VPG - Earnings call transcript Q3 2017 | Vishay Precision Group, Inc.

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Operator

Good morning and welcome to the VPG Q3 Fiscal 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Reynee Tung. ahead. go Please

Reynee Tung

or information. Good earnings quarter operator. it read be important Welcome VPG's you should the any to of By taken may Thank you have release now, conference morning, it and call. through contains third all questions including today, earnings conference received will to that An XXXX as participants the contribute. the you, have call everyone. comments press audio time made hope recording we

You including audio VPG's will and and US internet and it, this on can at be website law. call copyright of limited international content accessed a conference the VPG on is find the is reconciliations, protected non-GAAP relevant The by VPG on www.vpgsensors.com. by time recording An be for website. can available owned

any perform remarks call, conference adapt, You part or may and transmit, statements contents today. reproduce, in governed our worse not written or Act. the the Reform display Safe Private call the turn of not XXXX you make of may are we any by Harbor Litigation other conference of results whole distribute, copies by forward-looking significantly indicated provisions this better or without recordings may Securities than may in this out or that make Actual Today's permission.

and and for Bill? our President; CEO XXXX filings, introduce the the XX, Form to especially For Ziv a the today's Bill now, other more please ended Clancy, it's complete call, Shoshani, discussion filings. of And December the SEC pleasure operations, refer XX-K risks associated recent host CFO. with and to my VPG's year SEC for our

Bill Clancy

by I to thank and on joining us Reynee. summarizing highlights our start call few morning, would today. Thanks, a financials. then and for the Good you like reviewing everyone

solid adjusted $X.XX of diluted operations margin and gross by his $XX.X foreign prior diluted XXXX ratio $XX.X the of improved of $X.X of $XX.X XX.X%, revenues an to exchange earnings generated per On million, with quarter to increased million The quarter of in We year business global of share, revenues period third was of quarter $XXX,XXX. an as environment. $X.XX, provide and operating period. business million the adjusted Slide had X, rates book-to-bill of margin XX.X% of Ziv compared of the up per million, third of compared cash that, results adjusted earnings revenues million, X.XX, the indication negative share third prior year a of will to of a $X.X XXXX Following view revenues the X.X%, for impact net from XXXX to environment.

reductions alternative third million XX.X% of negative The was XXXX. increased of $XXX,XXX to not partially off quarter impact which in in and $X.X XXXX. of incurred repeat Our the million of $X.X million last the compared in rate of compared evaluation third volumes a gross reduction of third general increase in of of the to from for to incentive manufacturing $XX.X increases. wage in $X margin or quarter quarter the quarter $X increase million and a of profit expense taken million increase million increase XX.X% strategic XX% of the the $XX.X in quarter. to The this revenues million profit third to for in $X.X $XXX,XXX XXXX of and in the which as cost year's to XXXX third $XXX,XXX XX.X% XXXX quarter $XXX,XXX in third quarter of related the overall to gross Selling, of expenses attributable adjusted or comparison exchange is rate of offset $X.X in administrative increase of in by as were negative $XXX,XXX quarter did by wages million efficiencies exchange compensation was SG&A

has our in September the that diluted to other Looking the million expense termination quarter X.X% attributable an share quarter of for can the $X.X or income compared quarter increased and you to related the for XXXX the Included income of operating fiscal at basis, proceeds diluted Adjusted see per VPG payment XXXX. $X.XX adjusted share stockholders on China at as to to XX, is to net to People's million Tianjin, ended third $X.XX company $X.X one-time $X.X quarter year. location. in net lease compared third or at million the margin Republic last earnings per in increased X.X% of

quarter which Foreign for operations, the net $XXX,XXX in for flow $X.XX cash currency from a quarter to the million We million Free third for for share. per net of assets, the year XXXX less expenditures million negative cash cash $X.X $X.X XXXX. the had prior for the third for the were sale was exchange or of as of XXXX, as XXXX, amount was the compared of quarter of quarter third was define which diluted $X.X income third rates of compared of free of million which flow proceeds as third XXXX. XXXX to of the generated capital impact of $X.X third from quarter the $XXX,XXX quarter

the XX, for rate XXXX tax months nine September fiscal was ended XX.X%. GAAP Our

resulted range our rate improved execution to me due let the compared the X. costs We expect period on rate For mix be the prior XX% operational quarter strategy. environment Ziv. performance. an an and of of higher to focused The to remain the on our we With to Slide further for comments addition in that, of efficiencies Driving the as to in a pass year, XX%. year the On fiscal reducing operating to has earnings. was an business XXXX improved tax tax in

Ziv Shoshani

third in few XX% we FTP September ended part revenue by XXXX months and is part quarter, our traction. sensor which grow the developed and quarter ago, our nine product of third new gain reporting important An Bill. of versus advanced is segment strategy you, offering platform XXXX which continues and our a from Thank to to line of XXXX. years of increases This developing XX, the XXX% is

As year prior pleased it an customers and I period. enhanced with manufacturing platform the this to of in compared offers sensor conjunction platform. new am efficient our acceptance the performance with continued comparable

product which is the Another transducers segment. business in line gaining momentum Sensors is Force value-added the OEM

ended For increased the period. compared while the XXXX the trends nine third and World world XXX% The important highest September is in revenues XX, We're from for compared markets of see XXXX to quarter Association September which steel the end has quarter by prior increased this Steel continue January for healthy by the some XXXX. the XXXX of XXXX particular. year to encouraging. to-date months to revenues is as our the defense pleased business. that third I'll note reports XXX% since year been capacity market aerospace utilization steel in XX.X%, global Progressing utilization steel, at

being $XX.X book-to-bill our X.XX was in mainly in quarter in year general and and second measurements are offset orders precision performance market growth partially test economic excess of jet bull last details of We military Products XXXX the plans third for by Asia. X, increase shatter analyst million, in year both making, we accused domestic We and some prices. in an commercial for the of in an million reasons On output the Americas sectors. $XX.X as or quarter on to is the with the and orders an still because industry the below compared $X.X upturn quarter $XX.X use were very increased world barometer increase we believes million XXXX. sales to to X.XX and projects Beijing third $XX.X confident expectations that reporting XXXX. second serving Slide influence cyclical leading ahead is often press from dynamics improved quarter a of developed stagnate geographic huge frac the outlook According Foil or an at XXXX. other X.XX The X.XX expect demand X.XX segment of driven demand quarter Americas believe, million international construction book-to-bill in resistors, been the steady in have the a for car space China low in half avionics, and and overall executed. In our prices the quarter market. of roughly X.X% as countries seen on industry the to X, global for better by the exerts of steel in and X.X% XX.X% producer Total to $X.X compared with onto factories. increase ratio market China XXXX more of distribution the of due production With is steel the developing Slide from X.XX aerospace Association in the Steel the firming crude XXXX manufacturing. growth On the quarter World XXXX, in the The of year market. business decidedly in an would from in million The in than China. on quarter in as $XX, business segments. steel of Across warning throughout is third Steel for has predominantly well and Technology its improved redeployment in of dumping growth execution. economies. see last be and the expected XXXX improvement of defence in expected quarter improved second million second as and orders XXXX the by to by its quarter company's the the onshore and slower witness third of Most XXXX. represents had environment this sync the increase mainly to demand Sequentially, oil viewed nearly transport the to Despite of third XXXX [indiscernible] or and a a moderate tonnage. the of the second

Asia market. specific prior is second force of was increase Europe growth QX, in margin resistors all sensor from XX.X% test is markets from to primarily growth from XX.X% of the measurement coming for the in QX in in in resistors in XXXX. of channels orders an for for precision from advanced FTP year advanced in military gross avionics, measurements the increase precision revenue of The the a up $X.X market in end-market market sensor the for for and profit and force The last quarter test of sales in and due The addition the our within While XX.X% the test year Asia platform. regions. in and adjusted in adjusted measurements $X.X the FTP of is flat to measurement comparable period space profit gross of was volume increase market for million within instrument result increase that million the products. is for The growth distribution in measurements distribution sales precision and the and resistors channel and US in

offset foreign FTP currencies was Additionally, of sequential X.X there profit manufacturing to $XXX,XXX the and was increases. last gross quarter. and the to to months $X.X $X.X second improvements impact flat The wage prior adjusted to efficiencies X.X by The in months million compared period. months year X.X margin segment compared related due backlog negative was XXXX partially quarter million

quarter decreased XX.X% or the volume. the segment and by million quarter XXXX. $X.X and of Force measurement increase from inefficiencies this to Sensors in $X.X XX.X% third second million quarter mainly XXXX, agriculture up gross rate $X.X Americas. due segment, XX.X% of third XXXX profit in million profit the million adjusted and year is compared quarter mainly XX.X% of is impact. X.XX the X.XX ramp XXXX. last was margin by for in force construction for increased customers of in India related to to third The second quarter was gross quarter precision, The adjusted the the related the for market increase The book-to-bill primarily OEM year the of orders applications. X.XX to in $X.X of Sequential at manufacturing Offset the and the plant exchange for to last XXXX ratio Looking quarter the negative in the of third third of compared

XXXX. was third segment Force in margin XX.X% prior quarter the consistent X.X gross to of The months year backlog months with compared and XXXX the second months quarter in XXXX. second is of The Sensors X.X of X.X the quarter

Slide light Americas partially or primarily compared improved slightly and and the rate, we in quarter Weighing million was in Systems book-to-bill the increase in $XX.X ratio X.XX QX For comparable year, quarter to Control months XXXX. the the that, prior weighing in and Sequentially, orders end quarter last attributable product in in revenues Europe. $XX.X welcome for $X.X questions. are to the of XXXX expect steel increased range Control of segment, in for let's in weighing products On attributable profit versus million backlog and was a adjusted the steel orders a primarily X.XX second decreased and of X, for the months The System System net environment, X.X million XX.X% Europe. gross XXXX second in XX.X% third exchange quarter last offset XXXX. by the year compared products market Asia. the X.X%. to The fourth third business you. onboard to was to gross due decreased in The for decrease constant quarter quarter. Asia The at in third to Thank year quarter quarter. in adjusted X.XX gross line open business third in in Control the million from from months of the within an The increase by adjusted the is an XXXX second onboard and volume margin of in $X.X the onboard X.X and the quarter second the weighing of the XX.X% for margin $X.X the XXXX Weighing decrease of in million X.X With an segment third margin quarter profit Weighing

Operator

will [Operator question John Instructions] come first go Franzreb & Please ahead. Company. from with Sidoti the

John Franzreb

the swings of are factors When you and where top bottom revenue high I'd for range? hitting like about with and think the that of between end guidance fourth start revenue to the quarter. the the the low expectations biggest the

Ziv Shoshani

good very question, a That's John.

may regards - steel we know uncertainty we're the - another one a two a less lines of there which is business. logic being is given that me other Pacific is First the the move them when this of to the to the revenues some in days volume KELK more. the product quarter shipment customer Historically two have the shipped from we there's start that up working certainty the ship line nature you may certain driven. quarter. certain is in in as and have to Therefore, is let one ramping product fact to expect The and Instruments delays product one

that probably in So, the is factor this I to regards say would biggest the guidance.

John Franzreb

how just And backlog turnover Force it. It coming look. starting Weighing the in sticking that of the the and to Got been kind pronounced with that quarters and seems about Sensors most Is for the basis? theme Control, month or to commitments are in little because changed has is jumping the cycle of that some each a meet one tougher becoming bit year-over-year. virtually sizably you a timely a it has shipping on the

Ziv Shoshani

and did QX revenues I shipments, hiring day is the higher ramp people the per to that QX. that more in we're see massive adding and going very backlog of the a up indicate and to to in expectation respect going India in Regarding we're capacity

by more increase customer driven is the regarding So, no well that goal this still increase is the in I the indicated product is backlog to ramp WCS, is shipment. would a the customer dramatically timing, to our dictated at In say in India this will quarter. deliveries given project point timing backlog that regards doubt standpoint a here that but line the help capacity, within still We and prime up and the very a from staggered since I customers. order decision

John Franzreb

I pronounced Force Sensors, actually is driver on the it. most I'm the was got X.XX. you sure then in heard demand what the and seeing Ziv not book-to-bill of it at you're Force the And the if Got Sensors.

Ziv Shoshani

Precision being economy the big overall and driver some [indiscernible]. force orders. been placing business to The headed main of is is this agriculture, designs are our by better, our now for but have customers our precision OEM coming fruition

John Franzreb

Precision. someone to going some to into let I'm jump Perfect. else going questions. ask This I'm back queue. point

Operator

next go Sherbetchyan Riley. from the ahead. Instructions] Please with question [Operator will Sarkis be B.

Sarkis Sherbetchyan

XQ, the margin bit a the better. to foreign currency rate. is about I at here EBITDA obviously Just revenue little something XQ do expect you just know mentioned of kind the With the sequentially. that be midpoint margin better above regard understand gross so sticking and for you guidance with or that

Ziv Shoshani

fact should standpoint. from a meeting the expect Given that be level you profitability you to not take midpoint if the reference we know revenue margin standpoint, certain may main the volume, as that and - from the the is an if for better earning as a improvement good as giving driver

Sarkis Sherbetchyan

speakers previous point. the to Understood

if nicely your maybe mentioned of you little up but know bit backlog. You more of composition the the backlog are talk is could markets you know months, if in maybe a don't strong maybe about can backlog talk like composition the about I you end that the

Ziv Shoshani

Okay the very composition go of we can so the quickly backlog, segment-by-segment.

oriented. the before we're to for factor this as therefore where In the shipments dictated the demand. XX% the timing the customers. the is is up to very to project our expecting are and FTP regards regards India, being in in WCS, main meet slightly in expecting conditions Sensors it's order still delivered order to of since we we and time terms place Product meet driving main still demand. We deliver be the in backlog is I backlog here capacity to the contribution here In Force to the and mid-XXs in see drop capacity indicated around and the by quarter regard in expected we're is I we're following to within have and lead competitive in XX% customer mean

Sarkis Sherbetchyan

expect very improvement advance going you your I helpful. maybe the expectations about forward? a year-to-date, should run or what that. then business and that very we fiscal that performance we in if you thus sensors. expect year-over-year can maybe strong Can mean comments you give should it's on business for what maybe rate around far talk a into And for robust but That's it. Got basis mentioned XXXX,

Ziv Shoshani

market company. growth historical the product have the increasing without prior has a specific been a line, double-digit in very, regarding we new sales it's can and very performance acceptance. regarding nicely momentum line product specific giving still years I elaborate in lines regarding and information this never within Okay, provided detailed we're good but products product details, of year-over-year very this

Sarkis Sherbetchyan

maybe about, your Got talk the have to the think in from you it. you it - guys sensors? investor mentioned I I advanced past revenue Can rate what annual maybe number. means annual the sales conferences

Ziv Shoshani

we've in just the In in mentioned - that level. crossed new is we this we're level the and were fairly the years very running we product were double-digit revenue past a first two now low a we the on since line

Sarkis Sherbetchyan

Very back I'll helpful. in. Thanks. hop

Operator

next follow-up a Your Franzreb ahead. with Company. go John will & be from question Please Sidoti

John Franzreb

update of I your pipeline a you What One, about guess kind your you could how part it's there? things. the M&A talk on out are couple of on you strategy. presentation seeing growth

Ziv Shoshani

know, high. part Therefore, that still to of what are have enhance strategy business, say sure And XX the it's much emphasized multiples many, for multiples as growth I and seller's definitely XX. Based every sure very, we would always a still is bidders not dynamics high the it's shareholders' very of you extremely very company's for dynamics - value. found still year M&A or north M&A there in a last we've therefore very many in market. that are the John quarters, important the is on few the

John Franzreb

kind sustainable growth. Can the not part assuming bit? M&A of to single-digit you I'm sure. to that growth sales what profile mid X, sales organic Okay I'm single-digit strategy that's you the roadmap talk about case, a growth if don't on business. to means high If talk that the to sales high a quite of and side you just Slide on have mid of opportunities get that the to little it

Ziv Shoshani

OEM, we well. execution growth is specific product would for and see, have provided future nevertheless, as transducers slide regarding consider from and as organic an sensors, regarding nice First and very more standpoint the light the you business growth advanced that regarding deals that a there M&A encompasses as quarter-over-quarter. we itself I provide did we very say of engines year-over-year

John Franzreb

places? new else at on more long-term, you customers right. looking the into are market somehow, [indiscernible] adjacent Tapping if anything Anything

Ziv Shoshani

the Yes in our our could strategy. absolutely, new into it could round M&A we strategy. a part definitely portfolio get a us is a company this of this markets acquire customer base, end will If of product we may but with completely is different M&A part line,

John Franzreb

Okay rationalization kind you where was was think business. you you of us recalled and are it I kind one since put you could the process? in as can $X of of of update savings the as you hold, some realized, far cost that million update on the quarter mentioned point give that restructuring kind on us I so

Ziv Shoshani

of From base drive is a regardless in of continue cost mindset, - the assure the in culture for a to order it standpoint, business cost we our cost of more to the increase future. aspects of reduction our all volume competitiveness the

consolidation indicated that to company. and would of I due future products phase in the say executed no certain production volume to reduction Force part regards major did with is expected strategy delay continuous the to Sensors, the and I of to increase this is customers and Regarding time, doubt provide order in on in restructuring cost there the was regards especially continue the in company relocation manufacturing for to sites, be in to real near-term and a

John Franzreb

Okay right. all

It's going modest think clearly what last above at margin of I'm quarters you've north organic of you again. if kind above do you be we two adjusted growth organic to and operating of have kind you X%, allow longer reasonable any for X, talk So, any the growth. goal The XX%, adjusted operating Slide term is about looking [indiscernible] margin. XX%.

Ziv Shoshani

on growth new We expect based should At given significant and on a continue our environment financial me driving would let the innovation. more flat at okay revenues and our which product exchange realize exchange know, play meet this. you given rate, a organic to goals. As that and fact we based those say role rate the

two that, to you of provide the intention in said we very overtime. and can as were you we the as close operational Now last performance that financial but know show quarters, to consistent the company

So, ahead. quarters the intention is are two quarters more good, to but deliver

financial and the set sustainable next So are to targets those for targets then the step.

John Franzreb

looking that? Okay, to resetting Okay. forward How's them. Ziv. I'm enough. Fair

Ziv Shoshani

you. Thank

Operator

question-and-answer gentlemen, closing this conference concludes and our turn for session. would back to I Bill Ladies like the to remarks. any Clancy over

Bill Clancy

I appreciate everyone very dialing a to looking on earnings in talking call you listening, everybody and in a participating future. good Thank forward near to good have and day. very much and

Operator

for conference presentation. The is now Thank concluded. today's attending you

You disconnect. now may

Vishay Precision (VPG) 7 Nov 172017 Q3 Earnings call transcript