VPG Reports Fiscal 2021 First Quarter Results

Vishay Precision Group

MALVERN, PA — Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and sensor-based systems, announced its results for its fiscal 2021 first quarter ended April 3, 2021.

First Quarter Highlights:

  • Revenues of $70.6 million increased 4.3% from a year ago.
  • Gross profit margin was 40.5% as compared to 37.0% reported a year ago.
  • Adjusted gross profit margin* was 40.5%, as compared to 37.8% reported a year ago
  • Operating margin was 9.1% as compared to 6.9% reported a year ago.
  • Adjusted operating margin* was 8.7%, as compared to 7.8% reported a year ago.
  • Diluted earnings per share of $0.36 as compared to $0.24 reported a year ago.
  • Adjusted diluted earnings per share* of $0.31, as compared to $0.24 reported a year ago.
  • Cash from operating activities was $5.6 million with adjusted free cash flow* of $(0.1) million.
  • Book-to-bill was 1.21.

Ziv Shoshani, Chief Executive Officer of VPG, commented, “Our first quarter marked a good start to the year. We achieved sales of $70.6 million, which was slightly higher than the high-end of our guidance. Our strong book-to-bill of 1.21, which was driven by sequential order growth of 22.0%, reflected demand momentum across our businesses and end markets.

Mr. Shoshani said: “We executed well in the first quarter, and achieved financial results within our target model. We grew our adjusted gross margin compared to the fourth quarter of 2020 and the same quarter a year ago. Our strong cash from operations and solid balance sheet give us the foundation to continue to make the strategic investments in our business to create additional stockholder value.”

First Quarter Financial Trends:

The Company’s first fiscal quarter 2021 net earnings attributable to VPG stockholders were $5.0 million, or $0.36 per diluted share, compared to $3.3 million, or $0.24 per diluted share, in the first fiscal quarter of 2020.

The first fiscal quarter 2021 adjusted net earnings* attributable to VPG stockholders were $4.2 million, or $0.31 per diluted share, compared to $3.3 million, or $0.24 per diluted share in the first fiscal quarter of 2020.

Segments

Foil Technology Products segment revenue of $32.7 million in the first fiscal quarter of 2021 increased 7.3% from $30.5 million in the first fiscal quarter of 2020; sequentially, revenue decreased 10.3% compared to $36.5 million in the fourth quarter of 2020. The year-over-year increase in revenue was primarily attributable to an increase in their advanced sensors product line primarily in their consumer-related markets and an increase in their precision foil resistors revenue to the avionics, military and space market, which was partially offset by lower revenue of Pacific Instruments in the avionics, military and space market. Sequentially, the decline in revenue was primarily due to lower sales of Pacific Instruments and precision foil resistors in the avionics, military and space market, partially offset by an increase in precision foil resistors in the test and measurements market.

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Gross profit margin for the Foil Technology Products segment was 39.9% (or, 40.4% adjusted to exclude the impact of COVID-19 and start-up costs related to the new advanced sensors facility) for the first fiscal quarter of 2021, which increased compared to 36.7% in the first fiscal quarter of 2020, and to 38.4% (or, 38.9% adjusted to exclude the impact of COVID-19) in the fourth fiscal quarter of 2020. The year-over-year increase in adjusted gross profit margin was primarily due to higher revenue, favorable product mix, and manufacturing efficiencies. Sequentially, the higher adjusted gross profit margin was due to favorable product mix, manufacturing efficiencies and one-time inventory adjustments in the fourth quarter which did not reoccur, partially offset by lower revenue.

Force Sensors segment revenue of $16.9 million in the first fiscal quarter of 2021 increased 15.2% compared to $14.7 million in the first fiscal quarter of 2020 and was 4.2% higher than $16.3 million in the fourth quarter of 2020. The year-over-year increase was primarily due to higher revenue in their other markets, mainly agriculture and consumer. The sequential increase was primarily due to higher revenue in the industrial weighing and general industrial markets.

Gross profit margin for the Force Sensors segment was 35.7% (or, 36.0% adjusted to exclude the impact of COVID-19) for the first fiscal quarter of 2021, which was an increase compared to 24.3% in the first fiscal quarter of 2020, and 29.1% (or, 29.6% adjusted to exclude the impact of COVID-19) in the fourth fiscal quarter of 2020. The year-over-year increase in adjusted gross profit margin was primarily due to higher revenue, an increase in inventory, cost controls and a positive impact of foreign exchange. Sequentially, adjusted gross profit margin increased primarily due to higher revenue and manufacturing efficiencies.

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Weighing and Control Systems segment revenue of $20.9 million in the first fiscal quarter of 2021 declined 7.0% year-over-year from $22.5 million in the first fiscal quarter of 2020 and were 7.8% lower than $22.7 million in the fourth fiscal quarter of 2020. The year-over-year and sequential declines in revenue were primarily attributable to lower project-driven revenue of Dynamic Systems Inc. (“DSI”) and KELK steel-related revenue, which was partially offset by higher revenue of their onboard weighing products for the transportation market.

Gross profit margin for the Weighing and Control Systems segment was 45.6% (or, 44.3% adjusted to exclude the purchase accounting adjustments related to the DSI acquisition and the impact of COVID-19), compared to 45.7% (or, 48.0% adjusted to exclude the purchase accounting adjustments related to the DSI acquisition), from the first fiscal quarter of 2020, and 44.0% (or, 42.5% adjusted to exclude the purchase accounting adjustments related to the DSI acquisition and the impact of COVID-19) in the fourth fiscal quarter of 2020. The year-over-year decrease in adjusted gross profit margin was mostly due to lower revenue. The sequential increase in adjusted gross profit margin was mainly due to favorable product mix and an increase in inventory, partially offset by lower revenue.

Impacts From the Global COVID-19 Pandemic:

As of May 11, 2021, all of the Company’s facilities are open and operational. The Company is continuing to maintain COVID-19 best practices it believes are warranted with respect to working conditions. 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.

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Near-Term Outlook

“We expect net revenues to grow sequentially and be in the range of $71 million to $77 million for the second fiscal quarter of 2021, at constant first fiscal quarter 2021 exchange rates,” concluded Mr. Shoshani.

*Use of Non-GAAP Financial Information

The Company states it defines “adjusted gross profit margin” as gross profit margin before purchase accounting adjustments related to the DSI acquisition, start up costs, and the impacts of COVID-19 costs. The Company states it defines define “adjusted operating margin” as operating margin before purchase accounting adjustments, start-up costs, COVID-19 costs, and restructuring costs. The Company states it defines “adjusted net earnings” and “adjusted diluted net earnings per share” as net earnings attributable to VPG stockholders before purchase accounting adjustments, start up costs, COVID-19 costs, restructuring costs, foreign exchange gains and losses, and associated tax effects. “Adjusted free cash flow” for the first fiscal quarter of 2021 is defined as the amount of cash generated from operating activities ($5.6 million), in excess of their capital expenditures ($5.7 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 their 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 their 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 their Annual Report on Form 10-K and its Quarterly Reports on Forms 10-Q.

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