Earnings call transcript Q4 2022

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Operator

Hello everyone and welcome to the VPG's Fourth Quarter Fiscal 2022 Earnings Call. My name is Bruno and I will be operating your call today. [Operator Instructions]

I will now hand over to your host Mr. Steve Cantor, Senior Director of Investor Relations. Mr. ahead. go please Cantor

Steve Cantor

and earnings everyone. conference Bruno XXXX to fourth quarter call. good you, Welcome morning VPG's Thank

Our QX An and the also slides today's have be full will internet year press posted call the time our release for on accessed a website, and available on vpgsensors.com. be audio limited of been recording on and can accompanying website. VPG

Litigation governed provisions of Private Securities Harbor by the Safe Reform the are remarks Today's Act. XXXX

statements. Our actual may results forward-looking from vary

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

CEO the President; Clancy, and today Bill Ziv On call Shoshani, and CFO. are

remarks. Ziv? to quarterly now of the three Please refer I'll call some the turn presentation. slide to Ziv prepared for

Ziv Shoshani

in you, the am I successful performance, and XX%. year delivered to our our revenue year VPG. we best XXXX profitability. in of quarter by report XXXX Steve. Thank with history growth Beginning and terms for We was grew another very pleased VPG's

the exchange, revenue XX.X%. we impact foreign Excluding by grew of unfavorable

adjusted recorded our We adjusted adjusted margin XX.X% our to from and increased $XX year. million We net in EPS generated EBITDA XX.X% to EBITDA in improved diluted prior XX.X% by $X.XX.

potential. structure new a our growth operating accelerate on launched leverage We which strategy built believe and diversification, long-term our will and we operational strong competencies corporate

measurement solutions, of these the strategy. our power demonstrate increasing sensing results the We and strong business of our believe model importance our growth and precision

years, us to to targets. is have over the we three to important delivered puts five-year a XXXX note closer several continuation past is that of our financial performance It our achieving the results and

four. slide to Moving

X.X% a We fourth which quarter of than XXXX. the of year both Turning higher sales third million, reported quarter and to the XXXX. $XX.X ago was

impacted negatively be to segments. our Weighing particularly continued in foreign by performance sales Sensors and exchange, Solutions Our

quarter. Thus, revenues from and $XXX,XXX total grew revenue compared excluding our third XX.X% fourth quarter sequentially. and by FX compared prior by when year to a million ago impact, the impacted $X.X year FX to X.X%

diluted above We $X.XX net Through adjusted we higher slightly increases, on We a quarter. material EPS from realized price the fourth to million in is incremental adjusted of $X.X compared selling price million offset passed ago, of year price from XXXX our $XX.X record which realized increases target We to costs. mitigate successfully an end the in EBITDA costs. higher XX.X%. XXXX of generated high adjusted This revenue and for increases. material and our margin labor of EBITDA achieved essentially

record softer consumer, measurement, quarters in in fourth consecutive of the orders. lower book-to-bill reflected X.XX seven and orders The factors; markets. quarter primarily steel After first, of cyclicality, the quarter over and the the test following orders revenues, X fourth our reflected book-to-bill fourth quarter QX and

comparison And a of Second, semiannual and third the one-time a and the which annual project-driven orders. third, included timing the Ag. large in quarter, orders of Precision

While XXXX, we limited, is QX increase improve orders expect to in near-term the year. and visibility to through sequentially of

emerging precision measurement about confident for the strategic our and address are for broadening initiatives and to We sensing our technologies. opportunities prospects

five. slide Beginning our declined quarter and of from million our revenue with $XX.X X.X% segment to ago. sequentially year business segment, at grew moving a Sensor Looking performance, Fourth X.X%

and million resulted significantly to to to negative and of continued currency revenue and year $XXX,XXX Sensors' a in ago, quarter third a Sensors the impact Foreign impact compared $X.X topline the respectively.

to about platform Advanced our we potential the we are as Sensors. ago. approximately modestly XX% sequentially the softened Sensors full to Advanced what X.X% view with but down Sales million the continue we a excited be performing for product market on customers' Sensors in XX.X% as was grew revenue Sensors impact, its year year, of best revenue kind as the $XX today, for fourth the quarter, of in grew Advanced from next-generation FX well-positioned long-term Excluding

holidays. more are primarily markets, days precision due to in electric fewer to resistors from local lower We working additional QX, due Sales including were vehicles. seeing modestly of opportunities

secure We as continued automation to our as initiatives in systems. data in and well centers design strategic industrial wins new markets fiberoptic equipment, emerging

products stability higher which and provide For our to enhanced those levels data of of can performance centers, precision a networks. contributes

In of for inefficiencies. XX.X%declined gross and Sensors, margin which XX.X%, terms of results, was volume temporary result of manufacturing sequentially primarily a operating from lower

resistors margin of XXXX. of We first had X.XX, and to orders book-to-bill reflecting equipment for expect quarter test Sensors the measurement slower semiconductor test and market, a in Sensor for advanced particularly segment precision gross sensors. improve in The the cyclical for in consumer

in first we expect to XXXX. discussions, of orders the customer current half our improve Given

six. slide to Moving

quarter Turning from segment, of X.X% period. $XX.X year to from increased prior the million $XX.X the million from Solutions X.X% our quarter million and in XXXX fourth Weighing sales $XX.X of third

Excluding XX.X%year-over-year. OEM XX% initiatives as sensors negative on were basis. Weighing impact sequentially Solutions year-over-year the a performance grew revenue grew of and of a XX% approximately sequential We X.X% basis FX, on the with pleased our four and revenue OEM

sales the transportation shipments large for the agriculture runway initiatives. way truck our applications, third our sales in products for was partially was and quarter, reflected by monitoring fourth of market offset the In softer in which This order the booked precision quarter. overload

quarter Weighing higher was offset by currency Solutions, foreign in exchange adjusted gross quarter the the margin XX.X% flat volume compared XX.X% of third unfavorable to as in fourth rates. was

quarter for the OEM segment book-to-bill of and Solutions timing Asia industrial the in ratio applications. in the in reflecting Europe and chain X.XX and supply agriculture fourth projects XXXX, precision the streamlining a had weighing of The of Weighing of

seven. slide to Moving

reflecting grew from Measurement XX.X% Systems in Measurement and sequentially of Measurement ago our revenue Systems of prior and the fourth FX, million sequentially segment, year-over-year. year, to a XX.X% year Turning excluding negative Systems impact the portfolio, the from across XX.X% increased quarter revenue growth $XX.X -- XX.X%

mix of in gross the quarter on product unfavorable XX.X% a gross Systems while which adjusted impacted foreign basis, negatively Measurement margin XX.X%, margin slightly Systems exchange was and the in Adjusted for XXXX, rates. quarter sequential fourth quarter to Measurement the third was by for compared higher fourth

steel customer the robust, projects of a XXXX. quote indicator timing and orders safety Systems positive for half was Book-to-bill testing of for second and cyclically is vehicle Customer AMS. in transportation Measurement for which and X.X, the reflecting in activity slower in engagement remains

Measurement businesses market largely niches. and selling strong their as systems ASPs. cycles is project-driven have in respective and Our these delivery in Systems longer higher leaders businesses these generally are Demand

Within there are avenues number these a niches, of attractive for growth.

to eight. Moving slide

to value. solid strategy, by Our internal operations stock strong our our our is capital allocation priorities one, which focused and growth; on three, sheet supported two, M&A; are: creating Three cash strategic investment is organic from and support balance repurchase. shareholders'

ability higher will volume while us important In our further terms growth. XXXX opportunities address for year as our expanding to continue to accelerate of new that our internal another streamline was we manufacturing investments, capability,

already our made mentioned projects years. resistors, I've the on the we which precision previous infrastructure earnings investments several past significant over for calls, follow have

As to projects of current X.X%of levels complete revenue. historical approximately we we XXXX, expect in capital our more X% a to spending to return

to look attractive we that meet continue returns, our strategic M&A, value for Regarding creation. for businesses stringent requirements financial high-quality and fit,

on We more M&A and more opportunities are seeing front. the currently activity

finally, stock about XXXX, we we in August the or program of And shares. XX,XXX X.X repurchase announced repurchased million through regarding stock approximately our end of

The engine for VPG our of dedication, to employees detail, making and the Bill our VPG. on passion, of turning I success. our world customers and year thank to for call the around XXXX our financial focus are want a the teams successful additional for Before customers

Clancy more now for I details. over it to turn will

William Clancy

slide the tables deck. the you, Thank Referring reconciliation and Ziv. of to slide nine

quarter fourth the X.X% Our million fourth of quarter the grew were year XXXX the a above to compared X.X% XXXX. in $XX.X and revenues quarter ago, third

of revenues compared impact of fourth the of The had quarter for ago in on quarter. the third as $XXX,XXX the year a XXXX. to negative XX.X% negative to in XXXX the XX.X% exchange impact third of gross a a was to margin compared quarter million compared Foreign $X.X fourth quarter and

of of On accounting quarter $XXX,XXX an our gross compared the margin XXXX. third adjustments, XX.X% acquisition XX.X% adjusted fourth basis, quarter excluding to in of purchase

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

quarter XX%, fourth margin excluding just adjusted Our I adjustment restructuring and $XXX,XXX costs of operating above. the mentioned was

for or third million compared of Selling, XXXX. for quarter of $XX.X or were of $XX.X revenues the quarter the XXXX administrative expenses general, XX.X% of million XX.X% fourth revenues to and

in earnings $X.XX or quarter of increase compared to of per $X.X $X.XX share the diluted $XX.Xmillion of $XXX,XXX $XXX,XXX SG&A and commissions, third other share in $XXX,XXX XXXX. $X.X for to million per relates for for travel, or million XXXX were diluted expenses. fourth net adjusted quarter sequential The mainly for The the

or million $XX.X year ago. was grew XX.X% $XX.X million of EBITDA revenue to compared revenue of XX.X% Adjusted and a orXX.X%

for Our Sensors the majority reflects purchase infrastructure segment. $X.X CapEx reporting million, was quarter and in the purchases related of the fourth which

for CapEx revenues. purchase $XX X.X% of XXXX Total or million was

to approximately which we million, from in XXXX, million $XX budgeting are carryover $XX $X For spending million XXXX. includes

We XXXX. compared cash activities free adjusted of define of million flow flow expenditures million cash fixed the for quarter free We capital as assets. quarter fourth cash from for plus third of generated the to $X sales adjusted operating less with XXXX $X.X

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

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

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

outlook. the Regarding

For $XX fiscal million. to rates, revenue exchange XXXX million XXXX of in $XX the expect fourth the to fiscal first we of range quarter net constant be at

VPG. a In quarter results record summary, capped our solid fourth for year

customers. our market emerging segments are with our We high-value penetrating products for excited precision about

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

Operator

from go [Operator now Instructions] your is Please question first John line Franzreb ahead. Our Sidoti. open. is John, from

John Franzreb

about questions. ones on actually some can a awful that of bit drill most more go-forward and like with think and are temporary if quite the wonder here. number. for And Good seems an involved thanks you morning a maybe it which Ziv, of reported everyone in there's little taking into factors since concern I ones nature, we've which down Listen, want kind lot I talk It's quarter. seen to book-to-bill the you such are you been basis? ratio. eyeballing low time a Great the are

Ziv Shoshani

Absolutely. Sure.

already we an increase resistors. to year. changes, improvement certain of It's book-to-bill. equipment, of three are When end easing around chain, the process record looking automation, a So, revenues an mainly -- first expecting discussions at semiconductor in the with see distributor Test This for the on and Measurement it's customers, three the order around book-to-bill at precision EMS for and of three we are QX supply represents based all, and segments to the we magnitude which this segments. of also markets, extent a somehow represents had for our the

back coming on some the The from -- second regarding manufacturing which and measurement level. already quarter projection we we micro the constraints given consumer chain a received are latest to the second customer based now them, supply of to in the on see are side, to normalized orders our we electronics, the piece is affected has have expecting

The the weighing is, other has market. to piece an our the affected market business transportation the availability extent, UK. been mainly in of transportation microprocessors The onboard is by for

quarters expectations as expected see or microchips. the are availability well in to the return. coming we an Therefore, expecting improvement And the is demand of to

as we further along XXXX. QX, So, And markets. around improved earlier, three to are already an expecting rate end which already is are all-in-all, expected see it's in already specific -- indicated improve we order we to

John Franzreb

problematic of temporary And does your that endure more pause revenue kind putting that for certainly in this have the extend million, quarter? it the ample $XX million the it given second Is have come into you the quarter? to backlog before back suggests profile $XX And to bookings orders second fair? the that book. to in does becomes guidance, Or order booking of

Ziv Shoshani

which historically, -- represents to the of product expected be deliver to which quarter. delivered is slightly the slightly over given at So, desire over represents backlog, following XX% customers' time, backlog, our of XX% the within a

in quarter. build the about forecast built QX QX lower be given our, and we So, impacted sales be when products expect and order are let's within to We way -- deliveries. we what current That's to QX, given speak by our intake the we to looking get forecast don't so-called a at model. customer expectations we expect guidance, the say, backlog, booked the

John Franzreb

out question, last revenue mix The back X the you is And revenue versus then mix. into perfect. QX. in in I'll get -- would very play the regarding beneficial QX? expect QX guess How and I to and was Okay revenue queue mix

Ziv Shoshani

gross there in revenue -- at at QX, higher we a was that for that mix lower to Systems margin. mix in The in respect higher Weighing margin favorable have gross way, fact the Measurement given Solutions a was a

the As business, mix I the guidance gross gross give similar in you order changes But similar we should expect any given QX, margin. the don't know, some and all-in-all, would level margin we in the regarding level say, gross -- of margin.

John Franzreb

also. So, a that would I beneficial expect So right? you think maybe gross indicated be sensor sequentially, you Sensors, better margin

Ziv Shoshani

is That correct.

John Franzreb

in Thank Ziv. the I'll queue. Okay. get you, back

Operator

Dezellem from is Our open. next go Capital. now Please is from Bill, your question Bill Tieton ahead. line

Bill Dezellem

of Thank different you. couple questions. A

ag within that Weighing please all, segment. despite release, in of you market it would may be First the comments there talk interesting happening like the sounds and to industry the within the something construction

Ziv Shoshani

Sure, absolutely.

Regarding very field had very they and this QX Precision in it a business pretty we in QX, stable do who in very very, a a large have why to Ag, retrofit equipment, had had time running delivered that customer all has This a large is they we is way. in order their fast. order, point very at to this large received placed been

those our our but and equipment see point equipment have units given of for Construction also midsized that order buying quarter in time, large Regarding or fact to the at amount least they would change changes x low requirement any that -- within business, this the I at implied a who one in modify mean from [Indiscernible]. we we certain placed a we the next large visibility to field. I received companies construction don't had are the And say, go of larger spikes, a they order

this But XX% was business, quite OEM is OEM very in that forward strength us, business i.e., piece and on the move the stable of stability year. the the increase a year-over-year which and impressive we implies for quarter-over-quarter, as even there in is

Bill Dezellem

at you is a And why -- are sounds customer that strength OEM a and that. like from market you winning from retrofit the share that this referenced? XX% Or for level? competitor? different the you that's Because that Thank that

Ziv Shoshani

Sure.

OEM qualification of spec, and OEM mean equipment. select the products is the exchangeable required type I the business. given they cases, cost again, the for an the is given -- most a not very the the Force business, Sensors -- supplier. custom -- this of this In our OEM one So fit the is qualification sticky business nature to which

you Therefore, changes our XX once operate. life itis intake. trigger That's you years. of been you cycle. the on designed -- been cycle equipment could now those have there. sole in And customer product And have in, for been you supplier. to the we be way designed, a demand But you have designed designed, are XX the they that have order once life product will the based as

Bill Dezellem

discussions the Great. broadly pipeline Thank economic the talk And about to to global pipeline, an larger acquisition you you to place you. And there opening there. are think changing then comments, I today? be opportunity degree the to that questions your relative what the and inferred taking create favorable do developments what's why for activity Would with you. seems

Ziv Shoshani

Sure.

exchange more companies see more a are I the are even more that rates in course. We -- see -- once the putting many on that Of deals believe and many went many we as for dramatic M&A. that shelf. up companies way, opportunities

VCs them financial companies, are while are held by institutions. of being held others or privately Some

not guessed like companies seen we operating an order nice years, also to of would tailwind last could the Therefore, a which a those the selling were environment, take to the higher may I advantage have environment. and price we more of that, quarters to of performance rate they they optimize many interest opportunities, ago. see in couple operational given say, have extent, the improved with in would and do see which the, couple I economic

Bill Dezellem

you Great. for the perspective. Thank

Operator

Instructions] [Operator

is go next Hendi, is Hendi Gabelli ahead. now your from Funds. Please from open. Our line question Susanto

Hendi Susanto

Ziv, morning, Good Steve. Bill, and

Ziv Shoshani

Good morning.

Hendi Susanto

gross is look margin XXXX, gross how margin? levels. recent you if It's questions, at historical XX%? at like we ask than higher think sustainable gross I in may How around margin XXXX about should Bill,

William Clancy

levels margins, first I Hendi, the think as think similar we I really in even gross give see but mix, guidance on Ziv Yes, mentioned XXXX. yet that we don't especially in because I the the product given of call, mentioned would going think quarter we on

and we confident with that increased possibilities said, to like the but levels achieving give then we year, I of quite the increase. And we guidance, don't obviously, as the we're today volume out feel go

Hendi Susanto

when you. like then return, And I into Ziv like Thank can then sales inventory quickly ask about orders how turn in general? And may they levels.

Ziv Shoshani

is Well, months. of X.X is above any say, product current backlog backlog which could on X.X fairly -- our respond market which our in trends any At around this the don't we is product months fast. allocation we current time, is around we is would of -- in on sales, historical allocation. point uptick any have to any potential Therefore, don't have I which

are equipment I ready have hire we quickly. we -- and potential invested infrastructure, take more to upside. in be volume in to would we to believe Naturally, but do we this will have people, fairly would able Since any be that

able would two. we quarter say, volume into would additional turn revenues, once or would So, it to come, be I within a

Hendi Susanto

meaningfully great Okay. sensor expect What it you Yes. manufacturing of in Are think advanced to to And XXXX. XXXX? continue your pursuing? can in to should see XXXX? in sensor And like sensors million the advance new capacity Ziv, in applications $XX are like grew there up of terms we higher in capacity I we that sensors, ramp advanced see to is

Ziv Shoshani

come which have into any advanced support potential upside in XXXX equipment XXXX. capacity sensors we today, volume may which So, to do turn may --

large including and diligently to existing addition we In new servicing still continue our and the customers. at we -- our are that, customers current very wins some customers, portfolio, designing with

is of the nature rate. before design reached we a that the our we that of XX to engaged mention the cycle on design -- the vehicles, production electric have run around is in and customers, months the full cycle even are run very beyond large on product are the on stages, this XX which customers that early is consumer we out did call and fairly I -- it's electronics,

our continue wins manage while So, at to quarters the of members improving coming order for are in the equipment, we the in years. growth capacity, designing advanced the to in coming looking new opportunities the the and team sensors and process, continuously assure

Sorry please.

Hendi Susanto

would And to share, then EVs? be Ziv, footprint you can able to advanced where in of you are if the sensors able be share

Ziv Shoshani

to are advanced once this discussions, have still our Since we the with and steps But at customers. leads share happy it's point, stages. would in I those more would be early very early it

Hendi Susanto

That is Okay. understandable, yes.

and Bill Steve. much, so you Thank Ziv, Okay.

Ziv Shoshani

Thank you.

William Clancy

Thank you.

Operator

Franzreb from now next John line is Our from ahead. Please John, question go Sidoti. open. is your

John Franzreb

been but little do the ask I been Fortunately, about to my segment, a have that fully was follow-ups rectified? inefficiency addressed, of the cited What want labor Sensors has lot Ziv. that that? And a bit in you

Ziv Shoshani

QX that to have due QX drop the be effect the very temporary include headcount for inefficiencies mainly don't This incurred of quick XXXX, mainly is measurement. we also to a fact we adjust but this to that it micro Yes, in our severance. make to had adjustments. labor is expect that And in had some we the repeated to does we volume

you a as of that -- effect. it's can one-time mostly think So,

John Franzreb

regarding Or another I'm inflationary $X XXXX. necessary there the under Okay, based I XXXX be more timing? curious just million in as instituting realized increases? price Will curve. you would those be there continue in battle coming And to the in increases of be you timing fair just to round price you increases, benefit on enough. price think XXXX about of the

Ziv Shoshani

has increases are the that to the XXXX between price applied Sure, million company the $X XXXX.

of to increase, cost a move not for some inflation and due microprocessors, continuation other into costs. we parts only chain higher do see XXXX, material but supply we also As

of is into should price in in in material beyond naturally the which prices initiated are mitigate is This million to expected take has the another increases round that company see company applied the to the XXXX has which XXXX, effect $X before. XXXX, been that order from why

John Franzreb

me. Okay, for much you that’s very it Thank guys.

Operator

I Steve ahead. We will go questions. back currently speaker have hand to our final Please no comments, Mr. further now for Cantor.

Steve Cantor

want be joining our And March. investors Conference that for have participating a the in Before you Sidoti concluding, all in good let call will I know with we thank that, and to day.

Operator

joining. call. this today's you gentlemen, and Thank Ladies for concludes

disconnect lines. now may your You

Vishay Precision (VPG) 15 Feb 232022 Q4 Earnings call transcript