Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of
precision sensors and sensors-based systems, today announced its
results for its fiscal 2019 fourth quarter and twelve fiscal months
ended December 31, 2019.
Fourth Quarter Highlights:
- Revenues of $69.1 million declined 10.2% from a year ago
- Earnings per diluted share of $0.28 per diluted share, compared
to $0.25 reported a year ago
- Adjusted diluted EPS* was $0.27 compared $0.54 reported a year
ago
- Operating margin was 2.5%, as compared to 9.2% reported a year
ago
- Adjusted operating margin* was 7.5%, as compared to 12.9%
reported a year ago
- Cash from operating activities was $6.3 million with adjusted
free cash flow* of $4.1 million
- Book to bill ratio was 1.15 as compared to 0.93 from a year
ago.
2019 Full Year Highlights:
- Revenues of $284.0 million declined 5.3% year-over-year
- Earnings per diluted share of $1.63 compared to $1.75 reported
last year
- Adjusted diluted EPS* was $1.69 compared to prior year
$2.05
- Operating margin was 10.1%, as compared to 12.4% reported last
year
- Adjusted operating margin* was 11.7% as compared to 13.5%
reported last year
- Cash from operating activities was $30.9 million with adjusted
free cash flow* of $20.4 million
Ziv Shoshani, Chief Executive Officer of VPG, commented, "We
achieved sales at the high end of our expectations in fourth
quarter, which capped a year that began with a record first quarter
and then moderated through the year as trends in many of our end
markets slowed. We recorded strong fourth-quarter orders of $79.8
million and a book-to-bill of 1.15, reflecting order strength in
all three segments.
"Our operating results for the fourth quarter of 2019, compared
to the third quarter of 2019, were primarily impacted by inventory
reductions and the negative impact of foreign exchange rates, which
was partially offset by the higher sales volume. In addition, we
recorded $1.7 million of purchase accounting adjustments and other
costs related to the acquisition of Dynamic Systems Inc., or DSI.
We also incurred a restructuring charge of $1.7 million primarily
related to the closing and downsizing of facilities as part of
manufacturing transitions of our force sensor products to
facilities in India and China, which marked key milestones in our
ongoing strategic initiatives to align and consolidate our
manufacturing footprint."
Mr. Shoshani said: "We look forward to what lies ahead for VPG,
as we reap the benefit of our growth and cost initiatives. The
acquisition of DSI, which we completed in November of 2019, is
already showing positive results and demonstrates the kind of
value-creating opportunities we believe will add to the core
strengths of VPG."
The Company's fourth fiscal quarter 2019 net earnings
attributable to VPG stockholders were $3.9 million, or $0.28 per
diluted share, compared to $3.4 million, or $0.25 per diluted
share, in the fourth fiscal quarter of 2018. Foreign currency
exchange rates for the fourth quarter of 2019 decreased net income
by $0.9 million, or $0.07 per diluted share, relative to the prior
year period. Included in the fourth fiscal quarter 2019 were tax
benefits of approximately $3.4 million primarily related to the
acquisition of DSI and other discrete tax items.
In the twelve fiscal months ended December 31, 2019, net
earnings attributable to VPG stockholders were $22.2 million, or
$1.63 per diluted share, compared to $23.6 million, or $1.75 per
diluted share, in the twelve fiscal months ended December 31, 2018.
Foreign currency exchange rates for the twelve fiscal months ended
December 31, 2019 decreased net income by $1.3 million or $0.10 per
diluted share relative to the prior year period. Included in the
twelve fiscal months ended December 31, 2019 were tax benefits of
approximately $3.4 million primarily related to the acquisition of
DSI and other discrete tax items.
The fourth fiscal quarter 2019 adjusted net earnings*
attributable to VPG stockholders were $3.7 million, or $0.27 per
diluted share, compared to adjusted net earnings* attributable to
VPG stockholders of $7.3 million, or $0.54 per diluted share, for
the comparable prior year period.
In the twelve fiscal months ended December 31, 2019, adjusted
net earnings* attributable to VPG stockholders were $23.0 million,
or $1.69 per diluted share, compared to adjusted net earnings*
attributable to VPG stockholders of $27.8 million, or $2.05 per
diluted share, for the comparable prior year period.
Segments
Foil Technology Products segment revenues declined 19.3% to
$29.6 million in the fourth fiscal quarter of 2019 from $36.7
million in the fourth fiscal quarter of 2018, and sequentially
decreased 7.7% from $32.1 million in the third quarter of 2019. The
year-over-year decline in revenues was primarily attributable to
precision resistor products in all regions for distribution, OEM
and EMS customers, primarily in the test and measurement and
avionics, military and space markets. The sequential decline in
revenue was attributable to precision resistor products in the test
and measurement market.
Gross profit margin for the Foil Technology Products segment of
34.9% for the fourth fiscal quarter of 2019, was lower compared to
42.0% in the fourth fiscal quarter of 2018, and a decrease compared
to 37.3% in the third fiscal quarter of 2019. The year-over-year
decline in gross profit margin was primarily due to lower volume
and the negative impact of foreign exchange rates. Sequentially,
gross profit margin decreased primarily due to lower volume,
product mix, and one-time inventory reductions.
Force Sensors segment revenues decreased 11.4% to $15.1 million
in the fourth fiscal quarter of 2019, from $17.0 million in the
fourth fiscal quarter of 2018. Sequentially, revenue decreased
7.1%, from $16.2 million in the third quarter of 2019. The
year-over-year decrease in revenues was mainly attributable to
distribution customers in the precision weighing market across all
regions. The sequential decrease in revenue was mainly attributable
to OEM customers in the precision weighing and force measurement
markets in the Americas and Europe.
Gross profit margin for the Force Sensors segment was 24.2% for
the fourth fiscal quarter of 2019, a decrease compared to 26.6% in
the fourth fiscal quarter of 2018, and a decrease compared to 30.4%
in the third fiscal quarter of 2019. The year-over-year decrease in
gross profit margin was primarily due to lower volume and one-time
inventory reductions, which was partially offset by higher export
grants. Sequentially, gross profit margin declined due to lower
volume and a reduction in inventory.
Weighing and Control Systems segment revenues grew by 5.2% to
$24.4 million in the fourth fiscal quarter of 2019, up from $23.2
million in the fourth fiscal quarter of 2018. Sequentially, revenue
increased 28.1% from $19.1 million in the third fiscal quarter of
2019. The increase in revenues year-over-year was primarily
attributable to the addition of DSI in November 2019, which offset
lower sales of steel, process weighing, and U.S.-based onboard
weighing products. The sequential increase in revenues was
primarily attributable to the addition of DSI, with an increase in
our European process weighing product line along with an increase
in the steel product line.
Gross profit margin for the Weighing and Control Systems segment
was 41.6% (46.8% excluding the purchase accounting adjustments of
$1.3 million related to the DSI acquisition) for the fourth fiscal
quarter of 2019, compared to 46.8% from the fourth fiscal quarter
of 2018, and compared to 46.6% from the third fiscal quarter of
2019. The year-over-year adjusted gross profit margin is similar
due to higher volume attributable to the addition of DSI. The
sequential increase in adjusted gross profit margin was primarily
due to higher volume attributable to the DSI acquisition.
Near-Term Outlook
“At constant fourth fiscal quarter 2019 exchange rates, we
expect net revenues in the range of $63 million to $70 million for
the first fiscal quarter of 2020, which reflect the portions of our
customers' project-driven and longer-lead-time orders that are
expected to ship in the quarter. This projected revenue range
excludes any potential impact of the coronavirus outbreak on our
business, which we are continuing to monitor closely,” concluded
Mr. Shoshani.
*Use of Non-GAAP Financial Information
We define “adjusted gross profit margin" as gross profit margin
before purchase accounting adjustments related to the Dynamic
Systems, Inc. acquisition. We define "adjusted operating margin" as
operating margin before purchase accounting adjustments,
acquisition costs, restructuring costs, executive severance costs,
and impairment of goodwill and indefinite-lived intangibles. We
define "adjusted net earnings” and "adjusted net earnings per
share" as net earnings attributable to VPG stockholders before
purchase accounting adjustments, acquisition costs, restructuring
costs, executive severance costs, impairment of goodwill and
indefinite-lived intangibles, pension settlement, and associated
tax effects. "Adjusted free cash flow" for the fourth fiscal
quarter of 2019 is defined as the amount of cash generated from
operating activities ($6.3 million), in excess of our capital
expenditures ($2.6 million), net of proceeds, if any, from the sale
of assets ($0.4 million). "Adjusted free cash flow" for the fiscal
year of 2019 is defined as the amount of cash generated from
operating activities ($30.9 million) in excess of our capital
expenditures ($11.2 million), net of proceeds, if any, from the
sale of assets ($0.6 million). Management believes that these
non-GAAP measures are useful to investors because each presents
what management views as our core operating performance for the
relevant period. The adjustments to the applicable GAAP measures
relate to occurrences or events that are outside of our core
operations, and management believes that the use of these non-GAAP
measures provides a consistent basis to evaluate our operating
profitability and performance trends across comparable periods.
These reconciling items are indicated on the accompanying
reconciliation schedules and are more fully described in VPG’s
financial statements presented in our Annual Report on Form 10-K
and its Quarterly Reports on Forms 10-Q.
Conference Call and Webcast
A conference call will be held today (February 19) 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 4903504, 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 10137960.
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
(including Dynamic Systems, Inc.); 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, health (including the COVID-19 "coronavirus")
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 Statements of Operations
(Unaudited - In thousands, except per
share amounts)
Fiscal quarter ended
December 31, 2019
December 31, 2018
Net revenues
$
69,142
$
76,982
Costs of products sold
44,975
46,166
Gross profit
24,167
30,816
Gross profit margin
35.0
%
40.0
%
Selling, general, and administrative
expenses
20,221
20,905
Acquisition costs
443
—
Impairment of goodwill and
indefinite-lived intangibles
—
2,820
Restructuring costs
1,746
—
Operating income
1,757
7,091
Operating margin
2.5
%
9.2
%
Other income (expense):
Interest expense
(436
)
(405
)
Other
(316
)
(403
)
Other (expense) income - net
(752
)
(808
)
Income before taxes
1,005
6,283
Income tax (benefit) expense
(2,854
)
2,846
Net earnings
3,859
3,437
Less: net earnings (loss) attributable to
noncontrolling interests
(12
)
19
Net earnings attributable to VPG
stockholders
$
3,871
$
3,418
Basic earnings per share attributable to
VPG stockholders
$
0.29
$
0.25
Diluted earnings per share attributable to
VPG stockholders
$
0.28
$
0.25
Weighted average shares outstanding -
basic
13,523
13,474
Weighted average shares outstanding -
diluted
13,623
13,595
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Operations
(Unaudited - In thousands, except per
share amounts)
Years ended
December 31, 2019
December 31, 2018
Net revenues
$
283,958
$
299,794
Costs of products sold
172,341
178,527
Gross profit
111,617
121,267
Gross profit margin
39.3
%
40.5
%
Selling, general, and administrative
expenses
79,622
80,935
Acquisition costs
443
—
Impairment of goodwill and
indefinite-lived intangibles
—
2,820
Executive severance costs
611
—
Restructuring costs
2,293
289
Operating income
28,648
37,223
Operating margin
10.1
%
12.4
%
Other income (expense):
Interest expense
(1,507
)
(1,738
)
Other
(701
)
(1,496
)
Other (expense) income - net
(2,208
)
(3,234
)
Income before taxes
26,440
33,989
Income tax expense
4,145
10,344
Net earnings
22,295
23,645
Less: net earnings (loss) attributable to
noncontrolling interests
107
(1
)
Net earnings attributable to VPG
stockholders
$
22,188
$
23,646
Basic earnings per share attributable to
VPG stockholders
$
1.64
$
1.76
Diluted earnings per share attributable to
VPG stockholders
$
1.63
$
1.75
Weighted average shares outstanding -
basic
13,515
13,439
Weighted average shares outstanding -
diluted
13,597
13,535
VISHAY PRECISION GROUP, INC.
Consolidated Balance Sheets
(In thousands, except per share
amounts)
December 31, 2019
December 31, 2018
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
86,910
$
90,159
Accounts receivable, net of allowances for
doubtful accounts
41,704
53,156
Inventories:
Raw materials
21,701
18,052
Work in process
23,128
22,007
Finished goods
22,066
22,182
Inventories, net
66,895
62,241
Prepaid expenses and other current
assets
16,859
9,314
Total current assets
212,368
214,870
Property and equipment, at cost:
Land
4,243
3,390
Buildings and improvements
52,708
51,055
Machinery and equipment
111,492
105,840
Software
9,384
8,532
Construction in progress
2,485
2,157
Accumulated depreciation
(119,042
)
(111,555
)
Property and equipment, net
61,270
59,419
Goodwill
35,018
16,141
Intangible assets, net
34,198
17,656
Other assets
27,366
18,297
Total assets
$
370,220
$
326,383
VISHAY PRECISION GROUP, INC.
Consolidated Balance Sheets
(In thousands, except per share
amounts)
December 31, 2019
December 31, 2018
(Unaudited)
Liabilities and equity
Current liabilities:
Trade accounts payable
$
8,676
$
11,461
Payroll and related expenses
16,312
17,757
Other accrued expenses
18,953
17,031
Income taxes
261
3,879
Current portion of long-term debt
44,516
4,654
Total current liabilities
88,718
54,782
Long-term debt, less current portion
17
22,421
Deferred income taxes
3,478
2,200
Other liabilities
20,586
13,545
Accrued pension and other postretirement
costs
15,669
14,982
Total liabilities
128,468
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
197,125
196,666
Retained earnings
89,288
66,569
Accumulated other comprehensive loss
(37,703
)
(37,465
)
Total Vishay Precision Group, Inc.
stockholders' equity
241,360
218,415
Noncontrolling interests
392
38
Total equity
241,752
218,453
Total liabilities and equity
$
370,220
$
326,383
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Cash Flows
(Unaudited - In thousands)
Years ended
December 31, 2019
December 31, 2018
Operating activities
Net earnings
$
22,295
$
23,645
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Impairment of goodwill and
indefinite-lived intangibles
—
2,820
Depreciation and amortization
11,795
10,631
(Gain) loss on disposal of property and
equipment
34
(120
)
Share-based compensation expense
1,336
1,799
Inventory write-offs for obsolescence
2,588
1,876
Deferred income taxes
(2,724
)
1,011
Other
(301
)
819
Net changes in operating assets and
liabilities
Accounts receivable
12,863
(7,757
)
Inventories
(619
)
(5,095
)
Prepaid expenses and other current
assets
(6,388
)
588
Trade accounts payable
(2,466
)
(819
)
Other current liabilities
(7,481
)
5,981
Net cash provided by operating
activities
30,932
35,379
Investing activities
Capital expenditures
(11,196
)
(14,521
)
Proceeds from sale of property and
equipment
615
132
Purchase of business
(40,481
)
—
Net cash used in investing activities
(51,062
)
(14,389
)
Financing activities
Principal payments on long-term debt
(4,618
)
(5,603
)
Proceeds from revolving facility
22,000
22,000
Payments on revolving facility
—
(19,000
)
Distributions to noncontrolling
interests
(52
)
(109
)
Payments of employee taxes on certain
share-based arrangements
(854
)
(801
)
Net cash provided by (used in) financing
activities
16,476
(3,513
)
Effect of exchange rate changes on cash
and cash equivalents
405
(1,610
)
(Decrease) increase in cash and cash
equivalents
(3,249
)
15,867
Cash and cash equivalents at beginning of
year
90,159
74,292
Cash and cash equivalents at end of
year
$
86,910
$
90,159
Supplemental disclosure of investing
transactions:
Capital expenditures purchased
$
(10,529
)
$
(13,239
)
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 December 31, 2019 were $1,183
VISHAY PRECISION GROUP, INC.
Reconciliation of Consolidated Adjusted
Gross Profit, Operating Income, Net Earnings Attributable to VPG
Stockholders and Diluted Earnings Per Share
(Unaudited - In thousands except per share
data)
Gross Profit
Operating Income
Net Earnings Attributable to
VPG Stockholders
Diluted Earnings Per
share
Fiscal Year Ended December 31,
2019
2018
2019
2018
2019
2018
2019
2018
As reported - GAAP
$
111,617
$
121,267
$
28,648
$
37,223
$
22,188
$
23,646
$
1.63
$
1.75
Acquisition purchase accounting
adjustments
1,254
—
1,254
—
1,254
—
0.09
—
Acquisition costs
443
—
443
—
0.03
—
Executive Severance costs
611
—
611
—
0.04
—
Impairment of goodwill and
indefinite-lived intangibles
—
2,820
—
2,820
—
0.21
Restructuring costs
2,293
289
2,293
289
0.17
0.02
UK pension settlement
—
673
—
0.05
Less: Tax effect of reconciling items and
discrete tax items
3,743
(333
)
0.27
(0.02
)
As Adjusted - Non GAAP
$
112,871
$
121,267
$
33,249
$
40,332
$
23,046
$
27,761
$
1.69
$
2.05
As Adjusted - Non GAAP Margins
39.7
%
40.5
%
11.7
%
13.5
%
Gross Profit
Operating Income
Net Earnings Attributable to
VPG Stockholders
Diluted Earnings Per
share
Fiscal Quarter Ended December
31,
2019
2018
2019
2018
2019
2018
2019
2018
As reported - GAAP
$
24,167
$
30,816
$
1,757
$
7,091
$
3,871
$
3,418
$
0.28
$
0.25
Acquisition purchase accounting
adjustments
1,254
—
1,254
—
1,254
—
0.09
—
Acquisition costs
443
—
443
—
0.03
—
Impairment of goodwill and
indefinite-lived intangibles
—
2,820
—
2,820
—
0.21
Restructuring costs
1,746
—
1,746
—
0.13
—
UK pension settlement
673
—
0.05
Less: Tax effect of reconciling items and
discrete tax items
3,663
(377
)
0.26
(0.03
)
As Adjusted - Non GAAP
$
25,421
$
30,816
$
5,200
$
9,911
$
3,651
$
7,288
$
0.27
$
0.54
As Adjusted - Non GAAP Margins
36.8
%
40.0
%
7.5
%
12.9
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200219005247/en/
Steve Cantor Vishay Precision Group, Inc. 781-222-3516
steve.cantor@vpgsensors.com
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