VPG Q2 FY22 Revenues Top $88 Million; Up 17.6% From a Year Ago

Vishay Precision Group

MALVERN, PA — Vishay Precision Group, Inc. (NYSE: VPG) this week announced its results for its fiscal 2022 second quarter ended July 2, 2022.

Second Fiscal Quarter Highlights:

  • Revenues of $88.6 million increased 17.6% from a year ago.
  • Gross profit margin was 42.1%, as compared to 39.6% reported a year ago.
  • Adjusted gross profit margin* was 42.9%, as compared to 42.3% reported a year ago.
  • Operating margin was 11.9%, as compared to 6.5% reported a year ago.
  • Adjusted operating margin* was 13.7%, as compared to 12.2% reported a year ago.
  • Diluted net earnings per share of $0.79 compared to $0.29 reported a year ago.
  • Adjusted diluted net earnings per share* of $0.68 compared to $0.49 reported a year ago.
  • EBITDA* was $17.6 million with an EBITDA margin* of 19.8%.
  • Adjusted EBITDA* was $15.8 million with an adjusted EBITDA margin* of 17.8%.
  • Book-to-bill ratio was 1.08.
  • Cash from operating activities was $9.0 million with adjusted free cash flow* of $4.9 million.

Ziv Shoshani, Chief Executive Officer of VPG, commented, “We are pleased to report another strong quarter for VPG, as we executed well and grew our revenue both sequentially and year-over-year. We ended the quarter with record-level backlog of $171.4 million, which positions us well for the second half of the year. We achieved these results despite the headwind of unfavorable foreign exchange rates.”

Mr. Shoshani said: “Adjusted diluted net earnings per share* of $0.68 reached a record level, and we achieved record adjusted EBITDA* of $15.8 million, or an adjusted EBITDA margin* of 17.8%. We continue to invest in our long-term growth and cost-savings initiatives as we address expanding applications and markets for our precision measurement sensing technologies.”

VPG Announces Stock Repurchase Authorization:
The Company also announced today that its Board of Directors has approved a stock repurchase plan, authorizing the Company to repurchase in aggregate up to 600,000 shares of its outstanding common stock.

Marc Zandman, VPG’s Chairman of the Board said, “This authorization reflects our commitment to maximize long-term value for our stockholders by strategically allocating our capital.   We believe that our business strategy, strong balance sheet, and cash generation capability can support investments in current operations and value-adding M&A, as well as share repurchases such as the plan announced today.”

Second Fiscal Quarter and Six Month Financial Trends:
The Company’s second fiscal quarter 2022 net earnings attributable to VPG stockholders were $10.8 million, or $0.79 per diluted share, compared to $3.9 million, or $0.29 per diluted share, in the second fiscal quarter of 2021.

In the six fiscal months ended July 2, 2022 net earnings attributable to VPG stockholders were $17.1 million, or $1.25 per diluted share, compared to $8.9 million, or $0.65 per diluted share, in the six fiscal months ended July 3, 2021.

The second fiscal quarter 2022 adjusted net earnings* attributable to VPG stockholders were $9.3 million, or $0.68 per adjusted diluted net earnings per share*, compared to $6.7 million, or $0.49 per adjusted diluted net earnings per share* in the second fiscal quarter of 2021.

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In the six fiscal months ended July 2, 2022 adjusted net earnings* attributable to VPG stockholders were $16.0 million, or $1.17 per adjusted diluted net earnings per share*, compared to $10.9 million, or $0.80 per adjusted diluted net earnings per share* in the six fiscal months ended July 3, 2021.

Segment Performance:
The Sensors segment revenue of $40.3 million in the second fiscal quarter of 2022 increased 29.2% from $31.2 million in the second fiscal quarter of 2021; sequentially, revenue increased 6.7% compared to $37.8 million in the first quarter of 2022. The year-over-year increase in revenues was primarily attributable to higher sales of precision resistors in the Test and Measurements market and higher revenue of the Company’s advanced sensors products primarily in Other markets (mainly for consumer and medical applications) and in their General Industrial markets for energy applications. Sequentially, the increase in revenues reflected revenue growth in the Company’s sales of precision resistors in the Test and Measurement market, partially offset by a decrease in revenues for precision resistors in the Avionics, Military and Space market.

Gross profit margin for the Sensors segment was 44.3% for the second fiscal quarter of 2022. Gross profit margin increased compared to 38.9% (or 42.9% adjusted to exclude the impact of $1.3 million of advanced sensors facility start-up costs and COVID-19-related costs) in the second fiscal quarter of 2021, and increased compared to 37.8% (or 38.6% adjusted to exclude the impact of $0.3 million of advanced sensors facility start-up costs and COVID-19 related costs) in the first fiscal quarter of 2022. The year-over-year increase in adjusted gross profit margin* was primarily due to higher volume partially offset by unfavorable foreign exchange rates, wage increases, and labor inefficiencies due to the hiring of new personnel. Sequentially, the higher adjusted gross profit margin* was primarily due to higher volume and labor efficiencies.

The Weighing Solutions segment revenue of $28.5 million in the second fiscal quarter of 2022 decreased 10.2% compared to $31.7 million in the second fiscal quarter of 2021 and was 13.1% lower than $32.8 million in the first quarter of 2022. The year-over-year and sequential decreases in revenues were primarily attributable to a decrease in revenue related to force sensor products to the Company’s OEM customers in their Other markets and lower sales of onboard weighing products to the Transportation market.

Gross profit margin for the Weighing Solutions segment was 33.7% for the second fiscal quarter of 2022, which was a decrease compared to 37.2% (or 37.6% adjusted to exclude the impact of COVID-19) in the second fiscal quarter of 2021, and a decrease compared to 36.9% in the first fiscal quarter of 2022. The year-over-year decrease in adjusted gross profit margin* was primarily due to lower volume, unfavorable foreign exchange rates, and unfavorable product mix. The sequential decrease in adjusted gross profit margin* was primarily due to lower volume and an unfavorable product mix.

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The Measurement Systems segment revenue of $19.9 million in the second fiscal quarter of 2022 increased 59.2% year-over-year from $12.5 million in the second fiscal quarter of 2021 and was 15.9% higher than $17.1 million in the first fiscal quarter of 2022. The year-over-year increase in revenue was primarily attributable to the addition of revenue from Diversified Technical Systems, Inc. (“DTS”), which was acquired on June 1, 2021, and higher revenue of the Company’s KELK and Dynamic Systems, Inc. (“DSI”) steel-related businesses. Sequentially, the increase in revenue was primarily due to the higher revenue of KELK and DSI products to the Steel market.

Gross profit margin for the Measurement Systems segment was 49.9% (or 53.3% adjusted to exclude the $0.7 million of purchase accounting adjustments related to the DTS acquisition), compared to 47.1% (or 52.5% adjusted to exclude the purchase accounting adjustment related to the DTS acquisition and the impact of COVID-19 of $0.7 million), in the second fiscal quarter of 2021, and 51.8% (or 54.1% adjusted to exclude the $0.4 million of purchase accounting adjustments related to the DTS acquisition) in the first fiscal quarter of 2022. The year-over-year increase in adjusted gross profit margin* was mainly due to higher revenue, partially offset by an unfavorable foreign exchange rate and a full quarter of costs for DTS compared to one month in the prior year period. Adjusted gross profit margin* sequentially reflected higher volume which was offset by unfavorable product mix and a reduction in inventory.

Impacts from the Global COVID-19 Pandemic:
As of August 8, 2022, all of the Company’s facilities are open and operational. Nonetheless, given the ongoing uncertainty concerning the magnitude and duration of the COVID-19 pandemic around the world, any ongoing economic disruption may adversely affect the Company’s business and financial results.

Near-Term Outlook:
“We expect net revenues to grow sequentially and be in the range of $90 million to $100 million for the third fiscal quarter of 2022, at constant second fiscal quarter 2022 exchange rates,” concluded Mr. Shoshani.

*Use of Non-GAAP Financial Information:
The Company states that it defines “adjusted gross profit margin” as gross profit margin before purchase accounting adjustments related to the DTS and DSI acquisitions, start-up costs related to their new advanced sensors facility, and COVID-19 costs. Additionally, the Company defines “adjusted operating margin” as operating margin before purchase accounting adjustments related to the DTS and DSI acquisitions, acquisition costs related to the DTS acquisition, start-up costs related to their new advanced sensors facility, COVID-19 costs, impairment of goodwill and indefinite-lived intangibles, and restructuring costs. The Company defines “adjusted net earnings” and “adjusted diluted net earnings per share” as net earnings attributable to VPG stockholders before purchase accounting adjustments related to the DTS and DSI acquisitions, acquisition costs related to the DTS acquisition, start-up costs related to their new advanced sensors facility, COVID-19 costs, impairment of goodwill and indefinite-lived intangibles, restructuring costs, foreign exchange gains and losses, and associated tax effects. The Company reportedly defines “EBITDA” as earnings before interest, taxes, depreciation, and amortization. The Company defines “Adjusted EBITDA” as earnings before interest, taxes, depreciation, and amortization before purchase accounting adjustments related to the DTS and DSI acquisitions, acquisition costs related to the DTS acquisition, start-up costs related to their new advanced sensors facility, COVID-19 costs, impairment of goodwill and indefinite-lived intangibles, restructuring costs, foreign exchange gains and losses, and associated tax effects. “Adjusted free cash flow” for the second fiscal quarter of 2022 is defined as the amount of cash generated from operating activities ($9.0 million), in excess of their capital expenditures ($4.5 million), net of proceeds, if any, from the sale of assets ($0.4 million).

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Management believes that these non-GAAP measures are useful to investors because each presents what management views as The Company’s core operating results for the relevant period. The adjustments to the applicable GAAP measures relate to occurrences or events that are outside of their core operations, and management believes that the use of these non-GAAP measures provides a consistent basis to evaluate the Company’s operating profitability and performance trends across comparable periods. In addition, the Company has historically provided these or similar non-GAAP measures and understands that some investors and financial analysts find this information helpful in analyzing the Company’s performance and in comparing the Company’s financial performance to that of its peer companies and competitors. Management believes that the Company’s non-GAAP measures are regarded as supplemental to its GAAP financial results. These reconciling items are indicated on the accompanying reconciliation schedules and are more fully described in VPG’s financial statements presented in the Company’s Annual Report on Form 10-K and their Quarterly Reports on Forms 10-Q.

To learn more, visit VPG at www.vpgsensors.com.

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