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VPG Reports Fiscal 2019 Fourth Quarter and Twelve Month Results

Fourth Quarter and Full Year Revenue

MALVERN, PA — Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and sensors-based systems, recently 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.”

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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.

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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.

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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 their 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.

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