
%
Selling, general, and administrative
expenses
19,896
19,990
Executive severance costs
611
—
Restructuring costs
—
61
Operating income
8,102
11,315
Operating margin
11.4
%
15.2
%
Other income (expense):
Interest expense
(359
)
(478
)
Other
(160
)
(272
)
Other income (expense)
(519
)
(750
)
Income before taxes
7,583
10,565
Income tax expense
2,003
2,882
Net earnings
5,580
7,683
Less: net earnings attributable to
noncontrolling interests
15
(10
)
Net earnings attributable to VPG
stockholders
$
5,565
$
7,693
Basic earnings per share attributable to
VPG stockholders
$
0.41
$
0.57
Diluted earnings per share attributable to
VPG stockholders
$
0.41
$
0.57
Weighted average shares outstanding -
basic
13,518
13,464
Weighted average shares outstanding -
diluted
13,595
13,513
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of
Operations
(Unaudited - In thousands, except per
share amounts)
Six fiscal months
ended
June 29, 2019
June 30, 2018
Net revenues
$
147,395
$
147,322
Costs of products sold
85,735
87,451
Gross profit
61,660
59,871
Gross profit margin
41.8
%
40.6
%
Selling, general, and administrative
expenses
40,344
40,309
Executive severance costs
611
—
Restructuring costs
—
61
Operating income
20,705
19,501
Operating margin
14.0
%
13.2
%
Other income (expense):
Interest expense
(747
)
(920
)
Other
(932
)
(921
)
Other income (expense)
(1,679
)
(1,841
)
Income before taxes
19,026
17,660
Income tax expense
5,120
5,019
Net earnings
13,906
12,641
Less: net earnings (loss) attributable to
noncontrolling interests
98
(40
)
Net earnings attributable to VPG
stockholders
$
13,808
$
12,681
Basic earnings per share attributable to
VPG stockholders
$
1.02
$
0.95
Diluted earnings per share attributable to
VPG stockholders
$
1.02
$
0.94
Weighted average shares outstanding -
basic
13,506
13,409
Weighted average shares outstanding -
diluted
13,579
13,511
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Balance Sheets
(In thousands)
June 29, 2019
December 31, 2018
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
98,705
$
90,159
Accounts receivable, net
46,291
53,156
Inventories:
Raw materials
18,672
18,052
Work in process
23,835
22,007
Finished goods
21,775
22,182
Inventories, net
64,282
62,241
Prepaid expenses and other current
assets
12,702
9,314
Total current assets
221,980
214,870
Property and equipment, at cost:
Land
3,391
3,390
Buildings and improvements
51,787
51,055
Machinery and equipment
109,326
105,840
Software
9,205
8,532
Construction in progress
1,319
2,157
Accumulated depreciation
(115,525
)
(111,555
)
Property and equipment, net
59,503
59,419
Goodwill
16,387
16,141
Intangible assets, net
17,190
17,656
Other assets
27,410
18,297
Total assets
$
342,470
$
326,383
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Balance Sheets
(In thousands)
June 29, 2019
December 31, 2018
(Unaudited)
Liabilities and equity
Current liabilities:
Trade accounts payable
$
10,059
$
11,461
Payroll and related expenses
15,127
17,757
Other accrued expenses
17,560
17,031
Income taxes
2,981
3,879
Current portion of long-term debt
4,882
4,654
Total current liabilities
50,609
54,782
Long-term debt, less current portion
19,924
22,421
Deferred income taxes
2,200
2,200
Other liabilities
20,567
13,545
Accrued pension and other postretirement
costs
14,928
14,982
Total liabilities
108,228
107,930
Commitments and contingencies
Equity:
Common stock
1,312
1,307
Class B convertible common stock
103
103
Treasury stock
(8,765
)
(8,765
)
Capital in excess of par value
196,875
196,666
Retained earnings
80,908
66,569
Accumulated other comprehensive loss
(36,329
)
(37,465
)
Total Vishay Precision Group, Inc.
stockholders' equity
234,104
218,415
Noncontrolling interests
138
38
Total equity
234,242
218,453
Total liabilities and equity
$
342,470
$
326,383
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Cash
Flows
(Unaudited - In thousands)
Six Fiscal Months
Ended
June 29, 2019
June 30, 2018
Operating activities
Net earnings
$
13,906
$
12,641
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
5,619
5,332
Gain on disposal of property and
equipment
(50
)
(83
)
Share-based compensation expense
1,086
801
Inventory write-offs for obsolescence
1,389
1,158
Deferred income taxes
379
1,086
Other
(2,753
)
455
Net changes in operating assets and
liabilities:
Accounts receivable, net
7,085
(6,141
)
Inventories, net
(3,288
)
(7,304
)
Prepaid expenses and other current
assets
(3,301
)
(1,724
)
Trade accounts payable
(645
)
(390
)
Other current liabilities
(2,396
)
1,536
Net cash provided by operating
activities
17,031
7,367
Investing activities
Capital expenditures
(5,764
)
(6,134
)
Proceeds from sale of property and
equipment
214
106
Net cash used in investing activities
(5,550
)
(6,028
)
Financing activities
Principal payments on long-term debt
(2,311
)
(3,847
)
Proceeds from revolving facility
—
11,000
Payments on revolving facility
—
(6,000
)
Contributions from (distributions to)
noncontrolling interests
2
(129
)
Payments of employee taxes on certain
share-based arrangements
(854
)
(801
)
Net cash (used in) provided by financing
activities
(3,163
)
223
Effect of exchange rate changes on cash
and cash equivalents
228
(1,141
)
Increase in cash and cash equivalents
8,546
421
Cash and cash equivalents at beginning of
period
90,159
74,292
Cash and cash equivalents at end of
period
$
98,705
$
74,713
Supplemental disclosure of investing
transactions:
Capital expenditures purchased
$
(4,992
)
$
(3,988
)
Supplemental disclosure of non-cash
financing transactions:
Conversion of exchangeable notes to common
stock
$
—
$
(2,794
)
Capital expenditures accrued but not yet paid as of June 29,
2019 were $1,077.
VISHAY PRECISION GROUP, INC.
Reconciliation of Consolidated Adjusted
Operating Margin
(Unaudited - In thousands)
Fiscal quarter ended
Six fiscal months
ended
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Operating income
$
8,102
$
11,315
$
20,705
$
19,501
Operating margin
11.4
%
15.2
%
14.0
%
13.2
%
Reconciling items
affecting operating margin
Executive severance costs
611
—
611
—
Restructuring costs
—
61
—
61
Adjusted operating income
$
8,713
$
11,376
$
21,316
$
19,562
Adjusted operating margin
12.3
%
15.3
%
14.5
%
13.3
%
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 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Net earnings attributable to VPG
stockholders
$
5,565
$
7,693
$
13,808
$
12,681
Reconciling items
affecting operating margin
Executive severance costs
611
—
611
—
Restructuring costs
—
61
—
61
Less reconciling
items affecting income tax expense
Tax effect of reconciling items
—
9
—
9
Adjusted net earnings attributable to VPG
stockholders
$
6,176
$
7,745
$
14,419
$
12,733
Adjusted net earnings per diluted
share
$
0.45
$
0.57
$
1.06
$
0.94
Weighted average shares outstanding -
diluted
13,595
13,513
13,579
13,511
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For Investors ICR, Inc. Michael Callahan, 203-682-8311
michael.callahan@icrinc.com
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