Vishay Precision Group, Inc.

followed by one on your telephone keypad. Good morning, everyone, and welcome to the VPG fourth quarter and FY 2023 earnings call. My name is Chach, and I'll be the coordinator for your call today. During the presentation, you can register to ask a question by pressing star one on your telephone keypad. If you change your mind, please press star four by two. I will now hand you over to Steve Cantor, Senior Director of Investor Relations to begin. Steve, please go ahead.

Thank you, Josh, and good morning, everyone. Welcome to VPG's 2023 fourth quarter earnings conference call. Our Q4 and full year press release and accompanying slides have been posted on our website, 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. For a discussion of the risks associated with BPG's operations, we encourage you to refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2022, and our other recent SEC filings. On the call today, are Ziv Shoshani, CEO and President, and Bill Clancy, CFO. And now I'll turn the call to Ziv for some prepared remarks. Please refer to slide three of the quarterly presentation.

Thank you, Steve. We delivered a solid quarter and the second best year ever for VPG, despite a challenging macro environment, mainly in the second half of the year. beginning with our 2023 performance as shown in more detail in the accompanying slides. For the full year, we achieved revenue of $355 million and adjusted diluted net EPS of $2.17, and we improved our adjusted gross margin to 42.4%. We generated $60.4 million in adjusted EBDA an EBDA margin of 17.0% and a record $30.8 million of adjusted free cash flow. We deployed our cash to repurchase stock and to pay down our revolving debt in order to provide value to our stockholders. We completed infrastructure expansion projects in India and Japan and have accelerated our business development activities to capture new opportunities for our precision sensing and measurement solutions. Moving to slide four, turning to the fourth quarter of 2023, we achieved revenue of 89.5 million, which was above the high end of our guidance and 4.3% higher than the third quarter. We delivered adjusted diluted EPS of 61 cents. All the trends were mixed sequentially as growth in our sensors and weighing solution segments was offset by lower measurement systems bookings due to the timing of customers' projects. We generated record-level adjusted free cash flow of $13.5 million, adjusted EBDA of $16.5 million, and achieved an adjusted EBITDA margin of 18.5%. We deployed capital to pay down bank debt as well as to repurchase shares. We continue to execute on our long-term organic growth initiatives in terms of new product development and expanding our engagement with customers in larger markets. We are also continuing our cost reduction efforts to move production to lower cost locations, investing in automation and reducing material costs. I will now review our performance by business segment for the fourth quarter. Moving to slide five. Beginning with our sensor segment, fourth quarter revenue of $34.3 million grew 5.3% sequentially, but was 5.7% lower than a year ago. The sequential growth was driven by higher sales of precision resistors in the test and measurement, as sales related to semiconductor test and production applications improved from the third quarter. Revenue trends for the rest of our markets, including consumer for advanced sensors, were stable. We continued our strategic initiatives to secure design wins in new emerging markets in data centers and fiber optics equipment, as well as robotics and industrial automation systems. In terms of operating results for sensors, gross margin of 40.2% improved sequentially from 35.9%, primarily due to higher volume and improved manufacturing efficiencies. Book-to-bill for sensors was 0.85, which was modestly up from the third quarter as orders grew 7.8% sequentially. This reflected stronger demand in test and measurement and higher customer project related orders in avionic military and space or AMS. Moving to slide six, turning to our weighing solution segment, fourth quarter sales of 30.4 million increased 5.1% from 29.0 million in the third quarter, but were 8.0% lower than a year ago. Sequentially, The increase was driven by higher OEM sales for precision agriculture and construction applications, and higher sales in general industrial, which offset lower sales in the transportation market. Wang Solutions adjusted gross margin of 35.6% in the fourth quarter, declined from 38.7% in the third quarter, primarily due to a reduction in inventory and unfavorable product mix partially offset by higher volume. Book-to-bill for weighing solutions of 0.91 in the fourth quarter improved modestly from the third quarter. Orders of 27.7 million grew 7.2% due to higher bookings for industrial weighing and transportation applications. Moving to slide seven, Turning to our measurement system segment, revenue in the fourth quarter of $24.8 million increased 2.0% sequentially, but was 7.5% lower year over year. The sequential growth reflected higher DTS sales for AMS applications, which offset lower sales for our steel-related businesses. Adjusted gross margin in the fourth quarter for measurement systems was 56.1%, which compared to 54.5% in the third quarter of 2023. The higher adjusted gross profit margin in the fourth quarter of 2023 reflected the higher volume and favorable product mix. Book to bill for measurement systems of 0.73 declined from 0.98 in the third quarter, which had included record orders for DTS in the AMS market. The decline in book to bill reflects the timing of customers' projects. In the fourth quarter, steel-related orders grew sequentially, while orders in AMS were down from a record level. We see positive trends for DTS with our AMS customers. Despite the muted near-term outlook for the steel market, we are pursuing VPG specific opportunities with new products such as our development of calc solution for aluminum manufacturing. In addition, we are addressing opportunities in the Indian market, which is currently small, but is expected to grow a double digit over the next several years. We have added local sales and service support capabilities to meet this growing potential. Moving to slide eight, as I indicated, we were pleased with our cash generation, both for the fourth quarter and for 2023, which included record adjusted free cash flow. We continue to deploy cash as part of our capital allocation strategy, which prioritize internal investment, M&A, stock repurchase, and paying down our revolving credit facility. In terms of internal investments, we completed growth focus and operational capability and automation projects in 2023. For example, we have increased the automation in our India facility to support higher volume businesses. In addition, we are continuing to consolidate production to this location. As such, we expect capital spending to return in 2024 to a more historical level of approximately 4% of revenue. Regarding M&A, we continue to look for attractive, high-quality businesses that meet our stringent requirements for strategic fit, financial returns, and value creation. We are currently seeing a more favorable M&A environment. Before turning the call to Bill for additional comments, I would like to thank our employees and our customers around the world for their continued commitment and dedication. I will now turn it over to Bill Clancy. Bill?