Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of
precision sensors and sensor-based systems, today announced its
results for its fiscal 2020 first quarter ended March 28,
2020.
First Quarter Highlights:
- Revenues of $67.7 million declined 11.5% from a year ago.
- Operating margin was 6.9% as compared to 16.5% reported a year
ago.
- Adjusted operating margin* was 7.8%, as compared to 16.5%
reported a year ago.
- Diluted earnings per share of $0.24 as compared to $0.61
reported a year ago.
- Adjusted diluted earnings per share* of $0.29, as compared to
$0.61 reported a year ago.
- Cash from operating activities was $6.3 million with adjusted
free cash flow* of $3.0 million
- Book-to-bill ratio was 1.08 as compared to 0.92 from a year
ago.
Ziv Shoshani, Chief Executive Officer of VPG, commented, "We are
satisfied with our financial and operating performance in the first
quarter given the extraordinary circumstances that have unfolded
around the world due to the COVID-19 pandemic. Our employee
teams across our businesses responded quickly and diligently to
fast-changing operating conditions and restrictions to serve our
customers."
Mr. Shoshani said: "While the global economic outlook for the
second quarter is turbulent, our broad and diverse set of
end-markets that we serve provides us with a degree of resilience
in our revenue streams, which was evident by the year-over-year
growth in orders and the positive book-to-bill in the first
quarter. As we continue to take steps to ensure the health
and safety of our employees and customers, our focus on our key
long-term growth and cost-savings initiatives is unchanged. While
we expect that our financial results in the second quarter of 2020
will be negatively impacted by the pandemic, our strong balance
sheet and cash from operations supports our confidence in our
ability to navigate successfully through these challenging
times."
First Quarter Financial Trends:
The Company's first fiscal quarter 2020 net earnings
attributable to VPG stockholders was $3.3 million, or $0.24 per
diluted share, compared to $8.2 million, or $0.61 per diluted
share, in the first fiscal quarter of 2019. Foreign currency
exchange rates for the first quarter of 2020 increased net income
by $0.4 million, or $0.03 per diluted share, relative to the prior
year period.
The first fiscal quarter 2020 adjusted net earnings*
attributable to VPG stockholders was $4.0 million, or $0.29 per
diluted share, compared to $8.2 million, or $0.61 per diluted share
in the first fiscal quarter of 2019.
Segments
Foil Technology Products segment revenues decreased 17.7% to
$30.5 million in the first fiscal quarter of 2020, down from $37.0
million in the first fiscal quarter of 2019; sequential revenue
increased 2.8% compared to $29.6 million in the fourth quarter of
2020. The year-over-year decrease in revenues was primarily
attributable to precision resistor products in all regions for
distribution, OEM and EMS customers, primarily in the test and
measurement end market. The decrease was also reflected in the
Americas and Asia for end customers in the avionics, military and
space end market for the Pacific Instrument product
line. The sequential increase in revenue was
attributable to precision resistor products in all regions for
distribution and EMS customers, primarily in the avionics, military
and space, as well as test and measurement end markets.
Gross profit margin for the Foil Technology Products segment was
36.7% for the first fiscal quarter of 2020, a decrease compared to
44.7% in the first fiscal quarter of 2019, and an increase compared
to 34.9% in the fourth fiscal quarter of 2019. The year-over-year
decrease in gross profit margin was primarily due to lower volume,
negative impact of foreign exchange rates and inventory
reductions. The sequential increase in gross profit
margin was primarily due to higher volume.
Force Sensors segment revenues declined 12.2% to $14.7 million
in the first fiscal quarter of 2020, compared to $16.7 million in
the first fiscal quarter of 2019; sequential revenue declined 2.4%,
compared to $15.1 million in the fourth quarter of 2019. The
year-over-year decrease in revenues was mainly attributable to
distribution and OEM customers in the industrial weighing market,
mainly in the Americas and in Europe. The sequential decrease
in revenue was mainly attributable to distribution customers in the
industrial weighing market, mainly in the Americas and Asia.
Gross profit margin for the Force Sensors segment was 24.3% for
the first fiscal quarter of 2020, a decrease compared to 30.2% in
the first fiscal quarter of 2019, and was flat with 24.2% in the
fourth fiscal quarter of 2019. The year-over-year decrease in gross
profit margin was primarily due to lower volume, a reduction in
export grants, negative impact of foreign exchange, and inventory
reductions, which was partially offset by cost savings initiatives.
Sequentially, gross profit margin was flat as the favorable impact
from cost savings initiatives offset lower volume and a reduction
in export grants.
Weighing and Control Systems segment revenues declined 1.0% to
$22.5 million in the first fiscal quarter of 2020, down from $22.7
million in the first fiscal quarter of 2019; sequential revenue
decreased 7.9% from $24.4 million in the fourth fiscal quarter of
2019. The decrease in revenues year-over-year was primarily
attributable to our KELK steel product line in the Americas and in
Europe, onboard weighing product line for the transportation end
market in Europe, and the European process weighing product line,
mostly offset with the additional revenues of Dynamic Systems Inc.
("DSI"), which was acquired in November 2019. The sequential
decrease in revenue was primarily attributable to a reduction in
the steel product line in the Americas and in Asia for end user
customers.
The first fiscal quarter 2020 gross profit margin for the
Weighing and Control Systems segment was 45.7% (48.0% excluding the
purchasing accounting adjustments of $0.5 million related to the
DSI acquisition), compared to 50.2% from the first fiscal quarter
of 2019, and an increase compared to 41.6% (46.8% excluding the
purchase accounting adjustment of $1.3 million related to the DSI
acquisition) from the fourth fiscal quarter of 2019. The
year-over-year decrease in adjusted gross profit margin was
primarily due to unfavorable product mix. The
sequential adjusted gross profit margin increase was primarily due
to manufacturing efficiencies which were partially offset by lower
volume.
Impacts From the Global COVID-19 Pandemic:
As the COVID-19 pandemic began to unfold around the world, the
Company took measures to protect its employees and customers.
Those measures included suspending business travel, enabling
certain employees to work from home, implementing workplace
distancing, and adjusting work shifts to minimize employees’
contact with other employees. While the majority of the Company’s
operations have been able to maintain full or partial operations,
two of the Company’s Force Sensors operations were required per
government orders in their jurisdictions to shut down completely or
to operate with minimal staffs. The Company’s manufacturing
facility in China was closed for approximately three weeks in
January and February of 2020, and the Company’s manufacturing
facility in India was essentially shut down since late March 2020
as part of a government COVID-19 mitigation order. The
Company has received approval from the Indian government to resume
partial operations on May 4, 2020 and is expecting the Indian
government to lift all operating restrictions on May 17,
2020. Although the impact of these restrictions on the
Company’s financial results was minimal in the first quarter, the
Company expects the reduction in its India operations to reduce
Force Sensors revenues by $5 million to $7 million in the second
quarter, and to result in an impact of approximately $3.5 million
to operating profit, assuming the full reopening of its India
manufacturing facility on May 17, 2020. The Company currently
expects to recover the majority of the revenue shortfall in
subsequent quarters once restrictions are lifted. If the operating
restrictions on our Indian facility are not lifted on May 17, 2020
as we expect, we anticipate an additional negative impact on our
results of operation.
As of May 5, 2020, all of the Company’s facilities, with the
exception of the facility in India, are operating fully.
Nonetheless, given the impacts to date and the ongoing uncertainty
concerning the magnitude of the impact and duration of the COVID-19
pandemic, the ongoing economic disruption may continue to adversely
affect the Company’s business and financial results.
Near-Term Outlook
“Given the effects of the COVID-19 pandemic, at constant first
fiscal quarter 2020 exchange rates, we expect net revenues in the
range of $56 million to $62 million for the second fiscal quarter
of 2020,” 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 first fiscal
quarter of 2020 is defined as the amount of cash generated from
operating activities ($6.3 million), in excess of our capital
expenditures ($3.3 million), net of proceeds, if any, from the sale
of assets ($0.0 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 (May 5) 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 8633183, 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 10141729.
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; our efforts
and efforts by governmental authorities to mitigate the COVID-19
pandemic, such as travel bans, shelter in place orders and business
closures and resource allocations, manufacturing and supply chains;
the Company’s status as a “critical”, “essential” or
“life-sustaining” business in light of COVID-19 business closure
laws, orders and guidance being challenged by a governmental body
or other applicable authority; the Company’s ability to execute its
business continuity, operational and budget plans in light of the
COVID-19 outbreak; 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,
2019. 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 |
|
March 28, 2020 |
|
March 30, 2019 |
Net revenues |
$ |
67,696 |
|
|
$ |
76,525 |
|
Costs of products sold |
42,631 |
|
|
43,474 |
|
Gross profit |
25,065 |
|
|
33,051 |
|
Gross profit margin |
37.0 |
% |
|
43.2 |
% |
|
|
|
|
Selling, general, and
administrative expenses |
20,291 |
|
|
20,448 |
|
Restructuring costs |
130 |
|
|
— |
|
Operating income |
4,644 |
|
|
12,603 |
|
Operating margin |
6.9 |
% |
|
16.5 |
% |
|
|
|
|
Other income (expense): |
|
|
|
Interest expense |
(461 |
) |
|
(388 |
) |
Other |
683 |
|
|
(772 |
) |
Other income (expense) |
222 |
|
|
(1,160 |
) |
|
|
|
|
Income before taxes |
4,866 |
|
|
11,443 |
|
|
|
|
|
Income tax expense |
1,574 |
|
|
3,117 |
|
|
|
|
|
Net earnings |
3,292 |
|
|
8,326 |
|
Less: net (loss) earnings attributable to noncontrolling
interests |
(20 |
) |
|
83 |
|
Net earnings attributable to
VPG stockholders |
$ |
3,312 |
|
|
$ |
8,243 |
|
|
|
|
|
Basic earnings per share
attributable to VPG stockholders |
$ |
0.24 |
|
|
$ |
0.61 |
|
Diluted earnings per share
attributable to VPG stockholders |
$ |
0.24 |
|
|
$ |
0.61 |
|
|
|
|
|
Weighted average shares
outstanding - basic |
13,541 |
|
|
13,495 |
|
Weighted average shares
outstanding - diluted |
13,586 |
|
|
13,563 |
|
|
|
|
|
|
|
VISHAY PRECISION GROUP, INC. |
|
|
|
Consolidated Condensed Balance Sheets |
|
|
|
(In thousands) |
|
|
|
|
March 28, 2020 |
|
December 31, 2019 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
82,731 |
|
|
$ |
86,910 |
|
Accounts receivable, net |
46,958 |
|
|
43,198 |
|
Inventories: |
|
|
|
Raw materials |
25,712 |
|
|
21,701 |
|
Work in process |
19,062 |
|
|
23,128 |
|
Finished goods |
19,198 |
|
|
22,066 |
|
Inventories, net |
63,972 |
|
|
66,895 |
|
|
|
|
|
Prepaid expenses and other current assets |
16,616 |
|
|
15,558 |
|
Total current assets |
210,277 |
|
|
212,561 |
|
|
|
|
|
Property and equipment, at
cost: |
|
|
|
Land |
4,172 |
|
|
4,243 |
|
Buildings and improvements |
52,136 |
|
|
52,708 |
|
Machinery and equipment |
112,204 |
|
|
111,492 |
|
Software |
9,486 |
|
|
9,384 |
|
Construction in progress |
3,955 |
|
|
2,485 |
|
Accumulated depreciation |
(120,744 |
) |
|
(119,042 |
) |
Property and equipment,
net |
61,209 |
|
|
61,270 |
|
|
|
|
|
Goodwill |
34,511 |
|
|
35,018 |
|
|
|
|
|
Intangible assets, net |
32,937 |
|
|
34,198 |
|
|
|
|
|
Other assets |
25,867 |
|
|
27,366 |
|
Total assets |
$ |
364,801 |
|
|
$ |
370,413 |
|
|
|
|
|
|
|
|
|
VISHAY PRECISION GROUP, INC. |
|
|
|
Consolidated Condensed Balance Sheets |
|
|
|
(In thousands) |
|
|
|
|
March 28, 2020 |
|
December 31, 2019 |
|
(Unaudited) |
|
|
Liabilities and
equity |
|
|
|
Current liabilities: |
|
|
|
Trade accounts payable |
$ |
7,937 |
|
|
$ |
8,869 |
|
Payroll and related expenses |
17,096 |
|
|
16,312 |
|
Other accrued expenses |
20,687 |
|
|
18,953 |
|
Income taxes |
1,631 |
|
|
261 |
|
Current portion of long-term debt |
115 |
|
|
44,516 |
|
Total current liabilities |
47,466 |
|
|
88,911 |
|
|
|
|
|
Long-term debt, less current
portion |
40,599 |
|
|
17 |
|
Deferred income taxes |
3,478 |
|
|
3,478 |
|
Other liabilities |
18,631 |
|
|
20,586 |
|
Accrued pension and other
postretirement costs |
15,520 |
|
|
15,669 |
|
Total liabilities |
125,694 |
|
|
128,661 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Equity: |
|
|
|
Common stock |
1,316 |
|
|
1,312 |
|
Class B convertible common stock |
103 |
|
|
103 |
|
Treasury stock |
(8,765 |
) |
|
(8,765 |
) |
Capital in excess of par value |
196,709 |
|
|
197,125 |
|
Retained earnings |
92,600 |
|
|
89,288 |
|
Accumulated other comprehensive loss |
(43,203 |
) |
|
(37,703 |
) |
Total Vishay Precision Group,
Inc. stockholders' equity |
238,760 |
|
|
241,360 |
|
Noncontrolling interests |
347 |
|
|
392 |
|
Total equity |
239,107 |
|
|
241,752 |
|
Total liabilities and
equity |
$ |
364,801 |
|
|
$ |
370,413 |
|
|
|
|
|
|
|
|
|
VISHAY PRECISION GROUP, INC. |
|
|
|
Consolidated Condensed Statements of Cash Flows |
|
|
|
(Unaudited - In thousands) |
|
|
|
|
|
|
|
|
Three Fiscal Months Ended |
|
March 28, 2020 |
|
March 30, 2019 |
Operating
activities |
|
|
|
Net earnings |
$ |
3,292 |
|
|
$ |
8,326 |
|
Adjustments to reconcile net
earnings to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
3,199 |
|
|
2,854 |
|
Loss from extinguishment of debt |
30 |
|
|
— |
|
(Gain) loss on disposal of property and equipment |
(3 |
) |
|
1 |
|
Share-based compensation expense |
379 |
|
|
514 |
|
Inventory write-offs for obsolescence |
631 |
|
|
489 |
|
Deferred income taxes |
(233 |
) |
|
313 |
|
Other |
(1,137 |
) |
|
(2,367 |
) |
Net changes in operating
assets and liabilities: |
|
|
|
Accounts receivable, net |
(4,956 |
) |
|
850 |
|
Inventories, net |
1,449 |
|
|
(1,507 |
) |
Prepaid expenses and other current assets |
(1,380 |
) |
|
(3,484 |
) |
Trade accounts payable |
(617 |
) |
|
628 |
|
Other current liabilities |
5,642 |
|
|
1,488 |
|
Net cash provided by operating
activities |
6,296 |
|
|
8,105 |
|
|
|
|
|
Investing
activities |
|
|
|
Capital expenditures |
(3,344 |
) |
|
(3,334 |
) |
Proceeds from sale of property
and equipment |
15 |
|
|
29 |
|
Net cash used in investing
activities |
(3,329 |
) |
|
(3,305 |
) |
|
|
|
|
Financing
activities |
|
|
|
Principal payments on
long-term debt |
(33 |
) |
|
(1,155 |
) |
Repayments of principal upon
termination of long-term borrowings |
(3,352 |
) |
|
— |
|
Debt issuance costs |
(402 |
) |
|
— |
|
Distributions to
noncontrolling interests |
(25 |
) |
|
(34 |
) |
Payments of employee taxes on
certain share-based arrangements |
(813 |
) |
|
(795 |
) |
Net cash used in financing
activities |
(4,625 |
) |
|
(1,984 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
(2,521 |
) |
|
169 |
|
Increase in cash and cash
equivalents |
(4,179 |
) |
|
2,985 |
|
|
|
|
|
Cash and cash equivalents at
beginning of period |
86,910 |
|
|
90,159 |
|
Cash and cash equivalents at
end of period |
$ |
82,731 |
|
|
$ |
93,144 |
|
|
|
|
|
Supplemental
disclosure of investing transactions: |
|
|
|
Capital expenditures
purchased |
$ |
(3,178 |
) |
|
$ |
(1,986 |
) |
Supplemental
disclosure of financing transactions: |
|
|
|
Non-cash extinguishment of
long-term debt facility (see Note 7) |
$ |
(7,020 |
) |
|
$ |
— |
|
Non-cash refinancing of
revolving facility (see Note 7) |
$ |
7,020 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Capital expenditures accrued but not yet paid as
of March 28, 2020 were $1,016.
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
Operating Income |
|
Net Earnings Attributable to VPG Stockholders |
|
Diluted Earnings Per share |
Three fiscal months
ended |
March 28, 2020 |
|
March 30, 2019 |
|
March 28, 2020 |
|
March 30, 2019 |
|
March 28, 2020 |
|
March 30, 2019 |
|
March 28, 2020 |
|
March 30, 2019 |
As reported - GAAP |
$ |
25,065 |
|
|
$ |
33,051 |
|
|
$ |
4,644 |
|
|
$ |
12,603 |
|
|
$ |
3,312 |
|
|
$ |
8,243 |
|
|
$ |
0.24 |
|
|
$ |
0.61 |
|
As reported - GAAP
Margins |
37.0 |
% |
|
43.2 |
% |
|
6.9 |
% |
|
16.5 |
% |
|
|
|
|
|
|
|
|
Acquisition purchase
accounting adjustments |
515 |
|
|
— |
|
|
515 |
|
|
— |
|
|
515 |
|
|
— |
|
|
0.04 |
|
|
— |
|
Restructuring costs |
— |
|
|
— |
|
|
130 |
|
|
— |
|
|
130 |
|
|
— |
|
|
0.01 |
|
|
— |
|
Less: Tax effect of
reconciling items and discrete tax items |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7 |
|
|
— |
|
|
— |
|
|
— |
|
As Adjusted - Non GAAP |
$ |
25,580 |
|
|
$ |
33,051 |
|
|
$ |
5,289 |
|
|
$ |
12,603 |
|
|
$ |
3,950 |
|
|
$ |
8,243 |
|
|
0.29 |
|
|
$ |
0.61 |
|
As Adjusted - Non GAAP
Margins |
37.8 |
% |
|
43.2 |
% |
|
7.8 |
% |
|
16.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Steve Cantor
Vishay Precision Group, Inc.
781-222-3516
steve.cantor@vpgsensors.com
Vishay Precision (NYSE:VPG)
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