Vishay Precision Group Q1 2025 Earnings Call Transcript

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May 6, 2025

Key Takeaways

  • Consolidated Q1 revenue of $71.7 M declined modestly quarter-over-quarter, but orders grew 2.7% sequentially to deliver a book-to-bill ratio of 1.04 and generate $5.3 M in operating cash flow and $3.7 M in adjusted free cash flow.
  • Sensors segment posted a 5.1% sequential revenue increase and a 6.7% booking rise—the highest in five quarters—driven by test & measurement demand and an additional $1 M+ in humanoid robotics orders.
  • Measurement Systems revenue fell 13.8% due to steel market softness and $2 M of delayed CALC product shipments, though orders jumped 17.3% (book-to-bill 1.07) with shipments now expected in the second half of 2025.
  • Weighing Solutions orders declined 9.3% sequentially to $26.2 M (book-to-bill 0.99) as stronger transportation market sales were offset by softer OEM demand in agriculture, construction, and medical applications.
  • Management reiterated three strategic priorities for 2025—new business development, $5 M in annual cost reductions by year-end, and disciplined M&A—and provided Q2 revenue guidance of $70 M–$76 M.
AI Generated. May Contain Errors.
Earnings Conference Call
Vishay Precision Group Q1 2025
00:00 / 00:00

Transcript Sections

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Operator

Hello, everyone, and welcome to the PPG's twenty twenty five First Quarter Earnings Conference Call. My name is Ezra, and I will be your coordinator today. I will now hand you over to your host, Steve Cantor, Senior Director of Investor Relations to begin. Steve, please go ahead.

Steve Cantor
Steve Cantor
Senior Director - Investor Relations & Marketing Communications at Vishay Precision Group

Thank you, Ezra. Good morning, everyone. Welcome to VPG's twenty twenty five first quarter earnings conference call. Our Q1 press release and slides have been posted on our website, vpgsensors.com. An audio recording of today's call will be available on the Internet for a limited time and can also be accessed on the VPG website.

Steve Cantor
Steve Cantor
Senior Director - Investor Relations & Marketing Communications at Vishay Precision Group

Today's remarks are governed by the Safe Harbor provisions of the 1995 Private Securities Litigation Reform Act. Our actual results may vary from forward looking statements. For a discussion of the risks associated with VPG's operations, we encourage you to refer to our SEC filings, especially the Form 10 ks for the year ended 12/31/2024, and our other recent SEC filings. On the call today are Zeeb Shashami, CEO and President and Bill Clancy, CFO. I'll now turn the call to Zeeb for some prepared remarks.

Steve Cantor
Steve Cantor
Senior Director - Investor Relations & Marketing Communications at Vishay Precision Group

Please refer to Slide three of the quarterly presentation. Ziv?

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Thank you, Steve. I will begin with some commentary on our results and trends for the first quarter. Bill will provide financial details about the quarter and our outlook for the second quarter of twenty twenty five. Moving to Slide three. Beginning with revenue, first quarter revenue of 71,700,000.0 declined modestly from the fourth quarter and was impacted by approximately $2,000,000 of delayed shipments of our calc products.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Our consolidated orders grew 2.7% sequentially and resulted in a book to bill of 1.04. This marked our second quarter of sequential order growth with bookings increased in both the Sensors and Measurement Systems segments. Despite muted revenue level, we generated a solid cash flow in the quarter. Cash from operation was $5,300,000 and adjusted free cash flow was 3,700,000.0 Before discussing our performance by segment, I want to comment on tariff development as they relate to VPG. Given our manufacturing footprint and supply chains, we believe VPG is positioned to navigate the changing tariffs.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Based on current tariffs and expected volume, we anticipate the impact to our input costs to be minor based on our supply chains. With regards to The U. S. Ten Percent tariffs, we expect to pass the majority of the tariffs impact on to our customers. I'll now review our business segment performance.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Moving to Slide four. Beginning with our Sensors segment, first quarter revenue increased 5.1% sequentially, driven primarily higher sales of stringages and precision resistors in the test and measurement market. Sensors booking rose 6.7% sequentially, reaching the highest level in five quarters and resulting in a book to bill of 1.06. This growth reflected higher demand in the test and measurement applications, particularly from semiconductor equipment makers. In addition, our initiatives in humanoid robot applications continue to progress well.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

We received an additional order of more than $1,000,000 from our initial humanoid robotics customers as they continue to ramp up the development of their robots. We also received an initial prototype order from the second potential robotic customer. Orders for consumer applications in our other markets grew sequentially, although demand related to avionic military and space for sensors was soft due to the timing of defense and space projects in The U. S. And Europe.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Moving to Slide five. Turning to our Weighing Solutions segment. First quarter sales increased 2.7% from the fourth quarter. The increase was driven primarily by higher revenue in the transportation market for specialized load cells for heavy use trucks. Following strong bookings in Q4, Weighing Solutions order declined 9.3% sequentially to $26,200,000 resulting in a book to bill of 0.99.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Higher orders in the transportation market for trucks applications were offset by weaker orders for Force Sensors OEM business segments related to precision agriculture, construction and medical applications. Moving to Slide six. Turning to our Measurement Systems segment, revenue in the first quarter of eighteen point two million declined 13.8% sequentially. The decline reflected continued slow trends in the global steel market in part due to softness in the automotive sector, as well as a $2,000,000 shipment delays of CALC products. We expect to ship these products in the second half of this year.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

In contrast, first quarter measurement system orders of 19,500,000.0 increased 17.3% sequentially and resulted in a book to bill of 1.07. Bookings reflected higher demand primarily in the transportation for auto safety testing. Of note, we received an order from the University of Alabama for a prototype of DSI's UHTC system to test non conductive materials such as ceramics. This system will be used as part of a beta test at the University of Alabama we announced in February. Moving to Slide seven.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

As I indicated, the positive order patterns for VPG in the fourth quarter of twenty twenty four continue into the first quarter of twenty twenty five. While the short term global economic outlook for 2025 has become more uncertain, we continue to be focused on driving the long term potential for VPG and we are optimistic about the potential. In February, I outlined three top strategic priorities for 2025. First, driving business development with new customers and applications. Second, continuing to reduce costs and increase operational efficiencies.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

And third, pursuing high quality acquisitions to build scale and expand our cash flow. We are encouraged by the progress of our business development initiatives in the first quarter as orders of approximately $8,000,000 were broad based and were on plan. To drive further growth, we plan to refine our internal processes and capabilities related to sales systems, marketing expertise and digital marketing. In parallel, we have initiated steps to optimize our sales teams and processes. On the cost side, we continue to focus on long term strategic plans, which include product relocations and efficiency improvements to reduce our cost.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

We are on track to achieve our targeted annual operational cost reductions of $5,000,000 by year end. Finally, regarding M and A, our strong balance sheet provide us with the means to acquire businesses with recognized brands and growth path. We remain disciplined and patient in our search for the right opportunity. I will now turn it over to Bill Clancy. Bill?

William M. Clancy
William M. Clancy
EVP and CFO at Vishay Precision Group

Thank you, Zee. Referring to Slide eight and the reconciliation tables of the slide deck, our first quarter twenty twenty five revenues were $71,700,000 Adjusted gross margin of 38.3% in the first quarter was the same with 38.3% in the fourth quarter. Sequentially by segment, adjusted gross margin for Sensors of 30.8% decreased due to higher fixed costs and unfavorable foreign exchange rates, which was partially offset by higher volume. Weighting Solutions adjusted gross margin of 37.8%, which was adjusted for $278,000 of manufacturing start up costs, increased from the fourth quarter, primarily due to higher revenue and the effect of our cost reduction program. Gross margin for Measurement Systems of 50.3% declined from the fourth quarter due to lower revenue.

William M. Clancy
William M. Clancy
EVP and CFO at Vishay Precision Group

Moving to Slide nine. Our adjusted operating margin of 1.1%, which excluded start up and restructuring costs amounting to $858,000 improved from 0.8% in the fourth quarter of twenty twenty four. Selling, general and administrative expense for the first quarter was $26,700,000 or 37.2% of revenues, declined from $27,300,000 or 37.5% of revenues for the fourth quarter of twenty twenty four. The decrease in SG and A is mainly due to lower commissions and travel. The GAAP tax rate for the first quarter was not a meaningful number given the geographic mix and level of income.

William M. Clancy
William M. Clancy
EVP and CFO at Vishay Precision Group

We are assuming an operational tax rate of approximately 27% for the full year of 2025. We reported a net loss of $942,000 or $07 per diluted share. Adjusting for the manufacturing startup costs, restructuring, foreign currency exchange losses, adjusted net earnings for the first quarter was $468,000 or $04 per diluted share compared to $400,000 or $03 per diluted share in the fourth quarter of twenty twenty four. Moving to Slide 10. Adjusted EBITDA was $5,100,000 or 7.2% of revenue compared to $5,100,000 or 7% of revenue in the fourth quarter.

William M. Clancy
William M. Clancy
EVP and CFO at Vishay Precision Group

CapEx in the first quarter was $1,500,000 For 2025, we are forecasting 10,000,000 to $12,000,000 for capital expenditures. We generated adjusted free cash flow of $3,700,000 for the first quarter, which compared to $4,600,000 in the fourth quarter. We increased our cash position from 12/31/2024 by $4,600,000 to $83,900,000 in the first quarter. Total outstanding long term debt was $31,500,000 We believe that we have a strong balance sheet and ample liquidity to support our business requirements and to fund M and A. Regarding the outlook, for the second fiscal quarter of twenty twenty five at constant first fiscal quarter twenty twenty five exchange rates, we expect net revenues to be in the range of $70,000,000 to $76,000,000 In summary, bookings of 74,400,000 grew sequentially for the second straight quarter resulting in a book to bill ratio of 1.04.

William M. Clancy
William M. Clancy
EVP and CFO at Vishay Precision Group

Our business development initiatives continued to advance and we continue to generate solid cash flow in a challenging business environment. With that, let's open the lines for questions. Thank you.

Operator

Thank you very much. Our first question comes from John Franzreb with Sidoti. John, your line is now open. Please go ahead.

John Franzreb
Senior Equity Analyst at Sidoti & Company

Good morning, everyone, and thanks for taking the questions. Zeeb, I'd like to get your opinion on the incoming order book. How does May compare to March? What are your customers saying about inventory trends and what they're thinking on a go ahead basis?

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Good morning, John. In regards to the order intake, I would say that we do see a modest recovery already in Q1, mainly in Test and Measurement from semiconductor customers and also related to our humanoid robots and to an extent on the transportation markets. Those we do expect the demand to continue. Initially, we don't see, I would say, significant upside from real demand, which is coming from new orders given our customers' new demand in respect to the market recovery. Much of the demand today is coming from replenishing of the current supply chain, while generating new demand from our business development initiatives.

John Franzreb
Senior Equity Analyst at Sidoti & Company

So is it fair to assume that the revenue profile has somewhat troughed and we're at a will be gradual upslope? Zvi, are there?

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

John, I'm sorry.

William M. Clancy
William M. Clancy
EVP and CFO at Vishay Precision Group

Yes. John, your assumption is absolutely correct that I believe we have hit this And there is a continuation of us, like Zeeve talked about, a modest recovery going forward.

John Franzreb
Senior Equity Analyst at Sidoti & Company

Got it. And just a question on the delay in the calc order into the second half. That's a pretty sizable delay. Can you give any color to that? And is there any cancellation risk in that $2,000,000 order?

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Yes, absolutely. As you said, this is a significant amount. But given the fact that KELK is selling high ticket items at around 400 to 500,000 per order, we had some operational issues, which we have been resolved given the cycle time. Those orders are expected to be shipped in the second half of the year. Regarding your comment regarding cancellation, all in all, we since we are supplying all across the company a custom product, we have not seen in the past and we do not see any cancellations from customers.

John Franzreb
Senior Equity Analyst at Sidoti & Company

Got it. I guess one last question. I'll get back into the queue. On the $5,000,000 cost savings, what's the timing of realizing that? And is it all in cost of goods sold or SG and A?

John Franzreb
Senior Equity Analyst at Sidoti & Company

Or is there a mix that we should kind of be thinking about?

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

The $5,000,000 savings we are looking at year over year, 2025 in respect to 2024. Most I would say, by far most of the savings are in the cost of goods sold, resulting from material cost reduction, product relocation and process improvements.

John Franzreb
Senior Equity Analyst at Sidoti & Company

Got it. Thank you, Zvi. I'll get back into queue.

Operator

Thank you very much. Our next question comes from Griffin Boss with B. Riley Securities. Griffin, your line is now open. Please go ahead.

Griffin Boss
Equity Research Analyst at B.Riley Securities

Hi, good morning and thanks for taking the questions. Just to start up as a follow-up to the calc question. Is this $2,000,000 delayed shipment, is that incremental to the $5,000,000 that you mentioned on the fourth quarter earnings call? You mentioned the $5,000,000 of shipments were delayed and you expected $2,000,000 to be recognized in the first quarter. Is that related to that same push?

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

So this is a very good question. So just the $2,000,000 are related to kelp products, which as I indicated has been will be pushed the deliveries will be pushed out to the second half of the year. The $5,000,000 that I've indicated in Q4 was related to DPS and DSI products given the fact that customers were have we were expecting to get those orders and those orders has been placed in Q1. But those are different product lines, the $5,000,000 DTS, while the $2,000,000 is kelp steel products.

Griffin Boss
Equity Research Analyst at B.Riley Securities

Okay. Okay. Understood. Thanks for that. And then I wanted to touch on the humanoid robots opportunity.

Griffin Boss
Equity Research Analyst at B.Riley Securities

Obviously, it looks like you guys are continuing to make good progress there. Is there any more color you can give now that you're starting to see more order flow from those two initial customers on how many sensors we should expect are being used in a single robot? And to the extent maybe you could discuss certain ASPs for those sensors as well?

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

I'm not sure how much color I can provide, but I could say that we are in this that we are working with our customers in the second development phase. There was a very large order over $1,000,000 that has been placed in Q1. We are working on a larger order for the for, I would say, the second half of the year. We are looking at complete or I would say our value would be between $500 to $1,200 per robot. This is what I can provide at this point.

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

And we are speaking about tens of sensors within each bot. But unfortunately, I don't think I would be able to share more information at this point in time.

Griffin Boss
Equity Research Analyst at B.Riley Securities

Nazzi, that was helpful. Thanks for that. And fully understood. And then just last one for me, curious about the CapEx ramp. I know you said in the past, we should think about that as maybe 4%, four point five % of sales going forward.

Griffin Boss
Equity Research Analyst at B.Riley Securities

It was pretty light in the first quarter. So curious, Bill, if you can just touch on kind of how you're looking at the cadence throughout the year. Should we expect kind of a gradual ramp up or maybe a little bit more CapEx investment in the back half of the year?

Ziv Shoshani
Ziv Shoshani
CEO, President & Director at Vishay Precision Group

Since most of the CapEx are related to sensors equipment and some of the equipment are semiconductor type of equipment with a longer lead time, we always see a much larger CapEx in the second half of the year in respect to the first half of the year. So we still believe that we are going to spend between 10,000,000 to $12 but we will see most of the spending coming in the second half of the year.

Griffin Boss
Equity Research Analyst at B.Riley Securities

Okay, great. Thanks for taking my questions. Appreciate it.

Operator

Thank you very much. We currently have no further questions. I will now turn back to Steve for any closing remarks.

Steve Cantor
Steve Cantor
Senior Director - Investor Relations & Marketing Communications at Vishay Precision Group

Esmer, I think we may have another question. Could you recheck?

Operator

Apologies for that. We have a question from John with Sidoti. John, your line is now open. Please go ahead.

John Franzreb
Senior Equity Analyst at Sidoti & Company

Yes. Thanks for squeezing me back in. I'm actually curious about share repurchases. You were somewhat aggressive in early twenty twenty four at higher thresholds than trading today and certainly with your open app today. It doesn't seem that I don't know where your cash is domiciled, but it doesn't seem that cash is an issue.

John Franzreb
Senior Equity Analyst at Sidoti & Company

What are your thoughts about repurchasing the stock at those levels?

William M. Clancy
William M. Clancy
EVP and CFO at Vishay Precision Group

So John, at this point in time, our cash to the effect where just approximately 4% of our cash is in The U. S. Or conversely 96% outside. And to bring a lot of that cash back into The U. S.

William M. Clancy
William M. Clancy
EVP and CFO at Vishay Precision Group

Would we would have to pay significant cash tax on that on those repatriation. So at this point in time, we have not purchased any shares during the first quarter.

John Franzreb
Senior Equity Analyst at Sidoti & Company

Okay. Thanks. And Mike, I got you, Bill. Did you say that the tax rate should be using for the full year is 2527%. Twenty seven %. Thanks for the clarification. Thank you, guys. You're welcome.

Operator

Thank you very much, John. That concludes our question answer session. I will now hand back over to Steve for any closing remarks.

Steve Cantor
Steve Cantor
Senior Director - Investor Relations & Marketing Communications at Vishay Precision Group

Before closing our call, I do want to remind investors and those listening that we will be presenting at the upcoming B. Riley conference on May 22 and the three part advisory conference in June. We look forward to updating you on BPG next quarter. And thank you and have a great day.

Operator

Thank you very much, Steve. And thank you to Bill and Ziv for being our speakers on today's call. That concludes the conference call for today. We appreciate everyone for joining. You may now disconnect your lines.

Executives
    • Steve Cantor
      Steve Cantor
      Senior Director - Investor Relations & Marketing Communications
    • Ziv Shoshani
      Ziv Shoshani
      CEO, President & Director
    • William M. Clancy
      William M. Clancy
      EVP and CFO
Analysts
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