MALVERN, Pa.--(BUSINESS WIRE)--Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and systems, today announced its results for its fiscal 2016 third quarter and nine months ended October 1, 2016.
Highlights:
- Third quarter earnings per diluted share of $0.08.
- Adjusted earnings per diluted share of $0.21.*
- Cash generated from operations for the third quarter of 2016 was $6.3 million and free cash flow was $4.5 million.*
- Force Sensors segment achieved gross profit margins of 31.0% in the third quarter of 2016 as compared to 21.0% in the third quarter of 2015.
“Our adjusted earnings per diluted share performance was $0.21 for the third quarter of 2016 as compared to adjusted earnings per diluted share of $0.18 in the third quarter of 2015, in spite of softer sales this quarter compared to the third quarter of 2015,” said Ziv Shoshani, VPG chief executive officer. “We also generated cash from operations of $6.3 million, with free cash flow of $4.5 million in the third quarter of 2016, which validates the effectiveness of our restructuring and cost reduction programs.”
Net earnings attributable to VPG stockholders for the third fiscal quarter of 2016 were $1.1 million, or $0.08 per diluted share, compared to net loss attributable to VPG stockholders for the third fiscal quarter of 2015 of ($1.9) million, or ($0.15) per diluted share. Net earnings attributable to VPG stockholders for the fiscal nine months ended October 1, 2016 were $3.4 million, or $0.25 per diluted share, compared to net earnings attributable to VPG stockholders of $0.4 million, or $0.03 per diluted share, for the comparable prior year period.
Adjusted net earnings attributable to VPG stockholders for the third fiscal quarter of 2016 were $2.9 million, or $0.21 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $2.4 million, or $0.18 per diluted share, for the comparable prior year period. Adjusted net earnings attributable to VPG stockholders for the fiscal nine months ended October 1, 2016 were $6.5 million, or $0.49 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $5.1 million, or $0.37 per diluted share, for the comparable prior year period. Adjusted net earnings for the fiscal quarter and fiscal nine months ended October 1, 2016 exclude, among other costs, $1.1 million of costs associated with the Company’s evaluation of strategic alternatives to enhance stockholder value. There are no assurances that the evaluation will result in any particular strategic alternative. The Company does not intend to comment on or disclose developments regarding the evaluation process unless it deems further disclosure is appropriate or required.
The following table reconciles the company's non-U.S. GAAP measures included in the press release, which are provided for comparison with other results, and the most directly comparable U.S. GAAP measures:
| Reconciliation of Adjusted Earnings Per Share | ||||||||||||||||
| (Unaudited - In thousands, except per share data) | ||||||||||||||||
| Fiscal quarter ended | Nine fiscal months ended | |||||||||||||||
| October 1, 2016 | September 26, 2015 | October 1, 2016 | September 26, 2015 | |||||||||||||
| Net earnings (loss) attributable to VPG stockholders | $ | 1,051 | $ | (1,943 | ) | $ | 3,399 | $ | 393 | |||||||
|
Reconciling items affecting operating margin |
||||||||||||||||
| Acquisition purchase accounting adjustments | 46 | - | 537 | 26 | ||||||||||||
| Acquisition costs | - | - | 414 | - | ||||||||||||
| Strategic alternative evaluation costs | 1,079 | - | 1,079 | - | ||||||||||||
| Impairment of goodwill and indefinite-lived intangibles | - | 4,942 | — | 4,942 | ||||||||||||
| Restructuring costs | 709 | 459 | 2,395 | 841 | ||||||||||||
|
Reconciling items affecting income tax expense |
||||||||||||||||
| Less tax effect of reconciling items and discrete tax items | (27 | ) | (1,081 | ) | (1,317 | ) | (1,137 | ) | ||||||||
| Adjusted net earnings attributable to VPG stockholders | $ | 2,858 | $ | 2,377 | $ | 6,507 | $ | 5,065 | ||||||||
| Adjusted net earnings per diluted share | $ | 0.21 | $ | 0.18 | $ | 0.49 | $ | 0.37 | ||||||||
| Weighted average shares outstanding - diluted | 13,422 | 13,347 | 13,409 | 13,772 | ||||||||||||
Segments
The Foil Technology Products segment revenues were $23.9 million in the third quarter of 2016, down 11.7% from $27.0 million in the third quarter of 2015, and down 5.9% from $25.4 million in the second quarter of 2016. Decreased year-over-year revenues were attributable to lower volume, partially offset by the additional volume from Pacific Instruments of $0.7 million and positive exchange rate impact of $0.3 million. The decrease in sequential revenues was also attributable to lower volumes. The gross profit margin for the segment was 36.2% for the third quarter of 2016 compared to 42.0% in the third quarter of 2015 and 36.8% in the second quarter of 2016. The gross profit margin for the quarter compared to the comparable prior year period and the second quarter of 2016 decreased primarily due to lower volume.
The Force Sensors segment revenues were $15.2 million in the third quarter of 2016, up 4.5% from $14.6 million in the third quarter of 2015, and down 1.1% from $15.4 million in the second quarter of 2016. The increase in year-over-year revenues was attributable to an increase in volume offset by negative exchange rate impact of $0.3 million. Excluding the effects of foreign currency, the sequential revenues were flat. The gross profit margin for the segment was 31.0% in the third quarter of 2016, compared to 21.0% in the third quarter of 2015 and 29.0% in the second quarter of 2016. The gross profit margin for the quarter increased from the comparable prior year period primarily due to the increase in volume and the realization of cost savings from our previously announced cost reduction programs. The sequential gross profit margin increase was due to favorable product mix.
The Weighing and Control Systems segment revenues were $15.4 million in the third quarter of 2016, down 1.0% from $15.6 million in the third quarter of 2015, and down 10.6% from $17.2 million in the second quarter of 2016. Decreased year-over-year revenues were attributable to a negative exchange rate impact of $0.5 million and decrease in volumes, offset by the acquisition of Stress-Tek. The sequential decrease in revenues was attributable to a decrease in volume coupled with negative exchange rate impact of $0.4 million. The gross profit margin for the segment was 44.9% in the third quarter of 2016 compared to 45.4% in the third quarter of 2015 and 44.7% in the second quarter of 2016 (45.6% excluding the Stress-Tek acquisition purchase accounting adjustment of $0.1 million). Excluding foreign currency, the gross profit margin for the quarter was flat compared to the prior year period. The sequential gross profit margin decrease was due to the decrease in volume.
Outlook
“In light of global economic conditions and the continued strength of the U.S. dollar compared to other currencies, we expect net revenues in the range of $55 million to $60 million for the fourth quarter of 2016,” concluded Mr. Shoshani. “We are updating our expectation for fiscal year 2016 adjusted diluted earnings per share to be in the range of $0.70 to $0.75, at constant exchange rates as of the third quarter of 2016.”
*Editor’s Note
We define adjusted net earnings as net earnings attributable to VPG stockholders before acquisition purchase accounting adjustments, acquisition costs, restructuring costs, strategic alternative evaluation costs, impairment of goodwill and indefinite-lived intangibles and associated tax effects. Free cash flow is defined as the amount of cash generated from operations ($6.3 million for the third quarter of 2016), in excess of our capital expenditures ($1.8 million for the third quarter of 2016) and net of proceeds, if any, for the sale of assets (none in the third quarter of 2016). For a reconciliation of GAAP to non-GAAP financial information, refer to the quarterly financial tables.
Conference Call and Webcast
A conference call will be held today (November 8) at 10:00 a.m. ET (9:00 a.m. CT). To access the conference call, interested parties may call 1-888-317-6003 or internationally 1-412-317-6061 and use passcode 7373887, or log on to the investor relations page of the VPG website at www.vpgsensors.com.
A replay will be available approximately one hour after the completion of the call by calling toll-free 1-877-344-7529 or internationally 1-412-317- 0088 and by using the passcode: 10094433. The replay will also be available on the investor relations page of the VPG website at www.vpgsensors.com for a limited time.
About VPG
Vishay Precision Group, Inc. (VPG) is an internationally recognized designer, manufacturer and marketer of: components based on its resistive foil technology; sensors; and sensor-based systems specializing in the growing markets of stress, force, weight, pressure, and current measurements. VPG is a market leader of foil technology products, providing ongoing technology innovations in precision foil resistors and foil strain gages, which are the foundation of the company's force sensors products and its weighing and control systems. The product portfolio consists of a variety of well-established brand names recognized for precision and quality in the marketplace. To learn more, visit VPG at www.vpgsensors.com.
Forward-Looking Statements
From time to time, information provided by us, including but not limited to statements in this report, or other statements made by or on our behalf, may contain "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those anticipated.
Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; changes in the current pace of economic recovery; difficulties or delays in completing acquisitions and integrating acquired companies (including the acquisitions of Stress-Tek and Pacific Instruments); the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; difficulties in implementing our ERP system, and the associated impact on manufacturing efficiencies and customer satisfaction; difficulties in implementing our cost reduction strategies, such as underutilization of production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to difficulties in transferring production to lower-cost countries; resources expended in connection with evaluation of strategic alternatives to enhance stockholder value ; and other factors affecting our operations, markets, products, services, and prices that are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
| VISHAY PRECISION GROUP, INC. | ||||||||
| Consolidated Condensed Statements of Operations | ||||||||
| (Unaudited - In thousands, except per share amounts) | ||||||||
| Fiscal quarter ended | ||||||||
| October 1, 2016 | September 26, 2015 | |||||||
| Net revenues | $ | 54,490 | $ | 57,149 | ||||
| Costs of products sold | 34,225 | 35,699 | ||||||
| Gross profit | 20,265 | 21,450 | ||||||
| Gross profit margin | 37.2 | % | 37.5 | % | ||||
| Selling, general, and administrative expenses | 16,917 | 17,760 | ||||||
| Impairment of goodwill and indefinite-lived intangibles | - | 4,942 | ||||||
| Restructuring costs | 709 | 459 | ||||||
| Operating income (loss) | 2,639 | (1,711 | ) | |||||
| Operating margin | 4.8 | % | -3.0 | % | ||||
| Other income (expense): | ||||||||
| Interest expense | (377 | ) | (158 | ) | ||||
| Other | (44 | ) | (387 | ) | ||||
| Other income (expense) - net | (421 | ) | (545 | ) | ||||
| Income (loss) before taxes | 2,218 | (2,256 | ) | |||||
| Income tax expense (benefit) | 1,135 | (304 | ) | |||||
| Net earnings (loss) | 1,083 | (1,952 | ) | |||||
| Less: net earnings (loss) attributable to noncontrolling interests | 32 | (9 | ) | |||||
| Net earnings (loss) attributable to VPG stockholders | $ | 1,051 | $ | (1,943 | ) | |||
| Basic earnings (loss) per share attributable to VPG stockholders | $ | 0.08 | $ | (0.15 | ) | |||
| Diluted earnings (loss) per share attributable to VPG stockholders | $ | 0.08 | $ | (0.15 | ) | |||
| Weighted average shares outstanding - basic | 13,192 | 13,347 | ||||||
| Weighted average shares outstanding - diluted | 13,422 | 13,347 | ||||||
| VISHAY PRECISION GROUP, INC. | ||||||||
| Consolidated Condensed Statements of Operations | ||||||||
| (Unaudited - In thousands, except per share amounts) | ||||||||
| Nine fiscal months ended | ||||||||
| October 1, 2016 | September 26, 2015 | |||||||
| Net revenues | $ | 169,115 | $ | 173,265 | ||||
| Costs of products sold | 107,580 | 109,801 | ||||||
| Gross profit | 61,535 | 63,464 | ||||||
| Gross profit margin | 36.4 | % | 36.6 | % | ||||
| Selling, general, and administrative expenses | 53,409 | 54,904 | ||||||
| Acquisition costs | 414 | - | ||||||
| Impairment of goodwill and indefinite-lived intangibles | — | 4,942 | ||||||
| Restructuring costs | 2,395 | 841 | ||||||
| Operating income | 5,317 | 2,777 | ||||||
| Operating margin | 3.1 | % | 1.6 | % | ||||
| Other income (expense): | ||||||||
| Interest expense | (1,076 | ) | (518 | ) | ||||
| Other | 351 | (1,730 | ) | |||||
| Other income (expense) - net | (725 | ) | (2,248 | ) | ||||
| Income before taxes | 4,592 | 529 | ||||||
| Income tax expense | 1,164 | 174 | ||||||
| Net earnings | 3,428 | 355 | ||||||
| Less: net earnings (loss) attributable to noncontrolling interests | 29 | (38 | ) | |||||
| Net earnings attributable to VPG stockholders | $ | 3,399 | $ | 393 | ||||
| Basic earnings per share attributable to VPG stockholders | $ | 0.26 | $ | 0.03 | ||||
| Diluted earnings per share attributable to VPG stockholders | $ | 0.25 | $ | 0.03 | ||||
| Weighted average shares outstanding - basic | 13,185 | 13,558 | ||||||
| Weighted average shares outstanding - diluted | 13,409 | 13,772 | ||||||
| VISHAY PRECISION GROUP, INC. | ||||||||
| Consolidated Condensed Balance Sheets | ||||||||
| (In thousands) | ||||||||
| October 1, 2016 | December 31, 2015 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 56,133 | $ | 62,641 | ||||
| Accounts receivable, net | 34,889 | 35,553 | ||||||
| Inventories: | ||||||||
| Raw materials | 16,119 | 15,062 | ||||||
| Work in process | 21,913 | 20,289 | ||||||
| Finished goods | 20,300 | 20,849 | ||||||
| Inventories, net | 58,332 | 56,200 | ||||||
| Prepaid expenses and other current assets | 9,678 | 7,814 | ||||||
| Assets held for sale | 2,043 | - | ||||||
| Total current assets | 161,075 | 162,208 | ||||||
| Property and equipment, at cost: | ||||||||
| Land | 3,498 | 3,639 | ||||||
| Buildings and improvements | 46,128 | 55,003 | ||||||
| Machinery and equipment | 88,697 | 84,409 | ||||||
| Software | 7,379 | 7,284 | ||||||
| Construction in progress | 3,199 | 2,288 | ||||||
| Accumulated depreciation | (94,521 | ) | (95,992 | ) | ||||
| Property and equipment, net | 54,380 | 56,631 | ||||||
| Goodwill | 19,305 | 12,603 | ||||||
| Intangible assets, net | 22,438 | 17,683 | ||||||
| Other assets | 14,789 | 14,622 | ||||||
| Total assets | $ | 271,987 | $ | 263,747 | ||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 8,687 | $ | 8,004 | ||||
| Payroll and related expenses | 12,854 | 13,888 | ||||||
| Other accrued expenses | 15,607 | 16,604 | ||||||
| Income taxes | 1,387 | 527 | ||||||
| Current portion of long-term debt | 2,277 | 2,120 | ||||||
| Total current liabilities | 40,812 | 41,143 | ||||||
| Long-term debt, less current portion | 34,457 | 31,037 | ||||||
| Deferred income taxes | 623 | 334 | ||||||
| Other liabilities | 7,892 | 7,195 | ||||||
| Accrued pension and other postretirement costs | 11,309 | 11,597 | ||||||
| Total liabilities | 95,093 | 91,306 | ||||||
| Commitments and contingencies | ||||||||
| Equity: | ||||||||
| Common stock | 1,278 | 1,276 | ||||||
| Class B convertible common stock | 103 | 103 | ||||||
| Treasury stock | (8,765 | ) | (8,765 | ) | ||||
| Capital in excess of par value | 190,801 | 190,436 | ||||||
| Retained earnings | 25,726 | 22,327 | ||||||
| Accumulated other comprehensive loss | (32,451 | ) | (33,121 | ) | ||||
| Total Vishay Precision Group, Inc. stockholders' equity | 176,692 | 172,256 | ||||||
| Noncontrolling interests | 202 | 185 | ||||||
| Total equity | 176,894 | 172,441 | ||||||
| Total liabilities and equity | $ | 271,987 | $ | 263,747 | ||||
| VISHAY PRECISION GROUP, INC. | ||||||||
| Consolidated Condensed Statements of Cash Flows | ||||||||
| (Unaudited - In thousands) | ||||||||
| Nine fiscal months ended | ||||||||
| October 1, 2016 | September 26, 2015 | |||||||
| Operating activities | ||||||||
| Net earnings | $ | 3,428 | $ | 355 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Impairment of goodwill and indefinite-lived intangibles | - | 4,942 | ||||||
| Depreciation and amortization | 8,416 | 8,142 | ||||||
| (Gain) loss on disposal of property and equipment | (24 | ) | 14 | |||||
| Share-based compensation expense | 465 | 796 | ||||||
| Inventory write-offs for obsolescence | 1,410 | 1,190 | ||||||
| Deferred income taxes | (1,537 | ) | (914 | ) | ||||
| Other | (862 | ) | 2,190 | |||||
| Net changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 2,139 | (1,182 | ) | |||||
| Inventories, net | (2,891 | ) | (5,159 | ) | ||||
| Prepaid expenses and other current assets | (1,848 | ) | 290 | |||||
| Trade accounts payable | 453 | (2,256 | ) | |||||
| Other current liabilities | (2,657 | ) | (3,104 | ) | ||||
| Net cash provided by operating activities | 6,492 | 5,304 | ||||||
| Investing activities | ||||||||
| Capital expenditures | (6,266 | ) | (7,508 | ) | ||||
| Proceeds from sale of property and equipment | 316 | 117 | ||||||
| Purchase of business | (10,727 | ) | - | |||||
| Net cash used in investing activities | (16,677 | ) | (7,391 | ) | ||||
| Financing activities | ||||||||
| Principal payments on long-term debt and capital leases | (1,599 | ) | (3,839 | ) | ||||
| Proceeds from revolving facility | 17,000 | - | ||||||
| Payments on revolving facility | (12,000 | ) | - | |||||
| Purchase of treasury stock | - | (8,733 | ) | |||||
| Distributions to noncontrolling interests | (12 | ) | (58 | ) | ||||
| Net cash provided by (used in) financing activities | 3,389 | (12,630 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | 288 | (1,751 | ) | |||||
| Decrease in cash and cash equivalents | (6,508 | ) | (16,468 | ) | ||||
| Cash and cash equivalents at beginning of period | 62,641 | 79,642 | ||||||
| Cash and cash equivalents at end of period | $ | 56,133 | $ | 63,174 | ||||
| VISHAY PRECISION GROUP, INC. | ||||||||||||||||
| Reconciliation of Consolidated Adjusted Gross Profit Margin | ||||||||||||||||
| (Unaudited - In thousands) | ||||||||||||||||
| Fiscal quarter ended | Nine fiscal months ended | |||||||||||||||
| October 1, 2016 | September 26, 2015 | October 1, 2016 | September 26, 2015 | |||||||||||||
| Gross profit | $ | 20,265 | $ | 21,450 | $ | 61,535 | $ | 63,464 | ||||||||
|
Gross profit margin |
37.2 | % | 37.5 | % | 36.4 | % | 36.6 | % | ||||||||
|
Reconciling items affecting gross profit margin |
||||||||||||||||
| Acquisition purchase accounting adjustments | 46 | - | 537 | 26 | ||||||||||||
| Adjusted gross profit | $ | 20,311 | $ | 21,450 | $ | 62,072 | $ | 63,490 | ||||||||
| Adjusted gross profit margin | 37.3 | % | 37.5 | % | 36.7 | % | 36.6 | % | ||||||||
| VISHAY PRECISION GROUP, INC. | ||||||||||||||||
| Reconciliation of Adjusted Earnings Per Share | ||||||||||||||||
| (Unaudited - In thousands, except per share data) | ||||||||||||||||
| Fiscal quarter ended | Nine fiscal months ended | |||||||||||||||
| October 1, 2016 | September 26, 2015 | October 1, 2016 | September 26, 2015 | |||||||||||||
| Net earnings (loss) attributable to VPG stockholders | $ | 1,051 | $ | (1,943 | ) | $ | 3,399 | $ | 393 | |||||||
|
Reconciling items affecting operating margin |
||||||||||||||||
| Acquisition purchase accounting adjustments | 46 | - | 537 | 26 | ||||||||||||
| Acquisition costs | - | - | 414 | - | ||||||||||||
| Strategic alternative evaluation costs | 1,079 | - | 1,079 | - | ||||||||||||
| Impairment of goodwill and indefinite-lived intangibles | - | 4,942 | — | 4,942 | ||||||||||||
| Restructuring costs | 709 | 459 | 2,395 | 841 | ||||||||||||
|
Reconciling items affecting income tax expense |
||||||||||||||||
| Less tax effect of reconciling items and discrete tax items | (27 | ) | (1,081 | ) | (1,317 | ) | (1,137 | ) | ||||||||
| Adjusted net earnings attributable to VPG stockholders | $ | 2,858 | $ | 2,377 | $ | 6,507 | $ | 5,065 | ||||||||
| Adjusted net earnings per diluted share | $ | 0.21 | $ | 0.18 | $ | 0.49 | $ | 0.37 | ||||||||
| Weighted average shares outstanding - diluted | 13,422 | 13,347 | 13,409 | 13,772 | ||||||||||||
