VPG - Earnings call transcript Q4 2018 | Vishay Precision Group, Inc.

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Operator

Good morning, and welcome to the VPG 2018 Fourth Quarter and Full Year Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Reynee Tung, Director, Global Marketing Communications. ahead. go Please

Reynee Tung

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

relevant reconciliations, on on call time U.S. by on VPG including for at it, of An audio Copyright today's be International website the and limited find of vpgsensors.com. The by content and will this can You is accessed non-GAAP website. and Law. can a the conference protected VPG's VPG owned recording call available be Internet is

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

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

William 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,

and and X pleased quarterly our adjusted cash million by we to revenues of of repairs tariffs or and for of of The expenses operating as quarter X, revenues of fourth grew general XXXX $XX earnings $XX.X in from commission quarter quarter his a to operating On fourth to and the XXXX. million, for XXXX our million of million, with the of of also compared China. diluted Selling, fourth and with XXXX. and of $XXX,XXX adjusted of XX.X% deck, of imposition the the The to income increases, supplies by Referring business of in fourth the global U.S. travel XXXX $XX.X million. XXXX and another environment. revenues was $X.X million XX.X% of for The provide were $XX.X to wage selling, for volumes XX.X% XX.X% as increase $X.X revenues general to administrative $XXX,XXX from an tooling XX.X% exchange negative increase to and fourth quarter million, in $XXX,XXX of quarter cash to $X.XX. as XXXX. in primarily of to with of the flow Ziv fourth and had million share fourth gross free million quarter XX.X% $X.X good the or Slide compared the in $XX.X quarter the quarter of and rates bonus impact that, $XX.X service margin quarter results XXXX increases, of and of our $XXX,XXX to up in XXXX administrative offset fees. million performance XXXX million the and revenues comparison reserve fourth quarter the $X.X professional fourth in fourth to expenses fourth million, increase goods in the to of to margins $X foreign adjusted We're $X.X related will adjustments, $XX.X operations gross in compared Page profit We per of increased was our for slide profit million. $XXX,XXX maintenance Following view $XXX,XXX compared attributable related was wage partially we on related of of of quarter

a reporting with is related As in we Instruments the and of value each business, the to could regular goodwill which preliminary we Foil noncash change the and segment. assets Technology intangible and to and $X.X Pacific our finalize SEC. of of file a XXXX charge Form recorded result fourth assets the impairment quarter review our charge part Products XX-K intangible during the is as indefinite-lived pretax This of our of indefinite-lived goodwill reduce year, million carrying

$X.X Looking to $X.X adjusted adjusted XX.X% fourth the in operating million compared adjusted in of as million income by of an diluted the net or We per on basis. share or million quarter last $X.XX $X.XX our to $X.X XX.X% fourth earnings or share attributable margin the The increased $X of at fourth XXXX. stockholders operating XXXX XX.X% quarter per diluted VPG to for XX.X% year. to or million compared quarter increased to

the capital define X generated for amount were $X.X the free of proceed the operations, for quarter which on quarter fourth fourth XXXX. less compared fourth for as of currency the quarter net $XXX,XXX of for the or by increased XXXX, $XX.X million compared share. fourth of cash of of of the Foreign cash generated quarter from earnings which free per We $X.X was We $X.XX the as of expenditures $XX.X net of flow to the any sale XXXX quarter as for which quarter XXXX of of XXXX million XXXX. rates were exchange XXXX, fourth flow diluted million in fourth fourth to million cash quarter the assets,

ended Our GAAP December the XX, for year was XX.X%. rate tax XXXX,

incurred the relating goods imposition $XXX,XXX we the China and and to We China related second on continue U.S. the the the the mid-July, half went into tariffs. other costs from to in of by trade of tariffs response to countries to closely developments goods monitor XXXX. on from regulations of U.S. tariffs In effect, and the related tariffs

these For backlog, Inc., This the Group see us February current we And into filing a those on will impacted, minimize XXXX. closely the Tuesday, coming have are on of facility. capacity outlined very be let facility as strategy, which effects half to Technologies, quarters. been in line in focused our remain so located continues moving X, customers of to to facility products of Slide And to we on ramp X. allow working as prove in execution the advance construction XX. in to the to is X-K work a lease achieving up Advanced to new entered in Israel effective Form will streamlining Vishay as given With with expect agreement detailed we that, we me operations Vishay our progress, have Slide well this that new our operations second our on further Precision our a of subsidiary in expansion goals impact. Ziv. as to pass offsetting complete sensors comments product state-of-the-art all Currently, in the we production core on and expect

Ziv Shoshani

the sensor great developing developed as is has part part of this An and it approximately in to fourth our design. We December new adoption. of saw fourth XXXX of line, of was platform it XXXX, our We in Bill. advance as which of advance prior offering. grow XX% our approximately period. by revenues Technology grown to their the example nicely to strategy continues Products important this include as XX, sensor you, Foil product product the customers A compared XXXX. XX quarter revenue quarter is XX% gain our ended for segment, more Thank And the increase increase versus months year

pleased with performance provide platform sensor new customers. are are the this proud of We to to continued acceptance enhanced and

manufacturing our example pleased of be to platform. innovation on are part our efficient our Sensors second business, value-added also Force of OEM an We is transducer A segment.

to segment. its XXXX, period. Control XX, is prior compared fourth for final the business increased year December the revenues the for in quarter the A in compared our of Systems ended XXXX down year to quarter example the was and transducer Weighing by revenue OEM slightly XXXX. The fourth XX% For

VanWeigh Our TruckWeigh quarter in on-board as fourth the compared business to XX% revenues by of XXXX fourth XXXX. of weighing and increased the quarter

approximately December trends markets steel comparable for continuing aerospace prior the and and our see period. was equipment end important I'll ended In business. defense, compared some and year testing We as in to for XX, year XXXX, the the revenues note increase For semiconductor XX% particular, measurement.

to to in Washington rates. market, see shutdown increasing creates Turning to positive discussions, partial defense noise end budget markets. midterm end uncertain ongoing continues demand our elections, by environment. Aerospace reblock related In and driven government growth, the production the

which at the a single-digit However, has and semiconductor softer in with budget capital the the expenditure the semi-capital backlog the moderated spending for of focus and XXXX. for cycle In positive second end XXXX, expectations in prevailing increase order XXXX. Overall, for low spending cycle, to following expected of with remains very continue expenditure is robust the half rates shorter improvements market, end in XXXX. to

in On positive end quarter X.XX a Slide expected XXXX, XXXX and $XX.X supported We fourth but fourth demand products was X, test turning of of stimulus absence serve. quarter the to business $XX.X be measurement in on for well of decrease on the of of quarter is continued growing developing to market as to positive resistors nations, compared focus the in growth of XXXX, trade investment is steel saw economies. In tensions. decrease remain moderate we in will X.XX growth XXXX XXXX, than moderate. improved sustained million, in developed million of The the the and XXXX, the environment Asia. easing X.X%. government XX.X% by markets moderation more of decrease the our the Asia this areas into Finally, we emerging XXXX. quarter industry, resilience X.X% book-to-bill in expected balance, $XX.X X.XX we at and for or at rate company's global and $X.X a in XXXX. steel by the and the growth and overall the the economies million for the as given XXXX expect third throughout to $XX.X discrete demand sequential steel of show primarily in uncertainty is but global from market isolated steel precision particularly Demand Total quarter steel remain in orders and to a of market. from to order recovery in million in China, decelerate attributable third reflect our was or fourth of in in to On to also Americas demand activities believe quarter execution. healthy, fourth is million In the XXXX in expected region developed countries Globally, of for performance for

profit of decreased in to of compared quarter December $XX.X XXXX and million primarily reporting for XXXX, segment for of fourth XX, XXXX, of of measurement third The to volume XXXX, line fourth million regions. On million segment XX, December $XX.X was the XXXX. September in down primarily $XX.X million fourth quarter but of to Products of Sequentially, Our third XXXX. from had the X.XX margin product all the third quarter decrease X.XX $X.X end a increased the Technology the Technology decreased Americas, the coming fourth ratio on The in $X.X from some XX.X% the or our XXXX. quarter increase compared of and $X.X in Slide million book-to-bill at market. with gross increase to test X, backlog and of precision quarter gross Foil profit orders in Products to the the X.X% up quarter XX.X% from XXXX, at XXXX of The Foil was for XXXX across year-over-year at from segment. X.XX XX.X% for quarter compared due million details the the resistors XX, by

Asia resistors growth in and test was for force to market within the Our in advance measurement sensors measurement products. precision addition primarily the market for

last Instruments within Partially the for products coming within market. volume profit an of was prior primarily In was precision offsetting military Americas, the an for the $X.X supplies measurement primarily Europe margin $XXX,XXX, the backlog avionic, and tooling of the growth and space year compared Foil to wages and to $XXX,XXX end market was by $XXX,XXX, months increase Pacific and months Products offset Technology resistors. and increase from repairs and of was of growth X.X maintenance increase million. Sequentially, the volume months by inefficiencies in Our $XXX,XXX. The decreased X.X primarily test manufacturing quarter. segment in partially and X.X gross due in

X.XX gross segment compared gross quarter was to increased fourth X.X in X.XX the in XXXX. third Looking order efficiencies XXXX profit the of China. XX.X% the the from of was in $XXX,XXX down The the Force inventory for XXXX in XX.X% of was increase the and month the book-to-bill fourth to despite at U.S. quarter tariffs third weighing ratio fourth quarter quarter XXXX, $XXX,XXX, XXXX imposition of XXXX. to of in compared XXXX, a or The in quarter of profit third markets. segment, up X.XX an medical of quarter XXXX related of Sensors goods X.X% in the in and the from by due the margin quarter month the of to The end backlog for X.X to on was of offset volume reduction the month of of quarter to XXXX. and for compared Sensors $XXX,XXX of was in of flat compared and the fourth fourth the fourth within Sequentially, $XXX,XXX manufacturing XXXX from quarter profit of X.X improved in decrease quarter XX.X% the of segment precision Europe gross The $XXX,XXX. Force and $XXX,XXX, $XXX,XXX third by reduction the wages

process Europe, by For was primarily partially the to XXXX quarter compared of in product quarter profit fourth increase in Europe. the $X.X compared of XXXX. due Europe. for quarter ratio month expect weighing at in $X.X third was light in steel stable quarter and let's Systems the Americas XXXX Weighing an in $XX fiscal XXXX. in fourth in of exchange attributable Asia Control products X.X%. in from open of quarter XX.X% The and product profit XX.X% increase the for and sequential first Weighing quarter the gross X.XX to and fourth the of of and increase primarily $XXX,XXX, steel of and volume lines of and X, in fiscal to X.X third System in mainly month an and by profit Slide Asia $XX revenues the order Control a or million to by the XXXX the an for of Thank third XXXX. and of the continued fourth to XXXX questions. business products products at in margin XXXX you. the segment quarter the book-to-bill in fourth order gross fourth quarter the increased of to the that, Asia rate, in increase decreased quarter gross weighing XXXX due on-board in X.XX environment On compared The $X.X range mainly Sequentially, process quarter million, offset the X.X Americas. of was steel in the of weighing of volume the versus to net quarter we The X.XX million fourth for XXXX in third Weighing for segment, million XXXX. is the million in With Control Systems from of of the the XXXX line backlog for was The quarter X.X in month XX.X% $XXX,XXX and decrease constant

Operator

from our will come Sidoti Company. And first & Instructions]. [Operator John Franzreb question of

John Franzreb

a duration just How book-to-bill Is of infer Is two us kind for the What a flat book-to-bill? after walk analysis, that FX? change P&L. bookings ratio. think to been weak. function of should from we kind through it quarters number we years it's of with Listen, guess, it this function shorter I at through the out should are two last want growing about I think start should of you nearly the Asia we that point? orders of Can coming what about You've pointed geography? in was the

Ziv Shoshani

majority given of still markets, book-to-bill have of -- record a over The which even you for Sure. product diversified. end high is this book-to-bill the and we business is And line very X. our products company, as know,

to end at of is way market. the the the look So at looking that dynamics

with market market if of end reflected regards reflects And demand industrial environment softening testing those the sell that to we the the memory Products, of supply, which we the on the markets, precision the I end I all regarding -- in of it Data, see Big smartphones, of seen mainly Foil have Americas. a equipment, Technology semiconductor which In a softer into book-to-bill stable is really think softing the start resistors. X.X, we Europe, industrial in will that much in Asia. don't implies

affecting which regards mainly would in less this have Chinese in softening to while We inventory, So agriculture say, have FTP, demand a well, is products the there's of we in X.XX. weighing, sector. but precision seen expected precision of is we driven the to OEMs industrial projects by a to see, the a our should demand Force, on book-to-bill quarter Asia, of the that new offset I expect recession, softening slowdown demand. the In regarding stable some new due the are equipment with and the we do positive depletion

regards would fairly moderate see I company and Brexit demand, the a stable and product China, see situation, to in expect more subsidiary which, market. manner, one the despite do we Systems, a the the grow have expected year-over-year believe less Last product China process based different -- business States. in process a we in the still and in whereby, to In Europe markets, uncertainty weighing moving domestic beside is complete as developed the we least solid we the to United semiconductor, And line, all reaching environment. are the on-board expect to in Weighing the in phenomenas see the environment that think to should So the out weighing, to on weighing, stable environment we for British providing we I say stable weighing, very I Control a which regarding But and countries. environment. have, our steel in is slowdown regarding would more some information, diversified say not on-board end macro that of all, is is XXXX, into but

John Franzreb

have you sales percent FTP? of Exposure that market, how semiconductor as is of much a to overall percent or it the

Ziv Shoshani

the which, would end for semiconductor. I breakdown test the FTP, encompass around, provide don't roundabout. the part XX% and I We be the It's -- But the application semi. of just that it say around XX% of than markets, more think, could of measurement which FTP

John Franzreb

Okay. Fair at enough. manufacturing the was issues margin down Also efficiencies. Are and behind tooling second while it, we're those with you now? FTP some sequentially, gross some

Ziv Shoshani

Yes, mode. maintenance QX. and lines correct. the due those higher us a kind running. volume and was tooling catch-up QX as higher some behind inefficiency the be should had this effect product year forward But were of We during definitely, and we that it repairs And move is in and supply to end, the into

John Franzreb

it. the write-down? need there. need guess, And to write-down you Instruments, Got was that wrong? went Pacific it What lastly, take why did -- on Why I just

William Clancy

business had an something could this -- future, in really And accounting forecast unfavorable an very mix actual. was we itself exercise at it's versus But saw strong be your forecast. don't you it's look good. and and during And John, we don't took any XXXX you the accounting we but this charge. go what unfavorable that due exercise. the product product you we mix, But through that is And positive that through mix. what do, just to we your forecast the noncash

Operator

Riley question of next our come B. from Sherbetchyan And Sarkis will Instructions]. [Operator FBR.

Sarkis Sherbetchyan

bring this touch capacity understand little filed you're touched the new the can It to you you Maybe of in help advance capacity night, Know you're upon like expanding a call. last advance the agreement. sensors? the conference want X-K sensors. bit for seems it to I So planning on you amount lease and us for

Ziv Shoshani

is volume, increase high double the have to the to new streamline line year-over-year used and technology once sensor In enable in was years, a -- with been line the as a at would which for company conjunction of new the say had a -- reporting was advance advance never and you generate to which digit. sensor better applications new lower which based last on products dramatic which our cost us few revenues, would I the We design customers. we provide legacy -- with streaming business, know,

initially, doing very that As have we and been been first picking in very, years, we the few -- up have so, momentum the been has nicely.

our where support small We on capacity, should the or to sensor capitalize agreement existing to allow Xx I expected based the lease too on least, to much capacity, advance of we the this support least at it drive potential is in capacity expand new expected And capacity I would to standpoint, are at more and went in would new say a from point new to location, expansion. Xx company be to revenues. X, order be would say, is to to a more order is the future enable the margin which which support technology. now Therefore, its at location would substantially and X revenues

Sarkis Sherbetchyan

super have year-over-year helpful, if in fiscal I annual kind And you you mentioned sensors up 'XX. advance in that and with comments not revenue for us. can the maybe think sure you prepared of I'm XQ the XX% were XX% hand the in Ziv. share That's

be gauge top to business large line. how for could the sensors trying your Just advance

Ziv Shoshani

with would that lease or I the million potential in, but would provided And double-digit able I this business. would the say I the potential is new would to dollars. we the that would capacity already support, numbers, or say we once in say of be never north say, in close of have place, $XXX millions I move

Sarkis Sherbetchyan

Okay.

advance million. corporate maybe like look production relative margin $XXX today? for see what sensors we the the it, does cost you And of just call of that just to help or can the understand us to, close So average or north profile

Ziv Shoshani

average. at of The of advance of from sensor least average the company's north line I say, a is, the -- margin X% would contribution

Sarkis Sherbetchyan

incremental average? us you the stand right before Is the XX% that was think company the way where think today it refresh I And it? on pretax. to about for you can

William Clancy

-- Sarkis, are total our you margin about or...? in contribution talking the

Sarkis Sherbetchyan

Yes so, call it, contribution margin corporate average...

William Clancy

Yes.

-- we're what to XX% all seeing at to year-over-year, in moment XX% the in it's probably G&A, the, more think in say, increase I we somewhat down the what -- like the I'd had pretax. given

Sarkis Sherbetchyan

if and advance add up, it would sensors be stated? Got scale you you above XX% XX% it then meaningfully it. And that the to just

Ziv Shoshani

is This yes. correct,

William Clancy

yes. Yes,

Sarkis Sherbetchyan

of Okay. And kind just to reiterate.

So you to line. trajectory? least Can at could understand current support million pathway that's X top level, a the to call of business in $XXX the growth Xx about it, revenue you maybe help us that

Ziv Shoshani

advance at running we have X volume are business, have In -- the are on as a is other platforms. large OEMs we designing some -- OEMs, what a type a One for OEMs which Okay. are volume been running on while this and of ones defining sensors, products OEM high more and the different projection, the we is of lower projection.

are from I So -- -- than more XX%, of is designs. would -- the snapshot generated XX% than let's the snapshot. current say take more new revenues that current The during revenue

We have momentum a continue. new is fairly, and expectation different I OEMs, the that would will This say, is queue the with one of path. designs good

path which user end application, will platform for second go this structures. that XXXX line, product testing The develop into new the in mostly of will is

the way volume been not are have prices The slightly while doing far. We that selling higher, way, is lower. so average

business would to has -- is also for provided those different market, which end regarding testing nice of beta give been products are -- offer a those of market one are already do be an to to fairly board So expect we We I you and And a considered as we to sizable say end structures. to. just sites. planning a PC products potential could -- the has well, testing, will see been user samples going nice upturn be which once those developed example,

Operator

we a question Company. & Sidoti follow-up And John next, Franzreb from of have

John Franzreb

this lot dovetails question. to of new you're last into previous It be the the up in XXXX. facility CapEx guess, year. I Sure. going a kind sounds tooling like was

it's us to pass of in is, what incrementally budget the it how going tool much go up in facility? CapEx up bigger through to how kind you is the to XXXX, walk XXXX maybe much to Given but down be new can going

Ziv Shoshani

spending spending fact larger is are into to for as only roundabout we capital at money because fact, move next in year we as spend of to new that already mid to twice the CapEx planning facility, is XXXX. expected in despite much. Well, The in the the be the are going expected XXXX

For would this be the dedicated other the for spending growth large India would one incremental and an the X Force year, capacity for to advance sensors for of Modi'in in projects, Sensors. while be further support is our lease expansion one

John Franzreb

CapEx you're in million to So right talking about the million $XX $XX number? that the range. Is

Ziv Shoshani

projects, is This expansion. -- It will related is and close This it's Modi'in to correct. is two $XX XX% those million. to the correct. India

John Franzreb

Got it. a And okay. expecting. was That's fine for now. It's lot more I than

of questions. kind other couple housekeeping a just And type Okay.

service fees we were continue What said expect in year-over-year on forward? going they quarter. for was there and in $XXX,XXX the should professional you think them I

William Clancy

expensed Yes, John, fees majority already associated And the consulting most of internal of them were costs. with that been to control costs, related some year. this has

see XXXX. reduction we should going So into a

John Franzreb

as as It's far of kind are What a forward? should over thinking about Bill? fluctuating thinking we Got we there, been going tax the rate it. And year. be what past

William Clancy

Yes, Well, tax based rate. would it's XX% basis, tough, the always think, be an generated. a for anywhere think, upon always to is operational John. It's But XX% I good a take between where profitability use I on being

Operator

for would conference Clancy remarks. any this Mr. our session. over And concludes closing question-and-answer the back to turn to like I

William Clancy

the joining today call everyone, on you, for for Thank and it. appreciate the good questions. I

also presenting the We in Conference Sidoti will be at late March.

you in very appreciate today. much. Thank So hope to do see everybody there. people dialing I

Operator

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

now disconnect. You may

Vishay Precision (VPG) 20 Feb 192018 Q4 Earnings call transcript