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Vishay Precision (VPG)

Participants
Steve Cantor IR
Ziv Shoshani President and CEO
William M. Clancy EVP and CFO
John Franzreb Sidoti & Company
Call transcript
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Operator

Good morning. Thank you for attending today's VPG First Quarter 2022 Earnings Call. My name is Hannah, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Steve Cantor, Senior Director of Investor Relations. Please go ahead.

Steve Cantor

good and Hannah, you, morning, everyone. Thank VPG's to XXXX First Call. Conference Earnings Quarter Welcome

release Reform have VPG harbor call XXXX accompanying our QX be the a and Our press safe can and slides Act. remarks on Internet an Securities also Private are recording limited by time available on website, audio the been Today's of provisions be today's the of will accessed the Litigation for website. and on posted governed

from forward-looking vary Our may actual statements. results

discussion to especially a year to XX-K VPG's and risks operations, we with For filings. XXXX, the of associated our our the encourage for SEC other ended XX, you the refer December filings, recent SEC Form

now today the to are prepared Please for Ziv? call Ziv remarks. call some CFO. Ziv and presentation. to the On quarterly And of turn Slide I'll X refer and the CEO President; Shoshani, Bill Clancy,

Ziv Shoshani

first financial financial VPG's sales second Thank trends some commentary for outlook XXXX. you, on quarter the Bill will with the of Steve. results and begin and our quarter. consolidated will I for details provide

supply we report well X. included world. of to the as am and pleased first achieved and chain record impacting VPG challenges companies Moving to around backlog performance Slide quarter, solid the I which to labor that orders in navigated the

profitability. out and Before providing growth which results, laid the in will strategy we our on I QX long-term February, want additional long-term we color priorities to review and the accelerate believe

which an the reliability makes As array a and leader in in technologies, focusing measurement precision accuracy, difference. expanding are sensing of applications we on repeatability

need evolving expanding precision and requiring smarter product customers our sensing into new to not solutions and of is expertise their and deep Our application measurement engineering level were more before. The productive. precision and needed safer, markets that applications for enable make

XX.X% to to lower of Systems reflecting Solution of Sensors sales for XX.X% the our quarter contributed the and as strong backlog start growth underscores and project-driven of of our $XXX.X timing and compared This of X these revenue our an per X.X% growth book-to-bill quarter quarter as our and to adjusted margin the The was Systems performance in our well. Weighing sequentially, represents of year Measurement of decline grew quarterly than orders generated to million, of sales adjusted with in Operationally, margin of our business EBITDA all X.XX across we strength of $XX.X gross XX.X% and in due strong We In a The improved performed we target fourth shipments Measurement which declined and diluted Slide Fourth segments. XX.X% model Record earnings model. the of adjusted strategy. to XXXX, XX.X% adjusted million. gross a expected XXXX, order segments. reported higher share $XXX.X X. million was was record margin a Moving first ago. $X.XX, revenue which line systems. offset

we cases we in increases positions logistics from have costs. of mitigate majority supply higher new these curve. we to million materials place global the we our and $X hires have And as Year-over-year, some in realized the quarter, half which of million of revenue the we operating to in expect the labor million improved forward chain expected going sensor and XXXX. first world climb ongoing filled in we COVID-XX open the in surge Given to efficiencies -- segment, in $X parts expect contribute and learning the $X.X availability increases, put labor, challenges, the incremental price and of

positive order book-to-bill X. X segments in reported first the ratios of all businesses performance Looking at our business and over trends segment quarter,

Sensors, front-end quarter first for $XX.X Sensors Advanced with demand Slide and XX.X% address strong higher applications Beginning from systems, is precision which our key X. resulting The products our XX.X% resulting book-to-bill management by comprised driven our a to precision medical put was revenue segment, segment resistors, XX.X% and sequential for increase the in market. the in mainly and future data which million of million continued in ago $XX for battery resistors bookings sequentially. where from of grew applications industrial and our a year EV XX.X% from in in Advanced capacity of sequentially place. was driven was to for revenue Advanced as annualized our X.XX. to and grew general XG The Sensors expanded Total Sensors we've growth the we consumer the semiconductor Moving reliability sequentially, our was run provide benefited and growth efforts by grew and of a advantages. Sensor Order Difficulty] robust and stability in performance test [Technical orders for back-end in measurement precision resistors solutions rate

for and high continued orders sequentially of a demand grew book-to-bill XX% than had a X% approximately were in higher ago, resulting year Sensors as also Advanced X.XX. We

consumer In pumps. are consumer Sensors as Advanced electronics addition and the achieving equipment traction designing infusion we to such wins application, for of in medical

costs operating was the Sensor facility related terms for $XXX,XXX first to the of for the results adjusted sensors, gross quarter adjusted to In $XXX,XXX of and new exclude in margin COVID. start-up Advanced

in which higher adjusted improved reflecting quarter XXXX, to compared to offset favorable quarter and partially as increases. was wage XX.X% revenue fourth by of product margin gross the The XX.X% first mix,

X. to Moving Slide

and comprised our weighing businesses. to which Solutions segment, onboard Weighing Turning of sensors is X process weighing our

sales increased equipment. quarter and XX.X% well weighing Weighing mix, resulting in XX.X% favorable for for of Solutions' first onboard quarter, in higher reflecting primarily the ratio gross sales offset of million by our margin higher volume, by heavy higher prices the in costs. selling the to the quarter agriculture quarter, $XX material fourth fourth from book-to-bill from of shipments for trends positive higher XXXX. than of Weighing trucks. product The X.XX, transportation XX.X% as were was Orders products OEM $XX.X X.X% of in increased Solutions precision in million a due as driven from First fourth growth higher quarter

Slide X. Moving to

million Revenue primarily lower segment. quarter first declined to the of steel reflecting $XX.X Turning Measurement the market. in sequentially, to Systems sales due XX.X% our

As bookings these reported products project-driven systems for KELK strip I is the indicated good and selling mills. in strong these products delivery its as have cycles. largely generally first productivity earlier, demand for for longer quarter, demand reflecting hot

for XX.X%, sequential growth that its system Total additional cumber of to in part DTS acquisition provide and the for orders related from accounting enhancement. the steel to adjusted As quarter, gross reflecting of Adjusted measurement grew steel. quarter mix. productivity new XX.X% and a first expected X%, due development to order purchase margin revenue KELK in in for launch unfavorable plan, is features manufacturers for the declined X.XX, the resulting solution book-to-bill lower product fourth Systems in Measurement was mainly

Before additional turning the make a call comments. to few Bill, I'll

finally, all facilities our deploying be normally. and intended open growth. investments to that bottom priorities internal And our COVID, our capital of currently our top continues line to and accelerate are operating line are terms In for on funding growth-oriented

to markets, In our financial attractive addition, will Bill? I additional solid activity portfolio it our M&A turn supports now returns. to details. Clancy over for Bill product balance generate and sheet expand

William Clancy

per quarter XXXX, million XX.X% or of the million of reconciliation Thanks, first was an diluted $X.XX. $XX.X share Slide tables gross $X.XX. basis, operating $X.X revenues of the profit of achieved diluted of was of sales, income deck. revenues income of we per sales. net of of and or million X, X.X% was On to and $XX.X our and or earnings million million, profit Ziv. share or net of earnings XX.X% adjusted XX.X% gross Operating the In $X.X sales slide Referring $XX.X

quarter ago. million XXXX were fourth quarter decreased first in revenues XX.X% XXXX year compared to the and X.X% above Our a first $XX quarter the of

of quarter adjusted higher XXXX to acquisition costs for margin fourth by a quarter, accounting $XXX,XXX and from to XX.X% higher impacted benefited negatively $X.X $XXX,XXX quarter first ago prices, the Advanced XXXX compared curve. and was new of by compared XX.X% costs costs. exclude the of $XXX,XXX lower was the in basis, of year COVID-XX negatively first related volume, compared of first impacted XXXX. offset of Gross and revenues the as in revenues to XX.X% in as selling startup gross inventory exchange for purchase margin the to which fourth Foreign and quarter inefficiencies by quarter XX% higher related quarter adjustments, Sensors material higher learning On compared facility manufacturing to $XXX,XXX fourth an million and

first Our operating the was for quarter margin of X.X% XXXX.

were administrative quarter exclude Selling, compared $X.XX of the expenses for related in was compared or which Our revenues first adjustments of increases quarter XX.X% a CapEx first million wage ago. adjusted first to purchases costs. were of net with $XXX,XXX diluted $XX.X The XXXX $X.X margin of XX.X% $XXX,XXX $X.X The or infrastructure. compared XXXX. equipment quarter quarter and share $X.X share quarter XX.X% revenues earnings general, was million first for XX.X% million the acquisition, of DTS the adjusted million the of just of operating revenues I and the increase to other of XX.X% of XXXX as SG&A in relates for quarter million $X mainly $XX.X million reflect the for first XXXX. the $X.X of was per to or or per $XX.X of and and or XXXX million $X.X EBITDA the $X.XX to in million year of Adjusted million, majority diluted first mentioned.

the million, of of additional be and related level resistors due the for out XXXX, we CapEx to highest covert have related matters. segment. Approximately our expansions million expect infrastructure $XX sensor pushed been segment capacity Sensors CapEx history. purchases XXXX, to of which Weighing for $XX in Solutions are and a our growth range that in initiatives, precision the force support For in fiscal is half Approximately carryover from to the

sale free capital to negative as is from was cash CapEx the as activities, less in backlog We any Sensors compared was from expansion cash capital due as negative other operating quarter first XXXX. incentive The expenditures of cash segment. our impacted define quarter plus of a adjusted cost assets. fixed equipment Cash performance-linked efficiencies for as the the to Free high working flow $XXX,XXX needs well flow XX% for a in of for flow $X.X first compensation. mainly and million

the GAAP to in first of XXXX. quarter flow XX.X% second compared in quarter We return to XX.X% of cash expect to the XXXX. positive tax in free The rate the as first was quarter

in XX% operational to XXXX. of tax the an XX% rate assuming are for of the full We year range

of support X. equivalents and Slide $XX.X have of fund a quarter with business cash our requirements and ended liquidity to believe ample we that We We and to opportunities. debt million. sheet long-term first $XX.X to M&A the additional Moving and million balance total cash strong

Moving the outlook. to

we summary, net profits. million $XX contributed accelerate million long-term Thank quarter to another business first backlog, of of underscores of which quarter in strategy. we continue strength to that, range Record quarter, exchange open for initiatives record revenues And fiscal rates. And on $XX second the in growth grow fiscal we a to the line sales constant to to and For the achieved With expect finally, be orders and sequentially questions. our model our at execute let's strong results. of XXXX you. the and

Operator

first the & of Instructions] from [Operator with question line Franzreb Sidoti Company. The is John

John Franzreb

you start like with bit the in Could overall for biggest year-over-year a end little talk a which to about profile quarter? I'd revenue the were drivers the on the markets basis quarter.

Ziv Shoshani

for market for the micro came by resistors measurement and If goods. Sensors, is a a strong electronics headed basis came consumer are precision then by quarter, we which from the -- also and semiconductor on very measurement, from increase mainly consumer is Advanced the test year-over-year followed as increase largest looking

increase In a have all for our accounted segments. volume ago, acquisitions in in we that reporting we year have addition in that DTS the say fact, to seen not I have to

John Franzreb

existing any And expect as to the you and versus continue do March be quarter? drivers okay, look there improve? that markets are Or at expect in pivot you these June to new the we markets Okay. will quarter, June

Ziv Shoshani

segments. in we respect I would since are record solid in -- running say our I to all this strong see very backlog also at in we would time, and tailwind point reporting at demand a a say,

quarters to -- say microchips in quarters say, of market. see the we of X part would industrial some was due know, of may few all-in-all, the the already to respect a we I see that in we a forward. would weighing in But continuation lack momentum inventory which indicated we moving may And transportation. as that already good some prior So a see the you There the sensors. in ago I started the the slowdown,

John Franzreb

line? Okay. gross to And did how quarter income contribute revenue either the much and DTS in op on or profitability a

Ziv Shoshani

the for the I guess around for quarter revenues first XX%. -- were $X.X margin with revenues quarter and gross DTS the was million over

John Franzreb

the Sensor business. And to Advanced Okay. shifting then just

Sensor rate. was to the right we any at him mentioned quarter, go I now? have Sensor towards in -- mentioned think think targeted quarter. million this a up to CapEx inefficiency say do I $XX year. it's And heard ample that it's Sensor running had Bill don't some sizably you you line. annual But I Advanced run inefficiency that being capacity was of Are the business on your $X Advanced you costs of the last impact Advanced in what the also, million going

Ziv Shoshani

Yes, John.

a there $XXX,XXX the we the the then very, facility in we curve no moving and quarter, and due be for as have QX quarter, $XXX,XXX to which and So to booked I in startup quarter indicated learning Advanced in start-up will prior dropped to sub-$XXX,XXX say, expected this Sensors coming to is to of cost. would costs, has drop the new

So decline the to quick way we in capital a the regard in spending. see

-- Bill optimize addition investment to XX% goes facility precision and cost is expected solutions future structure order in the weighing in expected go As the support for XX% indicated, or for to support our designs. of to in resistors India to

the part, equipment Now related, resistors combination other mostly Sensor the segment, sensor a is Advanced segment. And in related it's to and the of Sensors. which precision

make equipment Advanced intending further this So investments, to there for investments further are expanding we Sensor which is capacity. year

John Franzreb

not and one into a having you may get to it. on shutdowns last Can question, queue. the it. talk about or you? impact may Got Got be your I'll exposure the And China bit just back

Ziv Shoshani

Sure. Absolutely.

as So was back. let the -- me indicated take -- mean okay, a past, we strategy the I step in

in had China fairly Our operational limited. in is footprint is -- facilities. extremely We years, X X

down we consolidated and facility X shut with sensors. facilities India, facility, in for left X just have smaller are China, to Tianjin, a one We fairly

footprint operational -- very capacity operational in our limited China. So is

something recent it would have been we limited in But not exposure. not expect fairly impacted. seen vicinity. did would we the very Fortunately, due happen our if Therefore, not lockdown, have to we come,

Operator

[Operator Instructions] time. at this There waiting are no questions additional

to So Cantor over Steve remarks. for I will turn the closing back call

Steven Cantor

thank call Before closing Stifel with participating month we have Conference B. the in morning, great that this And day. Riley and call, that, I you June. Conference note be a the want for and our will this to the in joining

Operator

concludes That call. for participation. you your Thank today's

You may now disconnect your lines.