Vishay Precision (VPG) 13 Nov 222022 Q3 Earnings call transcript

Good morning, and thank you for attending VPG's Third Quarter Fiscal 2022 Earnings Call. I would now like to pass the conference over to your host, Steve Cantor, Senior Director of Investor Relations with Vishay Precision Group. Thank you.

You may proceed.

Thank you, operator. everyone. morning, Good Third VPG's Conference Call. Welcome Quarter to Earnings

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

Our actual results forward-looking vary statements. may from

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

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

with our you, outlook currency. VPG. grew in and delivered XXXX. sequentially We XX.X%. of EPS ago a quarter. slightly EBITDA had the the Orders we commentary adjusted positive another adjusted achieved for margin some on will VPG's will for We solid and an We the Bill and $X.XX I X.XX. provide about a from Thank headwinds grew than despite ongoing quarter, of financial trends year from revenue foreign quarter from second third quarter of and the details fourth quarter Steve. sales begin achieved results consolidated for financial our book-to-bill

million currency. positions $XX.X X XX.X%, year-to-date of or backlog We strong for increased fourth revenue months of We to and quarter, from grow million first our operations strategy million to the to fourth repurchased expect Our well execute our third share we stock our quarter, the $X.X which generated impact $X capital common continue in million. cash excluding flow, program the shareholders' supports cash the during $X.X the our repurchase XXXX, of free Compared quarter. us of to and of allocation value. XX.X%

X. Slide to Moving

higher year detail. $XX.X third and a of above than X.X% reported Looking at was sales in quarter quarter of results ago XXXX. the second We X.X% million, which the

to book-to-bill of EBITDA generated our X.XX. a of We per earnings X, manufacturing further uncertain taken which and Sensors sequential global $X.X impacted a prior sales impacted and year headwind our million grew the Solutions Our was in to segment. and share an while net XX.X% in environment. FX our by in an the diluted is ratio foreign sequentially, revenue second This be seventh above when million macroeconomic growth quarter Thus, grew ago year investing total margin significant Weighing to Orders our sequentially. we of which adjusted quarter, compared results footprint the compared the and impact, continued had accomplished revenue we by particularly optimize of quarter. X.X% reporting we reflect FX $XX.X book-to-bill steps million in by to have $X.XX. a global our $X.X from and adjusted performance and exchange, These of and excluding operations XX.X% competitiveness.

same we end on X the first performance higher Through our to of quarter. continued material, high to passed realized our our compared price months While we million of costs from XXXX us XXXX have in costs. incremental the revenue and to $X puts labor year businesses, some to impact business This increases. price of from on increases. of logistics I'll million to increases frame these higher of mitigate our million $X third target segment track the now a $X.X achieve ASP ago, the review have in time

segment, Beginning and product sensors precision our X. Slide Moving to our includes advanced which Sensor resistors. with our

year of ago grew lower million $XX.X revenue a from XX.X% was quarter Third sequentially. and X.X%

a of a in resulted quarter and compared respectively. $X.X to revenue second ago sensors and year sensors $XXX,XXX million to the impact significantly negative the line in to impact continued currency top Foreign

revenue sensors a a annualized third and advanced million impact, from quarter. run of rate FX $XX rate the of in grew were year X.X% XX.X% Excluding sensors ago at sequentially. was Sales the down

AS the For X were higher sales ago. a same first period XX% the months of XXXX, year than

of times to other resistors with decline Roughly continue the test the to half of decline lower new of our from related sales and modestly across currency measurements half second related We the and market quarter. the unfavorable reduce both was and a to precision on Asia. the manufacturing effects, projects in new of were lead existing work lower customers Sales range applications. in

factors: orders in strategic of customer first, for our demand had gages. we was softer timing quarter. strain lower orders $XX.X market which some the in secure wins battery. large million resistors which quarter, EV and the design orders, recorded the second in continued data initiatives in Book-to-bill of We the equipment X from X.XX. semi-conductor semi-annual declined second, Sensor applications to And centers and sensors were second precision new emerging reflected for for

will sequentially unfavorable facility million In XX.X% conjunction lower Israel, gross annual exchange. which $X margin our from foreign terms declined results sensors, volume, In reflecting a in completed shutdown in approximately of with Legacy cost strategic third our strain savings. one-time yield we we in of excellence for inventory XX.X%, plan quarter, of expect operational operating gage the adjustments and

will of support our completed the infrastructure key to also address automated manufacturing opportunities Japanese our growth will that and lines expansion to new facility the long-term for our precision give products efficiency. us increase manufacturing We resistors

Moving to Slide X.

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

than of Europe higher Third products sales precision construction and higher components. sensors force The agriculture quarter higher OEM to sales or markets availability related in of XX.X% increase sales onboard our improved and our due primarily weighing $XX.X to electronic QX. of were million in

mainly in The were for Book-to-bill $XX.X Solutions the million was These XX.X% X.XX. XX.X% foreign in solutions in our we OEM Weighing chain earnings products XX.X% second Weighing shipped Orders to As quarter, third by electronic supply which redesigned from of due costs, by of redesigned quarter. some quarter. products compared material increased Weighing force and precision indicated order call, the was boards we prior margin were the sensors the our improve availability. to large and to price selling Solutions agriculture higher impacted increases. gross second unfavorable offset exchange gross a of applications. volume higher margin for

X. to Slide Moving

the DTS X.X% from our systems grew to development of and test metal project-driven and segment. military second systems. DSI, increased DTS, Turning tools the reflecting Measurement demand, crash the product reflecting the space alloy higher sequentially, and of health of higher million in market avionics, to and the quarter in XX.X% the safety Systems steel rebounded sold higher quarter for strongly third Revenue particularly $XX.X sales sequentially, Orders for market. sales

gross the Measurement product sales resulted positions discussed improved for The quarter a for fourth of XX.X% Systems sequentially pattern Measurement we which fluctuate stronger to XX.X% for orders, Systems from quarter-to-quarter due to these due and X.XX, a sequential margin have before, the favorable and book-to-bill As lead can time Adjusted customer in ratio products. the higher timing growth order of long in mix. third projects in quarter. to

X. Slide to Moving

business capital our of the turning structure. comment our strategy call Bill, strategy, and on to Before the and cost allocation to want I resilience

an mentioned stock our and support We margin allocation M&A strong believe EBITDA third fund $XX.X adjusted liquidity earlier, of can EBITDA strategy in the ample that the opportunities I quarter, generated balance sheet we that organic million As and XX.X%. and growth, capital of adjusted repurchases.

to our execute longer-term the manufacturing our optimize our shares are buy we million have project of repurchased growth, about In and up to have completing that mentioned of XX,XXX August accelerate been I the our expect to executing continue program the invest to we sensor or repurchase back in parallel, to addition stock program We to In stock. to shares, stock and we outstanding $X.X been we XXX,XXX QX. in QX, and we segment announced in in common our continuing to earlier. approximately

XXXX. We manufacturing our India address expect early long-term support in growth believe investment our opportunities. this to ability complete expanding We to in project

application end the we base While past. uncertainties we macroeconomic our the demonstrated environment, customer as have diversified and there in in are like current

We it will markets. that would financial economic Clancy balance additional for the relative expect of impact stability turn Bill I in this to specific Bill? face provide over details. now trends may

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

the to were increased above year revenues million XXXX quarter quarter of quarter third Our the X.X% third compared in ago. $XX.X a and second X.X%

XXXX, Foreign by second of exchange million a quarter by compared to the was as quarter compared compared XXXX. quarter year foreign ago the in for XX.X% million selling price and XX.X% revenues which of to the and margin negatively in offset $X.X benefited to Gross $X.X second impacted the cost, which exchange the gross increases, by from higher margin rates third XX.X% of volume in quarter second was and was inventories. higher compared basis, an reduction XXXX. unfavorable adjusted quarter XX.X% On material as a quarter third revenues impacted third in negatively more to than

or of year ago. diluted in diluted of quarter. million $XX.X third of reflects positive operating margin of third were general Purchase travel of the by XX.X% XX.X% in was which which rates. the $XXX,XXX quarter $XX.X The million Our of wage purchases or of the $XXX,XXX for of earnings offset XXXX. and as third operating XX% CapEx million partially costs, second Adjusted $XXX,XXX quarter of EBITDA was quarter $X.X Selling, or the XX.X% $XX.X share SG&A third $X.X million XXXX. $XXX,XXX $XXX,XXX was the of and margin third $XX.X quarter administrative compared were The majority the or third quarter million to to XX.X% for quarter per per of head the in $X.X XX.X%, Adjusted net XXXX to revenue XXXX. same to a $X.X was in other the in adjusted or the relates mainly count expenses for increases, and for was third exchange fees, quarter revenues related revenues share million, or the for for million compared million $X.XX infrastructure. of $X.XX and compared equipment foreign increase

we XXXX, the in For Sensors the the resistors to to segment Weighing initiatives growth low fiscal related be infrastructure precision purchase in for support for expect Approximately are range. Solutions expansions sensors purchases in segment. force additional million capacity of our half and CapEx $XX

free operating Adjusted cash for The activities Recall the other quarter was XX% of adjusted quarter million prior and cash the DTS expansion as equipment million, in of rate to capital XXXX $X of $XX.X as CapEx XXXX. is million. efficiencies of million of flow third year, of benefit for the as segment. quarter compared We one-time compared acquisition. GAAP in to cash third our for third reflected the from mainly third less flow in of define tax XX.X% in the cost the XX.X% quarter was $X free rate for expenditures approximately tax tax $XXX,XXX The with $X.X the a XXXX. that Sensors associated

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

million. total million long-term Slide and to cash with quarter debt third $XX.X and the XX. ended of Moving equivalents $XX.X We of cash

the third Regarding grew XXXX $XX and business be summary, $XX the our million solid for we quarter. expect million the quarter, third the a strength at in in our quarter, of which to rates. constant model strategy. to the net fourth range achieved quarter outlook the exchange In We of performance in fiscal we fiscal orders revenue underscores

note. backlog Our let's With capital implement Thank the our And on to XXXX that, positions to you. continue long-term us a at strategy allocation finish shareholder lines value. open aimed balanced strong increasing a healthy questions. we for

[Operator Instructions].

line from of with is Franzreb Sidoti. first The the John question

order how curious, matter could in really the impressive orders? start is they registered I the what? book guess delivery customers backlog? Or the could you cancel quarter. In I order downturns, other firm take I'm with do that no

-- cases, itself we As are some longer our is age around would be delivered and backlog non-returnable XX%, while say John, around At the of is quarter, give take, this to you I or the expected term which non-cancelable, is next many by is next part short-term The which projects, In know, backlog customers. servicing it's we other early many, breakdown breakdown point, within is a have year. confirmed policy. markets. niche the orders

and business very cancellations. is that don't our products Given We deliver, backlog the nature the of the we we expect feel firm.

telling you for in your maybe and Europe? about what's Ziv, production are winter? potential your disruptions customers on going how you manufacturing What are this are thoughts, What preparing coming

operational we footprint global our at a have looking footprint, Europe. So small very, very in

All in Asia America, based our are operations and of North larger Israel.

the very technology our a manufacturing we So is very small Europe, risk are the centers of very, in therefore, on have losing Most small side. because of very but operational footprint. little

sentiment, good European still market, customers. see some except general from industrial we the customer Regarding our in stabilization trends the

Last the quarter, success markets. are that the carried there? some new wins, products I kind consumer you What's were into market. you into getting different the if still branching having in And of third out over quarter. outlook wonder

any as stabilization well in from time as point segment in the Solutions. the of stabilization at at changes from for QX time, market. don't The consumer expect consumer rate, any and the we significant the in see we mainly baseline. see have And order recession segment, the or market level seen don't the a we a given business. Sensors consumer electronic we around this around Sensor our Weighing point which as of have indication from At this the sign we received customers, In level run of market is it the

question. last One

include us acquisitions? there seeing as you're or overall you down? is give just thoughts an coming Just what great. Your long-term prices your update out far goals targeted Any be price as the would M&A lofty M&A. Can

volatility, we market the see opportunities. more Given definitely

to there if the that opportunities part doubt capital point M&A strategy. as time dialogue, lower is valuations. but in tangible of valuations, I that At in have more may say, already I allocation capital high We no exploring reasonable all have on this M&A strategy. of report, nothing time, very believe allocation our I we some are are and signs our do been

next from the question The Dezellem Capital Tieton line Bill is Instructions]. [Operator with of Management.

increases compared need How would have achieved please? ultimate you increases, cost you far that so to price characterize the recapture your to

Bill, if backlog. size of a price given increase you the the can recall, started we ago, while the

not have We the we a believe have more ago. has pandemic-driven those started And seen year are that alone. cost. higher been that We that prices already than offsetting we

our We market. are alone not in in raising prices

able that all believe if never a you it think quite Our realize I it our and have I from stickiness, And approach have customer and is damaging And said, to it's most so relationship as correctly And I along. far, without this relationship. technologies product you or if something approach the customer that right without damaging but execute. is to for pricing do our the value been our was that trivial, the policy important with It's easy was your this never customers, to relationship. we us, success.

point? flow anticipating you largely additional increases through? Fourth that quarter, you Or will at are complete that price are

respect this $X going X The definitely As our the was momentum we to I indicated $X year million. will continue, million X first the of before, first in months months for and price achieve $X.X the are run last target to to increase around million for rate year. for

the We will we to will quarters. the means higher increases see into in price which an the QX, the is $X a of QX, additional be few on continuation million the end momentum last during flowing which

that does was have further? Moving Are rate to run my point I focus. done? really largely you Or that anticipating to you what guess, increase more X, capture

that what see to positive would will should it into this the will in say cost would the positive the a I the into at increases, additional during we all-in-all, given moving and do budget say, also that looking increases additional But our regarding our to momentum we the labor process policy. I be to price expect stages reassessing XXXX, the hard price we reviewing our in year. XXXX but reassessing continue at price of are post-pandemic I increase logistics, strategy, the are point magnitude. believe moving Regarding of next or midst parts, or higher in all momentum costs, time, this pricing strategy tell

us That how market? in VanWeigh update question, level of additional you and were if and you seeing to there an give the market. may, terms is relative TruckWeigh Would helpful. anticipate one that that I And the you activity

continued Sure, factors were and of reflecting weaker flattish absolutely. The sequentially, the sales vehicles for in TruckWeigh tight Europe U.K. VanWeigh economic and in supply

still our VanWeigh. ability some exact difficult new many Europe, summarize, eased, While more for hopeful is headwinds remain affecting tight, microchips an point are But to shortages is the of we effect has the the of and given vehicles in customers timing. economic of regarding time, it sell our to supply XXXX. predict while vehicles, TruckWeigh availability in we At see improvement to this units to in of see which

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

back to to like the Steve remarks. I'd turn So Cantor concluding over call for

forward this for you and Thank meeting a earnings again to look We some today. you conference week Thanks. call at Baird joining day. Chicago great the at all call. of Have next our our Conference to Industrial updating you in

joining, conference you your rest and That call. concludes day. for enjoy the please today's Thank of