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VPG Reports Fiscal 2014 Second Quarter Results

Companies mentioned in this article: VPG

MALVERN, Pa. -- (BUSINESS WIRE) -- Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and systems, based on its resistive foil technology, today announced financial results for its second quarter ended June 28, 2014.

Ziv Shoshani, VPG’s chief executive officer said, “I am pleased with our performance this quarter, with revenues coming in at the high end of guidance and with second quarter adjusted diluted earnings per share increasing to $0.25, from $0.22 adjusted diluted earnings per share in the second quarter last year.”

Mr. Shoshani added, “The global business environment remains strong. This is supported by our solid backlog. We believe our results validate our strategy of increasing shareholder value through product innovation and internal operational improvement, while we continue to pursue acquisitions.”

Net revenues for the second quarter of 2014 were $65.2 million, representing a 3.7% increase from $62.8 million of net revenues for the comparable prior year period. Net revenues for the six months of 2014 were $126.2 million, representing a 4.9% increase from the $120.3 million of net revenues for the comparable prior year period. Comparing sequential results, net revenues for the second quarter of 2014 increased by $4.1 million, or 6.8%, from $61.0 million in the first quarter of 2014.

Net earnings attributable to VPG stockholders for the second quarter of 2014 were $3.5 million, or $0.25 per diluted share, compared to net earnings attributable to VPG stockholders for the second quarter of 2013 of $1.3 million, or $0.09 per diluted share. Net earnings attributable to VPG stockholders for the six months of 2014 were $5.2 million, or $0.37 per diluted share, compared to net earnings attributable to VPG stockholders for the six months of 2013 of $1.7 million, or $0.12 per diluted share.

Net earnings attributable to VPG stockholders for the second quarter of 2013 include $2.5 million of acquisition related costs and restructuring costs, which affect comparability. Adjusted net earnings attributable to VPG stockholders for the second quarter of 2014 were $3.5 million, or $0.25 per diluted share, versus adjusted net earnings attributable to VPG stockholders of $3.1 million, or $0.22 per diluted share for the comparable prior year period.

Net earnings attributable to VPG stockholders for the six months of 2014 include $0.4 million of acquisition related costs and restructuring costs, versus $4.6 million of acquisition related costs and restructuring costs for the six months of 2013, which affect comparability. Adjusted net earnings attributable to VPG stockholders for the six months of 2014 were $5.5 million, or $0.39 per diluted share, versus adjusted net earnings attributable to VPG stockholders of $4.9 million, or $0.35 per diluted share for the comparable prior year period.

Segments

The Foil Technology Products segment revenues were $28.0 million in the second quarter of 2014, up 14.3% from $24.5 million in the second quarter last year, and up 7.8% from $26.0 million in the first quarter of 2014. The gross margin for the segment has increased to 40.2% for the second quarter of 2014 compared to 38.1% in the second quarter last year, and up from 37.9% in the first quarter of 2014. Increased year-over-year and sequential revenues are attributable primarily to higher volume. The gross margin improved from the comparable prior year period mainly due to increased volume, partially offset by wage and headcount increases. The sequential gross margin improved due to higher volume.

The Force Sensors segment revenues of $17.0 million in the second quarter of 2014 were up 5.5% compared to $16.1 million in the second quarter last year, and were up 3.3% from $16.4 million in the first quarter of 2014. The gross margin for the segment was 21.9% in the second quarter of 2014 versus 20.5% in the second quarter of 2013 and 21.3% in the first quarter of 2014. Increased year-over-year revenues are attributable to positive exchange rate impacts and higher volume. The increase in sequential revenues is attributable to higher volume. The gross margin for the quarter increased from the comparable prior year period primarily due to higher volume and positive exchange rate impacts. The sequential gross margin improved due to higher volume.

The Weighing and Control Systems segment revenues were $20.2 million in the second quarter of 2014, down 9.3% from $22.2 million in the second quarter last year, and up 8.3% from $18.6 million in the first quarter of 2014. Decreased year-over-year revenues are attributable primarily to lower volume. The gross margin for the segment was 48.2% in the second quarter of 2014 versus 40.1% in the second quarter of 2013 (50.2% excluding the KELK acquisition purchase accounting adjustments of $2.3 million) and 46.7% in the first quarter of 2014. The year over year reduction in adjusted gross margin is primarily due to lower volume and unfavorable product mix. The sequential increase in adjusted gross margin is due to higher volume.

Outlook

Mr. Shoshani concluded, “In light of the continued market demand, we expect net revenues in the range of $61 million to $66 million for the third quarter of 2014, despite the normal seasonal slowdown that is inclined to occur during this period.”

Conference Call and Webcast

A conference call will be held today (August 5) at 10:00 a.m. EDT (9:00 a.m. CDT). To access the conference call, interested parties may call toll-free 877-513-4180 or internationally 412-902-4149, 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 877-344-7529 or internationally 412-317-0088 and by using the conference number: 10048841. The replay will also be available on the investor relations page of the VPG website at www.vpgsensors.com. It will be available via phone and website 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, including if such recovery stalls or does not continue as expected; difficulties or delays in completing acquisitions and integrating acquired companies, including KELK, 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-labor-cost countries; 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, 2013. 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
June 28, June 29,
2014 2013
 
 
Net revenues $ 65,162 $ 62,837
Costs of products sold   40,465     41,277  
Gross profit 24,697 21,560
Gross margin 37.9 % 34.3 %
 
Selling, general, and administrative expenses 19,918 18,565
Acquisition costs - 208
Restructuring costs   7     -  
Operating income 4,772 2,787
Operating margin 7.3 % 4.4 %
 
Other income (expense):
Interest expense (236 ) (298 )
Other   (147 )   (907 )
Total other income (expense) - net   (383 )   (1,205 )
 
Income before taxes 4,389 1,582
 
Income tax expense   936     292  
 
Net earnings 3,453 1,290
 
Less: net loss attributable to noncontrolling interests (8 ) (20 )
           
Net earnings attributable to VPG stockholders $ 3,461   $ 1,310  
 
 
Basic earnings per share attributable to VPG stockholders $ 0.25 $ 0.10
 
Diluted earnings per share attributable to VPG stockholders $ 0.25 $ 0.09
 
 
Weighted average shares outstanding - basic 13,756 13,392
 
Weighted average shares outstanding - diluted 13,968 13,947
 
 
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)
       
Six fiscal months ended
June 28, June 29,
2014 2013
 
 
Net revenues $ 126,203 $ 120,298
Costs of products sold   79,459     78,769  
Gross profit 46,744 41,529
Gross margin 37.0 % 34.5 %
 
Selling, general, and administrative expenses 38,618 36,362
Acquisition costs - 695
Restructuring costs   331     388  
Operating income 7,795 4,084
Operating margin 6.2 % 3.4 %
 
Other income (expense):
Interest expense (448 ) (495 )
Other   (689 )   (1,283 )
Total other income (expense) - net   (1,137 )   (1,778 )
 
Income before taxes 6,658 2,306
 
Income tax expense   1,432     580  
 
Net earnings 5,226 1,726
 
Less: net earnings attributable to noncontrolling interests 59 29
           
Net earnings attributable to VPG stockholders $ 5,167   $ 1,697  
 
 
Basic earnings per share attributable to VPG stockholders $ 0.38 $ 0.13
 
Diluted earnings per share attributable to VPG stockholders $ 0.37 $ 0.12
 
 
Weighted average shares outstanding - basic 13,754 13,389
 
Weighted average shares outstanding - diluted 13,963 13,938
 
 
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Balance Sheets
(In thousands)
       
June 28, December 31,
2014 2013
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 72,455 $ 72,785
Accounts receivable, net 45,316 40,500
Inventories, net 54,650 54,973
Deferred income taxes 2,683 4,784
Prepaid expenses and other current assets   11,006     10,500  
Total current assets 186,110 183,542
 
Property and equipment, net 48,920 49,323
Goodwill 18,844 18,880
Intangible assets, net 21,149 22,458
Other assets   19,956     17,901  
Total assets $ 294,979   $ 292,104  
 
Liabilities and equity
Current liabilities:
Trade accounts payable $ 10,050 $ 10,258
Payroll and related expenses 14,291 15,016
Other accrued expenses 14,906 15,814
Income taxes 363 615
Current portion of long-term debt   4,641     4,137  
Total current liabilities 44,251 45,840
 
Long-term debt, less current portion 20,393 22,936
Deferred income taxes 1,030 1,259
Other liabilities 7,977 7,738
Accrued pension and other postretirement costs   10,720     10,780  
Total liabilities   84,371     88,553  
 
Commitments and contingencies
 
Equity:
Common stock 1,273 1,271
Class B convertible common stock 103 103
Capital in excess of par value 189,084 188,424
Retained earnings 37,814 32,647
Accumulated other comprehensive income (loss)   (17,815 )   (19,027 )
Total Vishay Precision Group, Inc. stockholders' equity 210,459 203,418
Noncontrolling interests   149     133  
Total equity   210,608     203,551  
Total liabilities and equity $ 294,979   $ 292,104  
 
       
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
 
Six fiscal months ended
June 28, June 29,
2014 2013
 
Operating activities:
Net earnings $ 5,226 $ 1,726

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 5,795 6,027
Loss (gain) on disposal of property and equipment 9 (6 )
Share-based compensation expense 485 704
Inventory write-offs for obsolescence 562 531
Other (309 ) (861 )
Changes in operating assets and liabilities   (6,884 )   (4,169 )
Net cash provided by operating activities 4,884 3,952
 
Investing activities:
Capital expenditures (3,444 ) (1,810 )
Proceeds from sale of property and equipment 63 42
Purchase of business   -     (48,919 )
Net cash used in investing activities (3,381 ) (50,687 )
 
Financing activities:
Proceeds from long-term debt - 25,000
Principal payments on long-term debt and capital lease obligations (2,070 ) (1,576 )
Debt issuance costs - (384 )
Distributions to noncontrolling interests   (43 )   (32 )
Net cash (used in) provided by financing activities (2,113 ) 23,008
Effect of exchange rate changes on cash and cash equivalents   280     (1,998 )
 
Decrease in cash and cash equivalents   (330 )   (25,725 )
 
Cash and cash equivalents at beginning of period   72,785     93,881  
Cash and cash equivalents at end of period $ 72,455   $ 68,156  
 
 
VISHAY PRECISION GROUP, INC.
Reconciliation of Adjusted Earnings Per Share
(Unaudited - In thousands, except per share data)
               
Fiscal quarter ended Six fiscal months ended
June 28, June 29, June 28, June 29,
2014 2013 2014 2013
 
 
Net earnings attributable to VPG stockholders $ 3,461 $ 1,310 $ 5,167 $ 1,697
 

Reconciling items affecting operating margin

 
Acquisition purchase accounting adjustments 2 2,260 41 3,498
Acquisition costs - 208 - 695
Restructuring costs 7 - 331 388
 
 

Reconciling items affecting income tax expense

Tax effect of purchase accounting adjustments, acquisition cost adjustments, and restructuring cost adjustments 2 654 94 1,346
 
               
Adjusted net earnings attributable to VPG stockholders $ 3,468 $ 3,124 $ 5,445 $ 4,932
 
Weighted average shares outstanding - diluted 13,968 13,947 13,963 13,938
 
Adjusted net earnings per diluted share $ 0.25 $ 0.22 $ 0.39 $ 0.35
 
 
VISHAY PRECISION GROUP, INC.
Reconciliation of Consolidated Adjusted Gross Margin
(Unaudited - In thousands)
               
Fiscal quarter ended Six fiscal months ended
June 28, June 29, June 28, June 29,
2014 2013 2014 2013
 
 
Gross profit $ 24,697 $ 21,560 $ 46,744 $ 41,529
Gross margin 37.9 % 34.3 % 37.0 % 34.5 %
 

Reconciling items affecting gross margin

Acquisition purchase accounting adjustments 2 2,260 41 3,498
                       
Adjusted gross profit $ 24,699   $ 23,820   $ 46,785   $ 45,027  
Adjusted gross margin 37.9 % 37.9 % 37.1 % 37.4 %
 


Copyright © Business Wire 2014
Contact:

VPG
Wendy Wilson
Senior Director Investor Relations and Corporate Communications
919-374-5501
wendy.wilson@vpgsensors.com