MALVERN, PA — Vishay Precision Group, Inc. (NYSE: VPG) this week announced its results for its fiscal 2023 first quarter ended April 1, 2023.
First Fiscal Quarter Highlights:
- Revenues of $88.9 million increased 1.4% from a year ago.
- Gross profit margin was 41.9%, as compared to 40.2% reported a year ago.
- Adjusted gross profit margin* was 41.9%, as compared to 41.0% reported a year ago.
- Operating margin was 11.2%, as compared to 9.5% reported a year ago.
- Adjusted operating margin* was 11.4%, as compared to 10.5% reported a year ago.
- Diluted net earnings per share of $0.51 compared to $0.46 reported a year ago.
- Adjusted diluted net earnings per share* of $0.52 compared to $0.49 reported a year ago.
- EBITDA* was $14.0 million with an EBITDA margin* of 15.8%.
- Adjusted EBITDA* was $14.1 million with an adjusted EBITDA margin* of 15.9%.
- Cash from operating activities was $8.4 million with adjusted free cash flow* of $4.9 million.
Ziv Shoshani, Chief Executive Officer of VPG, commented, “Our performance for the first quarter of 2023 marked a solid start for the year. We achieved revenue in line with our expectations, and increased our gross margin both sequentially and year-over-year. Orders of $83.1 million grew 13.1% sequentially, reflecting strengthening trends through the first quarter. We ended the quarter with a strong backlog of $150.4 million.
Mr. Shoshani said: “Our strong balance sheet and cash generation supports our ongoing strategic initiatives aimed at capturing a broader set of opportunities for our sensing and precision measurement technologies, while maintaining tight control of our costs and increasing our operating efficiencies.”
First Fiscal Quarter Financial Trends:
The Company’s first fiscal quarter 2023 net earnings attributable to VPG stockholders were $7.0 million, or $0.51 per diluted share, compared to $6.4 million, or $0.46 per diluted share, in the first fiscal quarter of 2022.
The first fiscal quarter 2023 adjusted net earnings* attributable to VPG stockholders were $7.0 million, or $0.52 per adjusted diluted net earnings per share*, compared to $6.6 million, or $0.49 per adjusted diluted net earnings per share* in the first fiscal quarter of 2022.
Segment Performance:
The Sensors segment revenue of $36.7 million in the first fiscal quarter of 2023 decreased 2.7% from $37.8 million in the first fiscal quarter of 2022; sequentially, revenue increased 1.1% compared to $36.3 million in the fourth quarter of 2022. The year-over-year decrease in revenues was primarily attributable to lower sales of advanced sensors products primarily in Other markets (mainly for consumer applications), partially offset by increases in precision resistors revenues and advanced sensors in Avionics, Military and Space (AMS) and in precision resistors in the Test and Measurement market. Sequentially, the increase primarily reflected higher revenue of precision resistors in the AMS market partially offset by lower advanced sensors revenue in Other markets (mainly for consumer applications).
Gross profit margin for the Sensors segment was 41.2% for the first fiscal quarter of 2023. Gross profit margin increased compared to 37.8% (or 38.6% adjusted to exclude the impact of $0.3 million of advanced sensors facility start-up costs) in the first fiscal quarter of 2022, and increased compared to 37.6% in the fourth fiscal quarter of 2022. The year-over-year increase in adjusted gross profit margin* was primarily due to higher selling prices and favorable foreign currency exchange rates. Sequentially, the higher adjusted gross profit margin* was primarily due to manufacturing efficiencies and favorable foreign currency exchange rates.
The Weighing Solutions segment revenue of $31.9 million in the first fiscal quarter of 2023 decreased 2.8% compared to $32.8 million in the first fiscal quarter of 2022 and was 3.7% lower than $33.1 million in the fourth quarter of 2022. The year-over-year decrease in revenues was mainly attributable to lower sales of load cells in the Industrial Weighing market, partially offset by higher revenues in our Other markets for precision agriculture and construction applications. Sequentially, the decrease in revenues was attributable to lower sales in the Industrial Weighing market, partially offset by an increase in revenues in the Transportation market.
Gross profit margin for the Weighing Solutions segment was 34.9% for the first fiscal quarter of 2023, which decreased compared to 36.9% in the first fiscal quarter of 2022, and increased compared to 33.4% in the fourth fiscal quarter of 2022. The year-over-year decrease in adjusted gross profit margin* was primarily due to higher materials costs, lower volume and unfavorable product mix, mainly offset by selling price increases and favorable foreign currency exchange rates. The sequential increase in adjusted gross profit margin* was primarily due to favorable foreign currency exchange rates, partially offset by lower volume.
The Measurement Systems segment revenue of $20.3 million in the first fiscal quarter of 2023 increased 18.3% year-over-year from $17.1 million in the first fiscal quarter of 2022 and was 24.4% lower than $26.8 million in the fourth fiscal quarter of 2022. The year-over-year increase was primarily attributable to increased revenue in the Steel market. Sequentially, the decrease in revenue was primarily due to the lower revenue of products in the Steel market and at Diversified Technical Systems Inc. (“DTS”) products in the Transportation market.
Gross profit margin for the Measurement Systems segment was 53.9% (or 54.1% adjusted to exclude the $0.05 million of purchase accounting adjustments related to the DTS acquisition), compared to 51.8% (or 54.1% adjusted to exclude the purchase accounting adjustment related to the DTS acquisition of $0.4 million), in the first fiscal quarter of 2022, and 55.9% (or 56.8% adjusted to exclude the $0.2 million of purchase accounting adjustments related to the DTS acquisition) in the fourth fiscal quarter of 2022. The year-over-year adjusted gross profit margin* was flat, as higher volume and higher selling prices were offset mainly by unfavorable foreign exchange rates and higher materials costs. The sequentially lower adjusted gross profit margin* reflected lower volume and higher material costs, offset by higher selling prices.
Near-Term Outlook
“We expect net revenues to be in the range of $83 million to $93 million for the second fiscal quarter of 2023, at constant first fiscal quarter 2023 foreign currency exchange rates,” concluded Mr. Shoshani.
*Use of Non-GAAP Financial Information:
The Company has declared that it defines “adjusted gross profit margin” as gross profit margin before purchase accounting adjustments related to the DTS and DSI acquisitions, and start-up costs related to its new advanced sensors facility, and COVID-19 costs. The Company defines “adjusted operating margin” as operating margin before purchase accounting adjustments related to the DTS and DSI acquisitions, start-up costs related to its new advanced sensors facility, COVID-19 costs, 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, start-up costs related to its new advanced sensors facility, COVID-19 costs, restructuring costs, foreign currency exchange gains and losses, and associated tax effects. The Company 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, start-up costs related to its new advanced sensors facility, COVID-19, restructuring costs, foreign currency exchange gains and losses, and associated tax effects. “Adjusted free cash flow” for the first fiscal quarter of 2023 is defined as the amount of cash generated from operating activities ($8.4 million), in excess of its capital expenditures ($3.5 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 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 its core operations, and management believes that the use of these non-GAAP measures provides a consistent basis to evaluate its 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 its Annual Report on Form 10-K and its Quarterly Reports on Forms 10-Q.
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