Buy Us a Cup of Coffee

Malvern-based VPG Reports Sales of $67.4 Million for Fiscal 2019 Third Quarter

Malvern-based VPG Reports Sales of $67.4 Million for Fiscal 2019 Third Quarter

MALVERN, PA — Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and sensor-based systems, announced its results for its fiscal 2019 third quarter ended September 28, 2019.

Third Quarter Highlights:

  • Sales of $67.4 million.
  • Gross profit margin of 38.3%.
  • Operating margin of 9.2%, adjusted operating margin* of 10.0%.
  • Net earnings per diluted share of $0.33, adjusted net earnings per diluted share* of $0.37.
  • Cash from operations of $7.6 million with free cash flow* of $4.8 million.
  • Acquisition of Dynamic Systems Inc. completed on November 1, 2019.

Ziv Shoshani, Chief Executive Officer of VPG, commented, “Our third-quarter results reflected slower global industrial demand trends reflecting in part trade uncertainty and destocking by customers. Despite the lower revenues, VPG delivered adjusted earnings per diluted share of $0.37 and solid free cash flow. We continue to execute on our key strategic initiatives which position us for future growth.”

Acquisition of Dynamic Systems Inc.:

On November 1, 2019, VPG completed the acquisition of New York-based Dynamic Systems Inc. (“DSI”), a specialized provider of dynamic thermal-mechanical test and simulation systems used to develop new metal alloys and optimize production processes, for a purchase price of $41 million, subject to customary adjustments, plus a potential earn out of up to an additional $3 million. Over the past three years, DSI achieved average annual sales of $16 million and high EBITDA margins. Going forward, DSI will report into the Company’s Weighing and Control Systems segment.

Ziv Shoshani commented: “We are very pleased with the addition of DSI to the VPG platform and the value this transaction creates for our shareholders. The acquisition reflects our strategy to deploy capital to drive incremental returns. DSI is an established, high margin business, with a strong brand and has the largest installed base of products of its type in the world, according to market estimates. DSI expands our position in the steel market, and offers good opportunities for growth by leveraging our sales capabilities and market presence, and by expanding DSI’s product line to address new ‘blue ocean’ opportunities.”

Third Quarter and Nine Month Financial Trends:

READ:  Teleflex Announces Positive Data Showing that the UroLift® System Effectively Relieves Enlarged Prostate Symptoms While Preserving Patients’ Sexual Function

The Company’s third fiscal quarter 2019 net earnings attributable to VPG stockholders was $4.5 million, or $0.33 per diluted share, compared to $7.5 million, or $0.56 per diluted share, in the third fiscal quarter of 2018. Foreign currency exchange rates for the third quarter of 2019 decreased net income by $0.4 million, or $0.03 per diluted share, relative to the prior year period.

In the nine fiscal months ended September 28, 2019, net earnings attributable to VPG stockholders grew to $18.3 million, or $1.35 per diluted share, compared to $20.2 million, or $1.50 per diluted share in the nine fiscal months ended September 29, 2018. Foreign currency exchange rates for the nine fiscal months of 2019 decreased net income by $0.5 million, or $0.03 per diluted share, relative to the prior year period.

The third fiscal quarter 2019 adjusted net earnings* attributable to VPG stockholders was $5.0 million, or $0.37 per diluted share, compared to $7.7 million, or $0.57 per diluted share in the third fiscal quarter of 2018.

In the nine fiscal months ended September 28, 2019, adjusted net earnings* attributable to VPG stockholders was $19.4 million, or $1.43 per diluted share compared to $20.5 million, or $1.51 per diluted share in the nine fiscal months ended September 29, 2018.

Segments

Foil Technology Products segment revenues decreased 10.6% to $32.1 million in the third fiscal quarter of 2019, down from $35.9 million in the third fiscal quarter of 2018; sequential revenue decreased 2.7% compared to $33.0 million in the second 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 for test and measurement applications, primarily in the Americas. This was partially offset by a revenue increase in the Advanced Sensors products primarily in the Americas. 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 and strain gage products for test and measurement applications, primarily in Europe. The Company also saw a decrease in precision resistor foil products in all regions for test and measurement applications.

READ:  AmerisourceBergen Prices $500 Million 2.800% Senior Notes Due 2030

Gross profit margin for the Foil Technology Products segment was 37.3% for the third fiscal quarter of 2019, a decrease compared to 43.9% in the third fiscal quarter of 2018, and a decrease compared to 43.6% in the second 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, unfavorable product mix, and the impact of negative exchange rates.

Force Sensors segment revenues declined 7.9% to $16.2 million in the third fiscal quarter of 2019, compared to $17.6 million in the third fiscal quarter of 2018; sequential revenue declined 0.8%, compared to $16.3 million in the second quarter of 2019. The year-over-year decrease in revenues was mainly attributable to OEM customers, primarily in the Americas. The sequential decrease in revenues was mainly attributable to OEM customers for precision weighing applications in the Americas and Asia, partially offset by an increase in revenues from OEM customers for medical and agriculture applications in the Americas.

Gross profit margin for the Force Sensors segment was 30.4% for the third fiscal quarter of 2019, an increase compared to 25.9% in the third fiscal quarter of 2018, and an increase compared to 26.9% in the second fiscal quarter of 2019. The year-over-year increase in gross profit margin was primarily due to an increase in export grants in India, the impact of positive exchange rates and manufacturing efficiencies partially offset by a decrease in volume. Sequentially, gross profit margin increased due to manufacturing efficiencies and a one-time charge recorded in the second quarter of 2019.

Weighing and Control Systems segment revenues declined 13.2% to $19.1 million in the third fiscal quarter of 2019, down from $22.0 million in the third fiscal quarter of 2018; sequential revenue decreased 11.3% from $21.5 million in the second fiscal quarter of 2019. The decrease in revenues year-over-year was primarily attributable to the steel product line in Europe, the on board weighing products in Europe and the Americas and the process weighing products in the Americas and Europe. The sequential decrease in revenue was primarily attributable to a decrease in the process weighing products in Europe, and in on-board weighing products mainly in Europe and the Americas.

READ:  PhaseBio Reports First Quarter 2020 Financial Results and Recent Business Highlights

The third fiscal quarter 2019 gross profit margin for the Weighing and Control Systems segment was 46.6%, flat compared to 46.6% from the third fiscal quarter of 2018, and an increase compared to 45.6% from the second fiscal quarter of 2019. Sequential gross profit margin increase was primarily due to manufacturing efficiencies partially offset by lower volume.

Near-Term Outlook

“Given the current business environment and our order trends, at constant third fiscal quarter 2019 exchange rates, and including approximately two months of sales related to the acquisition of DSI, we expect net revenues in the range of $63 million to $69 million for the fourth fiscal quarter of 2019,” concluded Mr. Shoshani.

*Use of Non-GAAP Financial Information

The Company defines “adjusted operating margin” as operating margin before restructuring costs and executive severance costs. They 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. They define “free cash flow” as the amount of cash generated from operations ($7.6 million for the third fiscal quarter of 2019), in excess of their capital expenditures ($(2.9) million for the third fiscal quarter of 2019) net of proceeds, if any, from the sale of assets ($0.1 million for the third fiscal quarter of 2019).

Source: Vishay Precision Group Inc., 3 Great Valley Pkwy, Malvern PA 19355

Thanks for visiting! MyChesCo brings reliable information and resources to Chester County, Pennsylvania. Please consider supporting us in our efforts. Your generous donation will help us continue this work and keep it free of charge. Show your support today by clicking here and becoming a patron.

Buy Us a Cup of Coffee