VPG - Earnings call transcript Q2 2019 | Vishay Precision Group, Inc.

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Operator

Good morning, and welcome to the VPG Second Quarter Fiscal 2019 Earnings Conference Call. [Operator instructions] Please note that this event is being recorded.

I'd now like to turn the conference over to Reynee Tung. Please go ahead.

Reynee Tung

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

VPG today's a find available the on be it at limited You accessed will and website. VPG's can be vpgsensors.com. An internet for call website on audio time can recording of the on

of and content by by call VPG and owned The this is International conference is protected U.S. Law. Copyright

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

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

Bill to CFO. Bill? the And now Ziv and hosts and my it's Clancy, President; Shoshani, introduce pleasure for today's CEO call,

William Clancy

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

results environment. his will the Ziv the global provide that, Following and of business view

earnings with of revenues, $X.X diluted net operating million share diluted $X.XX solid of earnings adjusted had X or XX.X% million, per net XX.X% operating of of of per the income we Page $X.X a Referring share $XX.X second margin or revenues, XXXX, $X.XX. quarter of up deck, and of revenues million of adjusted to slide

X. Slide On

million, XX.X down to of exchange second compared quarter revenues of of foreign second X.X% of million. was $XX.X in XXXX rates to second $X.X quarter for -- compared the impact by $X.X million revenues quarter revenues negative decreased as second the the million, XXXX to to Our $XX.X The XXXX of quarter XXXX.

quarter in the of profit decrease $X.X XX.X% margin was of $XXX,XXX, million $XXX,XXX. of the in decreased second of gross negative of attributable rates $XXX,XXX, to currency a manufacturing to the of compared comparison of and primarily impact quarter charge profit of $XXX,XXX, in in second one-time XXXX XXXX. decrease XXXX foreign volume to to $XXX,XXX Our the XX.X% for The second quarter wages as costs gross a from of

expenses for XX.X% Selling, XX.X% exchange wage The of rates in mainly second XXXX of general the to or of and million compared was administrative positive and by of related to general selling, were increases. offset expense of $XX.X administrative $XXX,XXX of revenues, decrease second $XX.X quarter million $XXX,XXX quarter for the impact XXXX. or foreign

in share adjusted compared diluted or net the second XXXX million stockholders diluted to share, second million of of earnings $X.X were quarter XXXX. $X.X $X.XX the or for quarter $X.XX to The VPG's attributable per per

of $X.XX or for by earnings per currency diluted quarter decreased XXXX the rate exchange XXXX of net to Foreign quarter compared second $XXX,XXX second share. the as

second $X.X quarter of of defined from for the million capital generated XXXX, second cash amount in was the for sale which expenditure, proceeds second the the net compared of the second was the of less of quarter as of $XXX,XXX of for cash free flow operations, assets, million $X.X $X.X XXXX, quarter of XXXX. for from quarter which was which the of cash million free to as million generated We We $X.X second XXXX flow quarter XXXX.

for rate We XX.X%. quarter tax of for operational rate be XX%. the the year in ended anticipate will June XX, was GAAP XXXX, that the XX% tax Our range the to

be on in X. which focused We've our the on core will believe we Slide strategy, remained achieving of effective Slide the X. very execution On goal outlined

let Ziv. on With that, pass to comments me further

Ziv Shoshani

An grow of great developed to of in by line, Product design. our product sensor Bill. approximately product in grown the gain is is adoption. revenues offering. more continues advanced A part new important you, it developing second this our increase part as XXXX which to advanced XXXX. strategy our has Technology as Foil example quarter and Thank second platform this of saw sensor We of the the our segment nicely We customers quarter XX% versus included of

of customers. A acceptance and continued are in enhanced the example our is and proud platform with Control to pleased segment. provide are Systems second this new sensor to We performance Weighing

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

spending of Moving over were XXXX of to for sentiment up XXXX. supply The QX continue. Positive our in with for quarter increase continue is XXXX. military end demand investments, defense defense XX% the The likely QX markets in in for expected and avionic, space. and treasury outlays beginning third spending of is to to

fall capital market, memory this projection logic expenditure, fab year. capital notes. dynamics foundry In advanced while XX% end demand limit equipment and for near-term the spend The producers product semiconductor as equipment demand remain on muted to

as the to begin However, under X% to increase producers from demand by investments. is the recover expectation

with was is Finally, that the tandem global focus XXXX XXXX economy. rate in growth to The moderate demand steel and turning continue to expected slowing but global market. would steel to grow,

see rapid serve. and environment in to uncertainty our volatility growth, in several and could after focus. However, this pose trade continue the potentially we markets of In summary, risks downside we markets stability financial over end years very

XXXX second Total X.XX of X.XX in of X. company's the second quarter and the quarter was the X.XX overall book-to-bill XXXX, in million XXXX. X% were to first of the a million million quarter million XXXX quarter compared orders $XX.X Slide in a from second $XX.X quarter $X.X quarter of $XX.X the from in of and of the second The to of for XX.X% Moving million, of in $XX.X or decrease first XXXX decrease or XXXX.

Force Also is OEM in decrease a saw sequential and precision market test customers Americas resistor The Europe. in end in Europe products attributable decrease the the to in measurement markets force products orders with Sensors Asia. in and mainly and in measurements in primarily

saw and in a Europe. the decrease we product Finally, steel Asia for in demand

XX, backlog XXXX, $XX.X at decreased at to Our million and compared million million, XX, June to $XXX.X XXXX, XX, June XXXX. $XX.X at March

Moving X. to Slide

X% XXXX, of Sequentially, reporting X.XX orders the X.XX our on of Foil and had XXXX. details second to decreased quarter segment of quarter the for or the quarter by quarter first $X.X compared the X.XX ratio of Some XXXX. segment. the Technology Product The for of first second XXXX book-to-bill from for million

in decrease negative of first and $X.X Product was million quarter for of impact increase quarter in margin $XXX,XXX, the primarily profit XXXX. Technology of profit The due of a foreign of in gross $XXX,XXX and the $XXX,XXX, the currency the of XX.X% down rate Foil gross in was The manufacturing from decrease segment XXXX to in quarter of cost second XX.X% of XX.X% increase wages year-over-year of XXXX, $XXX,XXX. volume second

in backlog $X.X markets and in last and product The the space decrease by Product a from year end measurement X.X in quarter. market due profit gage the primarily was in Americas the military volume months, decreased and X.X $X.X measurement months within primarily of the test Pacific strain avionic, Foil end The product months margin to volume force came the and the in to in X.X Americas. million. and decrease primarily million gross segment prior compared Sequentially, Instruments Technology

in to XXXX. second Looking X.XX $XXX,XXX of quarter of decreased for segment. X.XX from quarter or by the The quarter X.XX in XXXX, second XXXX XXXX first XX.X% orders and and of Force the down profit this Sequentially, the XX.X% at The the XXXX, the the down quarter for Sensors book-to-bill compared in first quarter for of XX.X% XXXX. of X.X%. was quarter from ratio segment second in gross of margin was second the

to to compared gross the second Americas. quarter decrease the backlog XXXX year X.X The exchange Measurement compared compared prior $XXX,XXX the to the due impact in $X.X Force profit quarter. market of decreased gross $XXX,XXX. of in million to was customers of in million X.X of and in a last OEM $XXX,XXX, months decrease X.X quarter of $XXX,XXX of volume to was one-time due charge of months XXXX by months, in The Sequentially, segment a $X.X first Sensor decrease related volume the and profit a the rate negative to Force

the quarter orders decreased the by the XXXX second quarter and Systems in Weighing or book-to-bill of the in XX.X% the for second of XXXX profit the XX% of segment the second the was margin in XX.X% of first X%.The and For X.XX of gross XXXX. Sequentially, quarter quarter X.XX XXXX quarter second versus XXXX. for $XXX,XXX first and segment, Control ratio to X.XX XXXX, for quarter of for was the compared

wage the mix. XXXX Weighing increase an manufacturing impact and an currency a of $XXX,XXX of due to decreased of Control in by of negative profit of increase by unfavorable System $XXX,XXX offset from $XXX,XXX, product volume $XXX,XXX foreign with quarter increase an and mostly gross $XXX,XXX, in second of costs

The XXXX. backlog compared mainly months volume decrease Weighing with System reduction quarter due X.X mix. in Control quarter was of was million of in an to profit X.X first gross XXXX second of in and product XXXX months $X.X Sequential first and to months, quarter the to compared the unfavorable X.X the of of million the $X.X

Moving to Slide X.

exchange order constant rates, and second for Given expect third net intake the quarter of revenues the our current we the range to XXXX. recent $XX environment fiscal XXXX of in most quarter business million $XX million at

lines With questions. that, let's open the Thank you. for

Operator

The Riley first Sherbetchyan Sarkis ahead. instructions] Please question B. with [Operator go comes from FBR.

Sarkis Sherbetchyan

for taking Hey, my good here. question thanks and morning

Ziv Shoshani

Sarkis. morning, Good

William Clancy

morning. Good

Sarkis Sherbetchyan

you're maybe kind areas markets? markets. of, the So current are weakness? of the are the and you outlook. I just us understand the end mentioned What I some areas far of the wanted order you with help end there. the strength? prepared rates what Ziv, from first regarding in various Can will seeing takes on puts to touch of start know What as sales the comments as,

Ziv Shoshani

Sure. given quarter-over-quarter precision a XX% intake to decline maybe a is precision reporting quarter of for resistors, the as say, from one-time of a the quarter would order The the happy order the I XX% annual as we’re from would our Instruments. over and I coming declines, well the business similar FTP, current Pacific Starting end resistors. regarding of is markets serving. overview general large environment, year-ago the one provide segments order decline -- be with coming

all, main from all-in see serving we’re softening precision or -- -- markets. In end precision resistors, different weakness resistors. the of we coming So, in

seen that the down new slowed for think dramatically the one the and semiconductor and is largest Americas in we’ve place I And demand measurements. -- in and far, biggest impact Asia -- in has fact the manufacturers the American in the by the the equipment is putting equipment. test

as equipment testing. fab looking about we’re is We’re -- as -- speaking as is IC well which chip back or which front-end, back-end,

the that toward drop low currently we we’ve the, we I'd precision year, general plateau. -- given of certain on biggest the reached there's more inputs say, is equipment demand semiconductor for very, end we’ve that for slightly very way, see to resistors the and I a do side. lower that investments capital happening. to uptick also is But On the in different sense, industrial environment of is So expectation in is based the I resistors, believe the regard in received, markets. the believe the macro -- And precision as end the indicated, see from coming in which some

for project-driven from there strain on annual the extremely product. that avionic, a has lines, part, and see fluctuation Micro-Measurement year-ago, coming was we as we resistors, of really order This precision the military Pacific the end an -- nature pretty phenomenon gage year, solid for Instruments. this is market, very, a specific quarter do an basis. order or don't similar our For the intake incoming product year-ago, a the the much and/or see A space large but placed -- for bigger all very similar including been still is this

lower equipment, measurement which So, industrial already all plateau. to in reached believe extent, a market, all, semiconductor for test and the effect and FTP, we general is the biggest the

to way, as Force Force large coming in the some Sensors In well from end our have general Sensors. respect reporting we as for segment, expect, I based servicing Force we’ve we’ve and segment, the Construction, precision should plateau industrial the our we and industry. in -- Sensors as the -- orders Control we mainly QX see we Systems this -- serve a in serve: weighing should that of markets to decline seen the market, one the this as serving to There the similar that industrial some medical the Weighing end we and the medical, general in we a onwards. from one we’re as We information of very received expect to Moving to quarters. for project on Americas, another as for due ag, believe three the regards OEMs reached, large in customers, identify picking The quarter fluctuations construction that well the are biggest Pacific change to end-user quarters segment, from still from to different Instruments quarter markets. to really is here up nature.

the well, half a it would that lower, should in I say running year, the maybe similar far in also environment intake second should year, strong, very strong, in the despite continue general but similar for So record this high be to order steel second this a not -- of at it slightly expect And level but year. the quarter, be we in should was was this also we’re still maybe way for steel. as

Some the strong. our the the running European -- required. on-board being weighing more capital other is process slightly North for hand, business which weighing general America side is industrial business, side, where investments on by our But the softening is in where we also serviced is construction see on

So, segment, a of a from kind all-in we’re a all, wash different end regarding in we expect, the reporting should markets.

Sarkis Sherbetchyan

all the Thanks it. Advanced Sensors segment. for I Got touch can the if there. color And on

quarter year-on-year, was some good about high-XXs I I this think range think mentioned, it was there in XX%? you for growth, the

Ziv Shoshani

Yes. Yes.

Sarkis Sherbetchyan

Is that can us there help with anything to line? in incremental regards product you

Ziv Shoshani

in we’re did orders and expecting despite in for we’ve in already and we into and I XXXX. this continue is started in customers. stress going product this to revenue line think applications expect introduced acceptance a significant But developed. new make believe, that applications. from not We good and that very, significantly -- XXXX, move a realize that we shared as -- new samples which earnings regards have quality, the new our to the to to go product fact but I the up product new new applications, The very revenues, advanced I continue -- inroads into markets to that service level sensors prior the to we level, deliver to we but do new we and develop analysis end

Sarkis Sherbetchyan

Sensors the That’s mentioned I facility $XX million included you I it. still you do XXXX? and shifted Got in previous CapEx into spend helpful. and to well. calls that on next related that, and build or for like this well, would And had as this think that think about Force Is to year plan a as that some little advanced get for year sensor for bit does that of

Ziv Shoshani

excellent a given spending, Okay. the That’s first given of year. million This in projects, bit on Despite those the fact are $XX nature the question. capital of the we're all light was of that little that the related. an XX% infrastructure the planned half

advanced management The the to sensors, plan manufacturing the and is, the start on quarter for early place it we're can transition at part. second that of in year so-called new on to report transition the next we’re at was that which as QX transitioning I project, facility I'd So is putting the say, Modi'in sometimes the the very year. of end early finalize to beginning next the time.

on time we're wise and timing this budget So project, wise. regarding

year. next we expansion, second time and this end we’re also project, of India quarter the Regarding expect to on finalize

Sarkis Sherbetchyan

Good.

I CapEx think suppose, And Is it? I right of so of would the in year? to guess half way that more about this spend perspective, from annual back the be, the

Ziv Shoshani

do expect million. initial $XX correct, you're the this This for projection and and Sarkis. is at -- absolutely to But point, correct we we meet the

Sarkis Sherbetchyan

hop ask questions. queue to in will others for I the Thanks. back

Operator

& Hinman DeForest with Walthausen The next question from Please ahead. go Company. comes

DeForest Hinman

I you've well? all the And you that terms are just there, think to. numbers it's ask these in past, escaping. the just giving for give you terms what you in I for detail opportunity new of a color of delivered If to? the being some the that Thanks been is revenue end Hi. further Q&A. think markets on in delivering could given as some us little update there us you’ve is any Is opportunity of you color product can that Can that in applications

Ziv Shoshani

to to application. the even They specially share confidential. would I’ve with to open markets. can very, that I do -- our regards regards strict potentially end in is keep be to very of have sensors, this opportunity -- to We like key careful in because stress this bit -- we NDAs a some advanced going to little is it But whatever is analysis new customers

Board to very market, participate and And that we take the the for PC testing going significant Board to any serious to being since it's currently. require and type PC I stress PC certain And those Board that. the as market measure in similar believe to applied also example, offering. Board do we’ve manufacturers, cost testing, of good competitions doing most they serves in Board, we’re For not move But market. we other planning and mean, the gages testing, have stress a while field. end do of we’ve -- Only this currently within a PC believe planning standpoint, similar stain stated application testing, which share on directions be performance do dollar analysis the that -- and product before, while from to market and the we’re product in a player price designing order into end product we PC we’re I multimillion a a

DeForest Hinman

step any way and in XX% and completion Okay. we’re factor would the in a those advanced that facilities how can be in Just that cadence [indiscernible]. those the about terms thinking is would it And when of we performing provide how think sensors, finished, seeing or about any of very revenues? you is function making investments revenue on growth before helpful a Israel those are in we’re be that gating India revenue color facilities

Ziv Shoshani

Sure. good a Sure. question. very Absolutely, that’s

with let XXXX currently So start sensor, we’ve projection. well current enough me advanced capacity as XXXX premises, I'd -- currently as say in to support our XXXX,

-- a But if our order come which volume. higher revenue don't any orders potential quite it's all potential larger us new leased much is point to feel secure those when regards risk Sensor given -- there's support Naturally, current now the to In similar to So once the transition the the we currently next also to premises opportunities into we way of time, our to in that we're give some already going opportunities of will in extra leased part complete opportunities to due that much of no facility, support in we risk going we this premises. and lack we will space, India, space. come premises, within current at order missing feel in until Force be mid support segment, finalized. can in so some year expansion external as

place point the this revenues -- due time, we’ve if could due the I to lose we at don't certain manufacturing be position So say. that in in to I may see we may space, where equipment and a and in space constraints,

DeForest Hinman

Okay. or Thank final on Thank any update allocation repurchases pipeline, thoughts outlook, M&A dividends? capital and give us on valuation, questions of you. group And share Can an you you. then on strategy. then

Ziv Shoshani

own first the From well is think that we similar and the expansion and requirement growth future Sure. as provide to expansion I the capital company's -- Sure. our organic to which to that capital Absolutely. to support priority information as for did a past expansion. the India similar similar Modi'in allocation, some is

M&A at rate, that been the with on and with M&A believe report. opportunity. disciplined our and looking in We’ve priority queue in of the to opportunities, the terms would it and constantly past quite -- feel second even priority environment say, valuations we’re up of reasonable which we’re not take more course, definitely on a an is the extremely from most But very to company discussion, the in of and we’re and I interest The a more and lower changes, high lower that any nothing we despite changes reasonable it's we is takes serious recent at. there's -- tangible supportive have, looking even the list do We M&A.

or and they’re as comes board the at looking in open it -- of that. are to and opportunities option. at dividends dividends, that, the buyback directors buyback -- stock -- buy purchase as as looking As always well is and all they’re part And -- a in of viable of

DeForest Hinman

Thank Okay. you.

Ziv Shoshani

you. Thank

Operator

to turn over [Operator remarks. question-and-answer instructions] back session. to the closing Clancy Please Bill like This our go concludes I conference ahead. any for would

William Clancy

call be that let And We to thank you and you, look Industrial forward in will on Vishay you you for Thank to in the joining everybody near the Group today. to future conference Precision know talking operator. also the Jeffries' Conference. participating

day New tomorrow, in will We be all York. there,

you look I appreciate to Have Bye-bye. a to very forward So good it day. much and talking soon.

Reynee Tung	Director, Global Marketing Communications
William Clancy	Executive Vice President & Chief Financial Officer
Ziv Shoshani	President & Chief Executive Officer
Sarkis Sherbetchyan	B. Riley FBR
DeForest Hinman	Walthausen and Company

Vishay Precision (VPG) 8 Aug 192019 Q2 Earnings call transcript