VPG - Earnings call transcript Q2 2021 | Vishay Precision Group, Inc.

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Operator

Good day, and welcome to the VPG Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Steven Cantor. Please go ahead.

Steven Cantor

good and Betsy, you, morning, everyone. Thank VPG’s to XXXX second call. conference earnings quarter Welcome

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

statements. forward-looking actual results from Our vary may

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

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

Ziv Shoshani

some of adjusted margin quarter and adjusted we to quarter. XX.X% EPS a second of VPG’s provide backlog. the strength grew the achieved I inclusion to adjusted $XXX.X markets We of our across with you, We on end our and outlook we X.X million XX.X%, X, of executed operationally gross our as DTS to consolidated our begin third ended second for results operating our performance the We pleased with the and and reflecting orders commentary quarter. book-to-bill solid for well for quarter results grew XX.X% sequentially to businesses $X.XX. $XX.X with margin XXXX. and financial Bill details sales trends and Slide Thank will are million. financial Steve. the will sales

of flow EBITDA margin strong and generated XX.X%. cash also We adjusted

completing June. the new move which We the facility. our final acquisition And of of stages of in DTS, are are sensors advanced to in excited manufacturing the we completed we about

X.X% related QX, control performed orders as levels this measurement equipment. test the follows. In ended second from related looking strong reflected the basis, were XX.X% Slide transportation a which On semiconductor segments. rebound the industrial me, Steel to process in the a the DTS quarter the to to sustained orders our and strength all continued sequential at and with above sales of book-to-bill grew first X Sales the business sales the the end X.X% demand. in to from reporting and markets sequentially, higher. with and the the remains reflecting were markets in we were year grew improved quarter all as Demand due exception more to had market detail. Sales individual X.X ago, end at end activity market, ongoing and quarter. X.X at compared project second X; trends Moving and of rose the XX.X%. results book-to-bill levels increased or three inclusion driven XX.X% each each the grew in XX.X%. weighing, steel XX.X% test in grew above – markets, of market at customer In and we Sales backlog. The and increased positive, to market, excuse orders

backlog of an from net book-to-bill includes the from trend for backlog. this DTS of $XXX.X $X.X first was quarter in the $XX.X orders from general and flat. X.X% DTS. included and sales XXXX, to Sales the of by by The orders weighing million million, second of increase While declined quarter, million general result and grew which market, XX.X% of from XX% million a backlog X.X tooling. modestly. were oil and Space up sales which $X while In the driven Military gas approximately industrial a QX, industrial was and Orders Avionics, grew of

million were sequentially, year Technology ago, Foil Moving sales a Instrument results of primarily $XX.X to to the of Compared X.X% advanced precision FTP to due Products grew resistors Pacific quarter turning X.X% system. foil to segments. and higher by sales X, sales primarily Slide sensors. by higher second driven

sensors a the to new from to costs second the QX ago this moderated than XX.X% year While We startup advanced due $X.X to quarter higher revenue were transition related in manufacturing second incurred of sales transition facility. quarter. million the

levels. the for Backlog XX% We in those anticipate AMS, higher the rate. in XX% quarter, Book-to-bill transition inventory the strength facility Demand was which XX.X% transition FTP post efficiencies for sequential it second us continued well demand increasing resistors of as move in products reported impact increasing India. extend for to we as run for continued sequentially, manufacturing quarter was from orders. quarter. advanced of Force in a sequentially. performance, the driven our strong XX.X% expect than the facing as X.XX as volume reflected challenges COVID-related well good to The manage positions precision on higher to for third which as The for gross FTP foil new to QX for increase another and to by more revenue the grow, completing in quarter to a sensors first Adjusted XX.X% Sensors advanced sensors. grew margin was approximately result segment

well quarter, decline exchanges, level year that a sequential to primarily quarter higher and affected Recall was sales improved expand continue modestly margin XXXX products. in of quarter, across restrictions from year higher XX.X% the the a X.X% limitation to quarter our the The sequentially. $XX.X to adversely Sensors Force quarter the COVID while by a inventories growth continues it fully and volume. high facility issue XX% parts of partially due its production Financially OEM business Sensors million from were given but Second as from nature of unfavorable significantly COVID we OEM of first India adjusted revenue at to capacity, ago. in from was strategic XX.X% COVID-related critical improved perform the in many in second infections foreign rates gross of initiatives offset remain X.X% due segment than second exemption by this ago. grew our to ongoing Force of operate India, our XX.X% an This declined first

and as addition TruckWeigh Sales well from the sequentially, sequentially, from our and in softened of for levels year a last At is products. other sales sales As a we gross and quarter to a or to the manufacturing, expect business Sales in of Systems plus, approximately XX% at Force $XX.X million from slower China of given and higher Control the Sequentially, million increased consumer. years. shortages. higher average of function of revenue Force momentum this markets, the components due this of comparable impact ago. mix second The sales to agricultures DTS, over of XX.X% costs as Sensors reflecting our expanding $X levels above Sensors production in the XX% trucks X.X% margins, initiatives from our of expected weighing year precision be ICN recorded we for related China the reflected mainly vans Weighing and and grew X.XX discussed over improvements margin ago, of and higher XXX.X% industry process May, product reflects our for and we KELK tariffs order for VanWeigh several solutions book-to-bill step product. but production XX.X%

in interest enforcement to as of expect XXXX. improves, ramp translate this into We countries as quarter, increased May availability related which the new cost since And EU of from to WCS was and have new adjustments first the WCS the regulations. and interest Adjusted EU gross up XX.X%, revenue second due customer in includes our for mainly products. overloading the the in orders impacts solution COVID addition the margin continue well seen in their we effect in DTS to acquisition higher and vehicles of improved regulations went quarter for as of XX.X% of

as addition In grew sequentially, as WCS related order continued for of DTS trends steel our terms segment, the products. in demand recovery the XX.X% of reflecting well orders

X.XX, As two-quarter this DSI the KELK order for we in in to in the the a and discussed market, of driven and orders book-to-bill With projects, KELK have was have positive quarter is second relative CapEx for combined typically second market. the a which WCS steel this inflection of steel in book-to-bill generally lag the are for to by KELK and DSI year in X.XX. previously, regards which trends case the XXXX. of was result half of revenue indicator The customer

Slide X. to Moving

Bill, call will a the comments. turning I to additional make Before few

In our terms all operational. facilities of COVID, are open currently and

manufacturer employees cases our want and in the acquisition be on Given current measures key of to our On one during DTS thank wave the COVID needed for management strong with and in testing employees systems with safety June to testing. all the on market DTS platform, focus customer with their the of behalf to taking also of I capabilities, acquisition the continue our in of leader but It sensor data critical unique superior business integration for established applications. a complimentary X. our knowledge. niche an and as management engineering DTS acquisition deep data it technical technology system team is technology, a the to as were dedication and around for Board the and of brand quarter, sensors highlights want protect adds only not product leading brings for to rise talented team, well and customers. world, is comment we centered technology this the miniaturization, pandemic. on I of VPG’s proactive and

of supplier dummies, acquisition, add data presence capabilities as embedded automotive test as specialized technology automotive that offering sports in DTS to well sectors and major and DTS military logging the believe market, benefit in crash defense will give As to avionic market. will applications. for our the a from testing global continue is a safety us for from and the avionics expanding need We the to

we an months, XX%. $XX or a EBITDA next believe revenue, more the adjusted to DTS generate million in with Over the has margin XX potential over

details. it continuing to growth opportunities for will I for Clancy financial are now that Bill accelerate further look profitability. will acquisitions, turn and attractive Bill? We additional over to our

Bill Clancy

second or Thanks, achieved share Ziv. revenues table as million million, XXXX earnings $XX.X release, and our Page sales, in reconciliation and XX.X% diluted an per million as tables gross press was basis, X.X% reconciliation gross in in per net $X.X of $X.X Operating or or of lay XX.X% of sales. million Referring net adjusted was of was which income for the diluted of of deck, $X.XX. earnings income sales, to of $X.XX. a out we slide the quarter or $XX.X and the XX.X% a revenues operating profit On profit million, share $XX.X we X

quarter Our and second to year XX.X% XXXX X.X% compared ago. $XX.X second quarter quarter first were above million in the revenues grew the

$X.X quarter. first compared to from first as impacted the $XXX,XXX the quarter ago, gross for second second million compared in exchange XXXX. and quarter compared the an in second to XX.X% quarter XXXX, margin the XX.X% the was Foreign adjusted margin of basis The positively XXXX. gross revenues of of grew in On a first XX.X% year XX.X% by to quarter the quarter of

X.X% with Our operating the second margin XXXX. quarter was of

revenue Our general, but quarter was in expenses of $X million facility. Adjusted XXXX The XX% million, second second impacts. was a impairment Capital recorded XXXX in XXXX. for purchase earnings million, to of or charges increase majority of advanced related million to million, or quarter of net in or the to diluted adjusted $XX.X the related XXX,XXX million revenue accounting margin SG&A of related DTS an million XXXX. million, Facilities new $XX.X to advanced expenditures of first represents for We foreign infrastructure the quarter compared the and $X.X wage quarter subsidies. relates Instrument for sensors exchange mainly or and Selling, the or XX.X% excluding per bonus of $X.XX of second for for million to the costs. acquisition sensor of costs revenues XX.X% of share or $X.XX costs. a $XX.X revenues, rate were the increase related other compared to of the XXX,XXX second and $X.X the were EBITDA $X $X.X per XXX,XXX This year share, which were X.X%. XX.X% second Goodwill diluted reflects acquisition, ago. quarter COVID-XX $X.X million The administrative for Pacific XXXX. of adjusted startup accruals, acquisition increases, and operating adjustments. from compared quarter as XX.X% purchases $X.X

of in second $XX facility, currently includes the the million $X.X operating of of result to we second range to tax free benefit projects enhancement of approximately resistors. well expenditure, fiscal be million of to to XXXX. these compared one-time events free and a flow acquisition. million for from capital full As central adjusted manufacturing plus the define the quarter as We precision million as X.X%, in CapEx cash flow for for activities, investments, for of XXXX assets. which was XXXX, associated cash as less the quarter cost DTS expect for the quarter generated sale as $X.X $XX fixed second cash expansion million of new GAAP tax anticipated with includes rate The a $X which the related We

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

optimistic of beyond. opportunities. Moving X, second half a At about that million. of and given requirements to the debt cash and liquidity order of outlook, XXXX strong to and are we and support million second balance ended the $XX.X backlog, flow the sheet long-term We Slide ample and with sort $XX.X our business quarter we the we our additional of cash believe equivalents fund have at M&A

fiscal we the net million grow $XX fiscal $XX constant third have expect we of In revenues the to been quarter exchange range quarter, the rates. a summary, million book-to-bill quarter, had We For flow. strong our margins orders second of at to sequentially, XXXX of our X.X. well good at EPS and second million generating $XXX.X ratio performed and across cash business growing adjusted of in

are We for that, forward. let’s going the and of what VPG they addition lines bring with the With questions. open DTS, you. Thank to pleased

Operator

first Sidoti Please comes ahead. Franzreb [Operator Company. and question John Instructions] Your from with go

John Franzreb

you in for the that the particularly to with Ziv, everybody. the a of start of put context I that, talk commentary is if Can taking this flattish Good steel about heard your I it the end delivery market us? steel correctly, business? X.XX. in here, morning, I – the in said thanks markets book-to-bill the bit And business, but wanted into to duration some I for with want little times questions. what’s

Ziv Shoshani

Yes.

you market, the cost by prices strong very I many backlog will companies sales, in higher say Historically, indicated up metal that are Regarding have that a a the is are demand currently would reinvest lead four that the for going and and those steel capacity second seen will mainly reflected see which time orders intake, John, improving the year, into order KELK or mills, and increasing the in of products. represented the of five as steel is indication and DSI The intake between, to the I starting we around reduction we projects move X.XX. the currently of we strong say the Therefore, order driven in see be months. first I to half much half the as XXXX. the

John Franzreb

I kind kind avionics the seeing military in there. of seeing any you’re been order it. in also It’s What kind business. and guess are defense of trends kind marketplace, similarly of of Got flattish. and strength that

Ziv Shoshani

Yes.

back stronger Yes. quarter We for is a much the seen was precision Instruments, ago seen we demand resistors and for have the And improvement the second coming quarter. – Pacific have was – an much which the projects softer. from company AMS X.XX on AMS book-to-bill mainly for

So, the demand. in we’ve got rebound

John Franzreb

all And this deliverable is year? that calendar

Ziv Shoshani

is Yes. The this of products Yes. second shipped types to more are line be repeatable expected with for time expected business, therefore, is our be to the of It half it lead shipped. expected to in year. be in those

John Franzreb

wonder get you in some us. talk performance to just if pre-COVID revenue little the put And versus on context it. it’s to about today business a how bit that DTS, is levels you up XXXX level the opportunity, just I from from now the great it can maybe go. contribution that have for in Got could is

Ziv Shoshani

adjusted just $X million as gross reported of give margin of operating fact, we margin have adjusted to you Well, XX.X%. revenue, XX.X%, DTS, of in

model, numbers, before introducing and In do for continuation that new Strength at significant when DTS fact, business, is testing we safety. in the and looked any them, company car automotive the acquire to really fact automotive a impact to we due have we historical due the we a business see And DTS there is momentum business, in seen continuation. not this a core the COVID.

XX%, in there strong therefore, to prior we is decline have continues to strong business XX% AMS significant and a strong seen environment. not any a which which safety, is DTS it’s demand addition go also – COVID addition, is of fairly In its to

John Franzreb

queue. for back I’ll right. coming, you. the Okay. All Thanks in Ziv, Thank get actually

Ziv Shoshani

you. Thank

Operator

The next question is from Sarkis B. Securities. Sherbetchyan Riley ahead. with Please go

Sarkis Sherbetchyan

Hi, thank you question And good taking morning. here. for my

Ziv Shoshani

Good morning.

Bill Clancy

Good morning, Sarkis.

Sarkis Sherbetchyan

Hi, Ziv.

sales, with here, let’s $XX So, be help million to million segments. obviously should quarter And call touch anything to just book-to-bill it contribution to $XX math wanted standpoint. million right, me in quarter, in an million end seeing my low is across if strong, the assumptions understand into me going end, $XX to DTS $XX here. that, different to are million folding of if see, your post low that third kind outlook on the strong and the help you’re shouldn’t or just Pretty all see on a $XX the you’re from EBITDA range let’s profitability on correct, we

Ziv Shoshani

don’t we –for the of DTS, a million guidance or profitability the $XX effect. we Sarkis quarter, quarter a of another sequentially, its this to are in at which regarding $X which are – expect guidance, QX guidance is we As, own it next following quarter looking favorable $X full higher, margins is to looking say of a midpoint which give we sales the for only impact million be million would $XX full case, let’s sales the the million, it’s any

related our DSI. which few In is and hand. on we at looking addition to another $X are KELK million factors by being In products, FTP, delivered steel one

expect place in Naturally of expected last we qualifying margins higher to once fact is due transition be that the piece the putting see transition We equipment. should has in and have the much, QX, we been which finalized, we would lower see a to are the revenues AS some QX, to in which completed.

that addition will mainly having due you also, impacted by holidays, being is QX, to the historically in be all had addition FTP year. the days to in are in for we In from working Israeli Europe, this the that fact in September fact less to effect coming national which seasonality the

the So, at all million we respect the I ups quarter. as and said, $X a second about looking midpoint upside in the around downs, all are even to is all in

Sarkis Sherbetchyan

sets up that Ziv, and of kind next question. understood Yes, the I for think

is kind seasonal. regarding for September order So you guys quarter typically, of fairly and the the strengths,

quarter top-line the provided third for you better of quarter? least third the So, Or looks at quarter of this do the you’ve kind guidance fourth should think year than something we outlined? from this the expect zipcode of in a that perspective you’ve

Ziv Shoshani

say I a based we may strong we on fourth If are year. indicated, we least, second At guidance. moving Sarkis, are have now to quarter into expecting second the have half what

Sarkis Sherbetchyan

like Yes, complete me, have here. advanced transition for headwind of now some as move the And still to of understood. expect revenues in the to sound in sensors, the third finally, a then quarter. you this it might for quarter kind acted And

to mentioned you I in backlog grew think XX% the advanced prepared remarks, Just get sensors. wanted understanding of an for Q-on-Q

So, rate an on the what that product run annualized if for will, sales, basis category? for would you be

Bill Clancy

million get an quarter, mix, QX, end to us support some to which, in XX% the to in expectation equipment of expectation additional in at in to on be since key the that equipment been full are not to additional respect the this the we transition has higher in qualifying third quarter, the extent realized capacity once XXX, revenue has we to So, with fourth transition does cost in would product the point startup XXX able backlog much completed, capacity. time, also and capacity, been allow is around once would would we be the equipment have an the still third of place processes, depending and quarter The the at second by the of quarter, completed. be $X.X we

Sarkis Sherbetchyan

the hop in Thank you. back I’ll queue.

Operator

go next The ahead. Colliers. Please from Ryan question Dick with comes

Dick Ryan

did kind Ziv to you. that we’ve with specific cost or deferred across were know there broad QX and the see exposure supply chain? any board the the logistic there was of Thank I pushed concerns you you have increases, heard of market revenue margin due but was out about impacts chain you’ve any end and companies, most had supply

Ziv Shoshani

Okay.

to States or effect. coming Asia logistics increased for from we have regards surcharge, I chain, we the allow to with prices seen been an to in would United supply Europe So, discussing say customers cost in increase for this logistic Dick, offset Sensors to order and have to additional or logistic surcharge mainly Force the

regarding our to to own that additional the I before, impact these of that there a chain mention estimated coming believe chip In we market weighing components lead the the those the we shortage. continue and quarter. have there to our do like also main well. for will know there the shortage, to quarter headwinds as customers be concerns But it in significant the are for and date did we approximately we inventories not But for monitor $XXX,XXX we in additional the are supply shortage, you seen impact revenue availability. board also potential probably mainly due from those that to have increasing so, being in quarter second introduced from we an competitive. third new second any the components in in client. to is to third costs identify quarter, components of we We components, discussion significant terms In probably it be supply is not addition we chip chain the identified. microprocessors would in and sourcing vehicles some our some IC where and supply as cost we is have ensure higher very delivery cases, time In customers, remains work experienced And to key pass some very, our to to global trying

Dick Ryan

Are increase Force is or actual amount in the that I percent a In existing Okay. business the and if customers? you. you not you caught sure Thank increase gave if was coming OEM dollar new I’m Great. I from there? nice the Sensors, wins you think seeing there business. said

Ziv Shoshani

from the now precision has those So, customers the those the an production starting Sensors, mainly, extent, also it And while is I been from would OEM And ag, that customers, but before. Force but barely ag, applications. business reason identify for had upside say I consumers we also did that new gone coming coming from business to realize part in consumer to of fruition. larger we in volume, in have designed Force was again, came which for to precision smaller but consumer Sensors

Dick Ryan

Okay, thank you.

market strong On period your you seeing kind and test some you or this year? seeing underlying trends? period the a end of measurement, digestion the pretty half mentioned of semi semi. through are any Or for you going Are still strong kind second consolidation of business

Ziv Shoshani

I about demand to coming semi the fairly our is of sales business, low the precision realize channel, a OEM, we if resistors, When I currently mainly level which they look the at inventory. still speak from relates have distributors,

will But distributors. second move as demand driving the of this at we time point would expect have in we inventories they any do depleted once significant an months time, that see the this six be placed those this in last this we to the We point to distributors, OEM. year. the not Therefore into at believe for do this not expect the changes from major in at see half So in year. our of point and of additional demand time, orders force main coming at

Dick Ryan

Okay, thank you.

Operator

Bill next ahead. from go The comes Capital. Instructions] Please Dezellem Tieton question with [Operator

Bill Dezellem

revenue Pacific and couple all, you first the aspects? contrasting the to of they discuss questions, relative off, had that of and A yet Instruments, growth, two you. kind those of fact would you did write sequential goodwill Thank

Bill Clancy

and – an on handle accounting always this mean, I basically, Bill, based can impairment Bill, Yes, is calculation. a, taxes the it’s goodwill I that.

Pacific look in forecast, for You a year, we sequential a for year proposed even as seen now we just through to we been slight ago, not have the though quarter see impairment for mentioned, – accounting you revenue we at the off. full the hitting on goodwill process, presented or increases and what this still I the took has mean targets. and the Instruments methodology, the all completely And based written running

Bill Dezellem

different Thank then totally you. And question.

published that, that that model, would You why to closer would that it $X.XX the and presentations. million you with you did have that the revenues your in above And revenue end be have revenue model? indicate EPS up being in prior model, $XX

Ziv Shoshani

did acquisition question. Well, Bill, good the this we include of at XXXX is have DSI. The not target DTS time, and model a that in very introduced

We the quarter-over-quarter, also exchange and rate, you been mainly for effect, been, the also the also it shekel may update has is negative need you which foreign the a Israeli ago. which the changed see which XXX to way, rate exchange has – dramatically see by but quarter year

we in anticipate and are that to quarter. model the in the of updating So, fourth process it introducing

Bill Dezellem

would otherwise that we quarter, you. above the then would as what indicate? would thank the earnings Great, be would the model And for implication, with third that you also be up end

Ziv Shoshani

target. itself – acquisitions, assume that and been the – we bear related profitability not has given please but mind does two have that in the model, in you’re accounted that the also that correct. cost But would two okay, top-line, Bill, the encompass model Given not I the

we as provide based we update comprehensive we integrating exchanges, the before on model, able those moving model, which did the to on updating – and be would once based accounts a parts. So, more for the all would

Bill Dezellem

not earnings, account very $XX we model. I’m $XX taking terms just in everything recognize that’s into $X.XX of the can model that entirely to million acquisitions the the is two million that accretive of $X.XX model just And in of revenues, to at indicates that are that helpful. to thinking Now, the

sounds that, it, So then that’s just directionally like. it the be to thinking about way

Ziv Shoshani

also only provide a model would to not two The be associated acquisitions, should Therefore, will be but dropping which in for for we the You’re to we revise has certain costs, incremental and the account revenue, – way into those did revised SG&A time companies. a account the model pre-tax for additional at we Once the fixed that level. and for the should has be we top-line will complete organic the absolutely there chart. cost accounts correct. growth, account of for have pure revenue, percentage every with those

Bill Dezellem

accretive you thank the model. Great, having are And acquisitions thank for you. to that and beneficial

Ziv Shoshani

Thank you.

Operator

go is with Sidoti Company. from Please and question a next ahead. John The follow-up Franzreb

John Franzreb

much to how Actually, two the essentially very to XX% along going was it’s the accretive ask does that the change lines XX% of questions. op incremental last margin. acquisitions, with it I

or answer how depending to comfortable? on you feel not So

Ziv Shoshani

will the update we and for revise those to time, this John, exchange the At model model. does as the I rate. acquisition not said, have to account also

revenue respect revise model. top-line the the therefore the in to does We So, model. profitability just correlate not bottom line have to the to

John Franzreb

that thing. the it my it was way Congratulations. Okay, sounds is question. good But a follow-up like the revising

Ziv Shoshani

Thank you, John.

Operator

[Operator concludes our like for session. the to I to conference over Cantor remarks. turn any back Instructions] This closing Steve would question-and-answer

Steven Cantor

Thank you.

I I’d day. D.A a Before in call. of that note conferences posting September, the our investor number that to on to participating Sidoti, With will some information like in you be including Colliers about And a And Davidson and we want concluding for that, good be joining have our website. conferences. we’ll thank all

Operator

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

disconnect. now may You

Vishay Precision (VPG) 10 Aug 212021 Q2 Earnings call transcript