VPG - Earnings call transcript Q3 2020 | Vishay Precision Group, Inc.

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Operator

Good day, and welcome to the VPG Third Quarter 2020 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to Steve Cantor, Senior Director of Investor Relations. Please go ahead.

Steven Cantor

Thank you, Matt, and thank you, everyone, for joining our call today. Third Conference XXXX VPG's to Quarter Call. Earnings Welcome

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

forward-looking statements. from actual vary Our results may

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

now today the Ziv are remarks. some to Ziv call prepared CFO. for and On I'll the turn and call CEO President; Shoshani, Bill Clancy,

the to can refer You X Slide presentation. Ziv? quarterly of

Ziv Shoshani

some I business. and the VPG's trends quarter QX and with Thank an and outlook. our COVID-XX you, on financial begin the sales of commentary financial Steve. details results will of provide pandemic for on update fourth will consolidated Bill impact our

financial Moving I Slide quarter performance highlights. third X, our am pleased in QX. to with

operating now investments year facility ago. pandemic. are We long-term full at our achieved at we new in flow the quarter third to our full of sensors generated free advanced facility. managing for growth continued share adjusted our a global to earnings and we As manufacturing positive capacity the quarter and sensors. manufacturing And cash India continue in challenges while strategies and the per our execute sales, compared margin second We the a levels

$XX.X high XX.X% of We market achieved our X, guidance, Slide the third a million, quarter higher ago. quarter about second than and to was and Moving flat year of end sales which results the above with trends. consolidated

many grew million growth the modest these lows from trends, Consolidated the sequential or different diversified from show the orders second third across continued the quarter strength. of of we our markets our $X.X are signs year. pandemic trends earlier this to terms of in level by show quarter, end while in business recovery of In the markets XX.X% encouraged

strong for agriculture was by stronger orders and Inc. test medical In precision positive and the partially for consumer KELK demand application market, steel-related market strong. or were construction. the for military orders Dynamic orders and were the On in side, while lower DSI avionic, flat. remained Systems, and measurement space offset Orders and

a were pre-pandemic were the Orders in mixed. However, rebounded recovered trends levels transportation the from general in level In market, for was to industrial markets line the demand still this of market trends or which depressed net below with prior in broader in partially, muted result but markets in quarter, second The some orders the general the year. end of GDP in these many move quarter. third of the but the trends, in geographies. our tends economic X.XX remain book-to-bill

Moving X, to segments. growth all segment business trends. across achieved sequential We X Slide

the of For XXXX. sequentially from shipments data QX performance systems. XX% year advanced sensors Pacific sales were strength by XX% of acquisition million, a complemented We X.X% Technology The quarter with in was by X.X% Sensors, of and third QX its ago. Instruments sales higher pleased by Products, Foil from grew Advanced which $XX.X and grew from of

mainly orders for and advanced Book-to-bill efficiencies of cost manufacturing margin to measurement resistors consumer precision was due foil quarter applications. controls. the the quarter Adjusted gross another XX.X% of improved FTP in and applications. FTP flat with consecutive sales XX.X%, which X.XX for and XXXX were for of was for for quarter, softer second driven quarter was in from gross While profit. the sensors third third about the by significant Adjusted test

from benefits additional indoor exercise applications for technology and as as power that continue smaller bicycle and consumption, the get including medical markets, size interest We well such consumer design, customer in for our sensor applications the as to flexible of lower for advanced applications.

we the the sensors, our able infrastructure are the been the are been With keep new of up demand. regards of with currently to capacity maximum we administrative facility current and have building to While for operating advanced finished, we that at project, has offices. move completed our

in us capacity early move the accommodate and we to second future to facility which the growth. in half install be give fully expect of As equipment new the production needed stages, into transitioned XXXX, we will

For of it the recovery. Force a was quarter segment, Sensors continued

our second capacity Third facility quarter late the by return the XXXX, quarter. sales quarter of of $XX.X driven by our third XX.X% the in and of from India full backlog million improved to

The region hit As India Sensors adversely run major has million, hard by our quarter, our And Sensors rate due to a approximately comment beginning dedication with the has our approximately been operating levels. by revenues even to government we has which lifted pandemic X for terms we that by want a were pre-COVID its million Force normalized work COVID primarily facility impacted team income from past was million $X discussed normalized its for of in pandemic Sensors from pandemic quarter, and were faced the by Force rate. restrictions, third aggregate $X.X the in challenges. lower Force of pandemic $XX to impacted estimated I ongoing and in in there production million months local income July. XXXX operating particularly impacted $X by In as their revenue fully run ramping been contended up due approximately in approximately the the revenues. hard first and

was Sales including which of Sensors terms gross below growth rate. structural in move the adjusted run cost compared second and the XX.X% sequentially Sensors orders of of for Force in orders and of was second sales initiatives key by savings volume. and pre-pandemic the X.X X.X% primarily in Book-to-bill rebounded XX.X% we of applications sequential our X lower margin the below of normalized weighing to grew past medical. a mainly generic over XX.X% Sales performed the Force and of Weighing Compared Control manufacturing in agriculture TruckWeigh long-term Sales and increase OEM majority higher XX% Financially This quarter the third higher. This India. sequentially to as due have our Systems products, quarter products, quarter, precision of third cost to the were year Force wing for OEM-specific X Sequentially initiatives. gross an the offset of the quarter DSI higher savings ago. achieving and XXXX. were for by VanWeigh systems. in run from increased third quarter, the to and of Force for million but Sensors $XX.X the the were XX.X% of OEM-related products adjusted solutions reflects third implemented short-term onboard than XXXX. higher second but XX% quarter, lower sales in both is performance which that quarter Sensors' KELK the years, a in the still In rate offset well, of was margin measures the

of partially unfavorable from for to EU volume. COVID reduction second XX.X%, VanWeigh, for regulations product of for and aftermarket additional become in inventory, XXXX. by the margin capture WCS in mid and Adjusted opportunities third sales offset a declined demand impact expect to due the was as mix quarter, new gross in and quarter emerge we TruckWeigh, the higher adjusted continue to XX.X% effective mainly We

results a levels. sequential terms remained The orders were X.XX. orders WCS In orders below in higher, and prepandemic segment, weighing of of trends book-to-bill were and onboard was in trend the WCS of quarter flat DSI for KELK third while these

Slide with to COVID-XX VPG Moving business. its strategy on to X, content impact

In from the terms providing and are health although safe distancing our of with our COVID, include These maintaining on our operating all to continuing travel normally, protect of measures transportation assistance. workplace are and customers. impact measures we and restrictions now businesses employees

uncertainties Given Nonetheless, stockholders' pandemic capital strategic maintain and increase deploying the are our our the world, continuing prudently we cost. including presented the to value. in economic rates around continuing to our we infection long-term initiatives, build control of ongoing are long-term tight by

now we spending As $XX.X XXXX, which been the capital invested be through for to million approximately million first has months. such, expect $XX of X

opportunities to for We to attractive are value M&A. stockholders' additional continuing to build also look

more during these focus on to third around take I our to first financials, In have details. employees to quarter and Bill? would is times. the our dedication of details currently more the like thank I turn our for prepandemic recovered now than Before it financial customer fully VPG's half their challenging -- will business Bill the year, provides summary, world in for additional positive Bill over Clancy of the levels. still many but not to environment markets

Bill Clancy

Ziv. you, Thank

XXXX, profit On of of million and million, was government XX.X% revenues of to Slide restructuring or $XXX,XXX earnings sales, of subsidy an a earnings diluted slide Page our $X.XX. of $XX,XXX third our primarily to diluted $X.XX. share an XX.X% the million X, Canadian a million $X.X excludes COVID-related revenues per quarter XX.X% adjusted income the $XX.X and million sales net or to XX.X% Referring or mainly the Moving net gross deck. X we income credit which $X.X net of or per was from basis, related was charge, sales. and results. In of operating $XX.X of $XX.X profit of of achieved financial a share gross Operating

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

revenues $XXX,XXX the Foreign to positive to compared a third exchange year of as second quarter $X.X of compared ago quarter had a effect XXXX. by for million XXXX on and

improved in quarter. margin On grew margin second from basis, in XX.X% gross second of quarter the from quarter to quarter XX.X% third Our the XX.X% an in XXXX. of third XX.X% adjusted the gross our

of XX% XXXX. third for margin the operating Our quarter was

XXXX. percentage Excluding XXXX million quarter to operating of the XX.X%, quarter of and or of quarter administrative XXXX revenues adjusted margin terms, $X.XX third $XXX,XXX X.X% $X.XX compared Selling, share second XXXX. quarter exchange. quarter third flat of or compared second in mainly related the was were a of with of was the this third and SG&A The and The diluted sequential in were of to dollar revenues, revenues. general adjusted XXXX increased third net and increase XX.X% second quarter expenses $X.X of COVID-XX above-mentioned of In we for foreign million the the earnings the in to quarter from the charge subsidy, impact which as $XX.X of essentially in XXXX. of recorded restructuring or diluted $XX.X per the million our XX.X% for $X.X million per was share the the

XXXX. exchange $XXX,XXX free adjusted generated diluted cash of quarter currency sale of the as by define cash to quarter third for XXXX less for XXXX from We rates or relative of assets. period. activities, increased fixed million $X.X plus flow third net income share $X.XX for million third operating to We year cash per expenditures capital the as adjusted the compared quarter free the Foreign of flow of prior $X.X

rate the XX.X%. tax third Our quarter GAAP in was

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

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

at and sales fiscal we with outlook. sequential the and forward lines XXXX to $XX open net move quarter X solid normal. We ready reporting $XX the of revenues million the and for our third growth conditions in be margin economic With summary, segments. to to In let's XXXX million growth that, global return and continue impact investments expect the Despite maximize QX fourth to of the rates. we all in be we initiatives exchange achieved our of EPS, range as uncertainties pandemic, fiscal Regarding performance quarter for sequentially delivered grow constant questions. and to the across performance ongoing to

Operator

[Operator Sherbetchyan comes first Instructions] Riley B. Sarkis question with Our from Securities.

Sarkis Sherbetchyan

So first sales quarter on fourth outlook. the

and guys at sequentially impressive sales that. that you better I think guided have to it's pretty

driving here? assumptions? are to assumptions? quarter-on-quarter quarter And pick at the beneficiaries I away wanted then and the relative end metrics the of of which looking are So third biggest just XQ what kind kind segments understand markets growth Just to of your the

Ziv Shoshani

Okay.

So projecting are sales Sarkis, we are when at a factors. QX revenues, so few we looking

to X/X company and and that are the the be in not already like And Pacific dynamic thing, the same historically, orders expected in of X/X a firmed such are with KELK, quarters. homogeneously that which to following specific all, is shipped the with to that is not project-driven DSI revenues the in is the -- same First date, that, booked are delivery and cycling -- quarter the of expected are we the quarter. product backlog firm dates which delivery lines shipped and is are across addition customers. within has a instruments like be to the like of

strong. high level of revenues. on FTP markets, more order the take So believe quite delivered, account support of quite to given color consumer if regarding the do different that including product level, On intake is the into the of already to million is number lines. the X/X the working expectation, -- consumer QX and And on to be is said, we guidance the a we project-driven as which strong. environment, is we -- be regarding QX, that is provided cycle the this delivered $XX.X in We current days AMS expected expected

more with other in came lines one. modest is shifted to [technical not in and India we enough the that of of some of decline more on the a product prepandemic to places, are and still the year, and show from pandemic to in expanding India like better the it expanding level also support the QX first once did deal lockdown building, became And in seen One, fluid was not but priorities order softer. respect demand, the and other medical building product the we capacity OEM that industrial support and much situation lines the given the had other we on the uncertainty, infrastructure for in where to demand half did fairly prepandemic growth. levels much to is product flat last projects in we infrastructure into certain support sensors the capital had in than weighing have change order difficulty] lines year, account related took current where We this

India the sensors in order we shifted that the to more support period. FTP on that the adding infrastructure, addition during In to capacity for COVID growth we seen have for advanced predominantly additional

situation a was and the the just it So change given priorities of uncertainty.

Operator

comes question from next Our with John Sidoti. Franzreb

John Franzreb

want they front? bit I talk have with costs as that might of now to of in the the P&L? the you we back Can the on guess, temporary Where about Are cost part I a equation. start you all side little that do put stand place?

Ziv Shoshani

are there two types measures. of Well, cost

minimized the -- other is which travel we an extra environment some the have to we we execute All we which plan, and we products, in ones, we strategic example. of multiyear closing have continuing warehouse the This a facilities, projects, project, -- a we cost-related which multiyear that like part during program have have short-term We as is and cost-related location. abandoned which out to COVID changing that took pushed relocation -- all cost, are supposed and we may QX, support nonrelated have in to have of did addition our them. discuss of all bigger much measures have which

some which into the year next pandemic. of we So projects have given pushed the out

of mixed like term, really significant could a those is which result money. this short amount a travel, in of bag So

projects. that have type legacy longer-term earlier if advanced India addition, moving those to you in recall, in In the sensors, which the freeze can of year are projects, of more some a addition the we to production of with implemented strategic the transitioning or product of into nature salary

a really into it's now So all combination. XXXX But flows P&L. it's

John Franzreb

earliest. that freeze at most a fair the as Is we of place, assumption? XXXX them expect still in such materialize aggregate, to So shouldn't saying you're to that is the costs and temporary in salary the

Ziv Shoshani

going be world and when found forward a to we don't I distributed. know as going change will Well, how that have vaccine the is post-pandemic really say to

effective don't do So postpandemic the assume media. in we in way would that level the level -- will that a same And the but changes same we not we increase that communicate find some of I how travel, fairly I are think are would or and I believe of there electronic to did there fundamental to the ways traveling. that via see cost the

level an So is I this but prepandemic, to increase the of don't would think that same as there be one. cost,

initiatives, we we to and are information strategic in our delivered. our plan, have be delivered onwards once and after there closer that. finalized the we to going to are strategic get XXXX do have Regarding projects we more execution. that provide reduction And more not be and cost multiyear to projects, But projects

John Franzreb

into over the Got interested your outlook it. than what's expected about how Ziv, in Europe, baked happening Understood. much take for there? your I you've And regarding fourth guidance know, don't of I'm kind being, quarter. in the And worse

Ziv Shoshani

can question regarding I'm please? clearly. -- the you repeat Would sorry, John. hear couldn't it, range? you QX I

John Franzreb

your how the considered -- what regards to fourth How much in curious Europe outlook. in quarter in part you've you've as of -- and I'm you conditions outlook much about have the paid

Ziv Shoshani

Okay.

before, So revenues to deliver are expecting that as the baked revenues, of backlog. I the are X/X the in indicated already X/X of into in QX that we

So of of revenues at those steel. end-user cycle and end those the of the DSI given and the end really -- like X/X we are looking of projects

that I think assumptions of the that else I for that Europe say there we did is that in this very factor a always another certain I uncertainty. respect low and I have provided. are place, would is moving to lockdown, a everybody say, have a us that risk do to estimation into given our believe in But we the like put -- guidance

believe tolerance. we that situation is guide Of a think keeps those the -- provided is course, as changing. within there on I guidance that But have certain the I fluidity the

So guidance. comfortable I with the feel

John Franzreb

Any all? issues I your Okay. chain getting Has any what there thing. guess X been last need? at you And supply with problems

Ziv Shoshani

line identify a that be we will and key initially, -- pandemic we not to down a in for company as identify the everyone could to of to in where the we were situation suppliers just to And we as all line have were the there initially, and no to is shutdown. potentially started, when build -- be those we looking Well, situation. today, risk assure and a stock safety in able be

chain from standpoint. supply a are Yes. We secure

Operator

[Operator be Instructions] Our might to us? Ho from next able question your from hear Patrick, you line muted. Are comes Patrick Stifel.

Patrick Ho

Do the And full back the Maybe terms business outlook. margin nice I'm -- talked about in that. on you it Force sorry and congrats sustainable? the segment first production. being about see talked of about quarter Sensors in gains business, being you you that off, at

Bill Clancy

with But further significant expect the all to we reduction At years will the cost make will design-in similar should if today, short, those since sustainable India. margins the margins Since, same are sustainable, answer to we the regarding came level we volume in are as -- level to we as of volume the volumes, even long long -- keep the strategy of yes. definitely continue volume, is did running of story point a would Okay. are the the over this quite with Patrick margins given a which improvement means we moving to from and the margins level pick OEMs. up our a the on exercise with wins time,

Patrick Ho

And marketplace. next near helpful. over several That's term segment see you starting for of X well that that as that to years? Great. the any Can question, that secular in closely you trends as both and the rollout I follow-up is opportunities in globally cover as the discuss my of the maybe growth we're

Bill Clancy

potential exploring stations that with point The large Okay. part opportunities regarding And time. were is precision We design those some is we are XG -- which we the OEMs. is that base engage product at resistors, line within only did the in only of. this line product

a have and product we level made the say relevant the those. phase disclosed related are in to regarding not contacts, for it's to not of But win have of but have opportunity, designing the we only are we resistors I initial again, and exclusively We -- lines. precision rest

Operator

Director over session. to This conference Investor turn question-and-answer like Steve our Relations to Cantor, of would closing Senior concludes the for back remarks. any I

Steven Cantor

call. joining for day. great We you forward our and a you look updating quarter, all have next to Thank

Operator

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

disconnect. You may now

Vishay Precision (VPG) 3 Nov 202020 Q3 Earnings call transcript