Vishay Precision Group, Inc.

Hello and welcome to VPG's second quarter 2022 earnings call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star 1 on your telephone keypad. If you'd like to withdraw your question, you may press star 2. I'll now hand over to your host, Steve Cantor, Senior Director of Investor Relations. Steve, over to you.

Thank you, Alex, and good morning, everyone. Welcome to VPG's 2022 Second Quarter Earnings Conference Call. Our Q2 press release and accompanying slides have been posted on our website at vpgsensors.com. An audio recording of today's call will be available on the Internet for a limited time and can also be accessed on our website. Today's remarks are governed by the safe harbor provisions of the 1995 Private Securities Litigation Reform Act. Our actual results may vary from forward-looking statements, and for a discussion of the risks associated with VPG's operations, we encourage you to refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2021, and our other recent SEC filings. On the call today are Ziv Shoshani, CEO and President, and Bill Clancy, CFO. And I'll now turn the call to Ziv for some prepared remarks. Please refer to slide three of the quarterly presentation. Ziv.

Thank you, Steve. I will begin with some commentary on VPG's consolidated financial results and sales trends for the second quarter. Bill will provide financial details and our outlook for the third quarter of 2022. The second quarter marked one of the best quarters in VPG's history, as we continue to execute well. We achieved a number of quarterly financial milestones, including record adjusted diluted net earnings per share, adjusted EBDA, and backlog. These results are a reflection of our diversified business model and market, our strong VPG teams around the world, as well as the growth and the cost savings initiatives and investments across our businesses. Our record backlog positions us well for the rest of the year and supports our outlook for continued growth in the third quarter. We continue to implement our new operating strategy as we focus on solid and consistent long-term opportunities in expanding precision measurement sensing applications. As a reflection of our financial and operating performance, our board of directors has authorized stock repurchase program. Moving to slide four. Looking at the second quarter results in detail, we reported sales of 88.6 million, which was 17.6% higher than a year ago and 1.1% above the first quarter of 2022. Excluding foreign exchange rate impacts, revenues grew 24.2% from prior year and 3.4% sequentially. We achieved another strong quarter of orders of 95.9 million and a positive book-to-bill of 1.08. This is the sixth sequential quarter of reporting book-to-bill above 1. We improved our adjusted gross margin to 42.9% as compared to the first quarter adjusted gross profit margin of 41.0%. and generated an adjusted EBDA margin of 17.8% and a record adjusted diluted net earnings per share of 68 cents. These results reflect the steps we continue to take to realize the operating profit leverage embedded in our model. We continue to manage the impact of the global supply chain challenges in some areas we continue to make strategic purchases of materials and in other instances we have redesigned our products to manage the supply chain constraints mainly for microchips through the first half of 2022 we realized approximately 3.7 million from price increases compared to this to the same time frame a year ago we are on track for these increases to contribute to our target for six to eight million for incremental revenue in 2022, which we expect will offset higher pandemic-driven costs for direct labor, materials, and logistics. I'll now review our business segment performance in the second quarter. Moving to slide five, Beginning with our sensor segment, which is comprised of our advanced sensors product and our precision resistors, second quarter revenue of $40.3 million grew 29.2% from a year ago and was 6.7% higher sequentially. Excluding foreign exchange rate impacts, Q2 revenues grew 9.9% sequentially, and were up 38.3% from a year ago. The sequential growth was primarily driven by higher sales of precision resistors in the test and measurements market and higher sales of advanced sensors for consumer and medical applications. For the second consecutive quarter, advanced sensors revenues was above annual 50 million run rate. Book-to-bill for sensors was 1.17, reflecting solid orders of 47.1 million, which were up 9.1% from a year ago, but down 2.0% sequentially. Bookings continue to be strong for precision resistors in the test and measurement for front-end and back-end semiconductor equipment. as well as for avionics, military and space, or AMS markets. While orders float for advanced sensors for general industrial and AMS markets, a portion of which relates to the timing of semiannual orders. We continue to see good customer engagement and sales opportunities in consumer and medical applications. In terms of operating results for sensors, adjusted gross margin of 44.3% increased from 38.6% in the first quarter of 2022, reflecting higher revenue and labor efficiencies. Moving to slide six, turning to our weighing solution segment. which is comprised of our four sensors, onboard weighing, and process weighing businesses. Second quarter sales were 28.5 million. The 13.1% sequential decline reflected lower sales of OEM four sensors in our precision agriculture and construction markets, and lower sales of onboard weighing products to the transportation market. Our sales of OEM 4 sensors reflected a redesign of electronic boards to improve supply chain availability. We expect the redesigned products to ship in the second half of the year. In terms of our onboard weighing solutions, which are sold in the aftermarket, our sales continue to be impacted by a long lead times industry-wide for new trucks and vans. Book-to-bill for weighing solutions was 1.03. Orders of 29.3 million declined 5.6 million or 16% from the first quarter due to softer demand for force sensors in other markets and for process weighing. applications. Wayne Solutions' gross margin of 33.7% in the second quarter declined from 36.9% in the first quarter due to lower volume, unfavorable foreign exchange rate, and unfavorable product mix. Moving to slide 7, turning to our measurement system segment. Revenues in the second quarter of 19.9 million increased 15.9% sequentially, reflecting higher sales of project-driven solutions to the steel market. Excluding foreign exchange rates impact, Q2 revenues increased 16.7% sequentially. After record quarterly orders in the first quarter, orders declined 26.9 percent due to the timing of customer projects book to bill was 0.98 adjusted gross margin in the second quarter for measurement systems was 53.3 percent adjusted for purchase accounting related to the dts acquisition and declined modestly from 54.1% in the first quarter, as higher volume was offset by unfavorable product mix and a reduction in inventory. Before turning the call to build, I would like to comment on our announcement today of the stock repurchase authorization. As I mentioned earlier, in the second quarter we generated 15.8 million of adjusted EBDA and an adjusted EBDA margin of 17.8%. We believe that we have a strong balance sheet and ample liquidity to support our capital allocation strategy to fund organic growth, M&A opportunities, and stock repurchases. Accordingly, the board has authorized a stock repurchase program to buy back up to 600,000 shares of our outstanding common stock. Finally, I want to make a comment on VPG's ESG program. In August last year, we launched a three-year ESG plan. As part of the plan this past quarter, we posted and new ESG-related content on our website. We are proud that VPG and its products are playing a role in making the world safer, smarter, and more productive. I will now turn it over to Bill Clancy for additional financial details. Bill?