Vishay Precision Group, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the VPG's first quarter fiscal 2024 earnings call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question and answer at the end. If you'd like to ask a question, please press star followed by one on your telephone keypad. I would now like to turn this conference over to our host, Steve Kantar, Senior Director of Investor Relations. Please go ahead.

Great. Thank you, Candice. Good morning. Good afternoon, everyone. Welcome to our first quarter 2024 earnings conference call. Our Q1 press release and accompanying slides have been posted on our website at bpgsensors.com. An audio recording of today's call will be available on the internet for a limited time and can 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 VPG's operations, we encourage you to refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2023, and our other recent SEC filings. On the call today, are Ziv Shoshani, CEO and President, and Bill Clancy, CFO. I'll now turn the call to Ziv for some prepared remarks and refer to slide three of the quarterly presentation.

Thank you, Steve. I will begin with some comments on VPG's consolidated financial results and sales trends for the first quarter. Bill will provide financial details about the quarter and our outlook for the second quarter. Moving to slide three, to summarize the quarter results, operationally, we performed well given a mixed business environment, which resulted in a lower revenue compared to a year ago in the fourth quarter. Orders were flat sequentially, reflecting continuing soft demand, mainly in the industrial weighing and semiconductor test equipment. We achieved record gross margin despite the lower revenue. reflecting ongoing cost reduction initiatives. Our cash flow remains solid, and we continue to repurchase our common stock. Before providing detail regarding the first quarter, I want to take this opportunity to summarize our strategy to accelerate VPG's long-term growth. Moving to slide four, as we have described in the past several quarters, We believe VPG is coming to an important inflection point as we pivot our strategic priorities to accelerate our growth and achieve our long-term targets. Our strategy leveraged both organic and inorganic initiatives to address larger, faster growing markets. These opportunities are driven by key technology trends, including electrification, industrial automation, defense and aerospace technologies that requires greater precision and performance. Our organic growth strategy comprises initiatives in each of our business reporting segments that expand our business development and engineering capabilities to capture new customers as well as to expand applications we address. We are investing more in these areas in 2024 and are offsetting these investments with ongoing cost reductions and efficiency initiatives. While some of these initiatives are still in the early stages, we are already seeing an increase in the funnel of opportunities. To summarize some of these opportunities in the sensor segment, we are leveraging our advanced sensor technology to further penetrate the e-bike market. We are making progress in the medical and surgical robotics, as well as with humanoid robots we have discussed previously. For precision resistors, we have expanded our engagement with data center and fiber optics equipment manufacturers. In weighing solutions, we are working with the leading OEM customers for precision agriculture and construction equipment on their next generation equipment. We have also launched V-Lite, a new lighter weight force sensors, which is targeted for the industrial weighing market. In the measurement systems, one of the key initiatives is to broaden our market beyond steel manufacturers to address application at aluminum mills, which is a new market for us. In the first quarter, we received an initial order for this solution. We are expanding our product offering at DSI with a new version of our global system designed to test small samples in additive or 3D manufacturing systems. Concurrent with our programs aimed at growing our top line, we are continuing our focus on operational excellence. Our investments in operational capabilities and efficiencies and increased automation have positioned VPG to address higher volume opportunities and to achieve new level of profitability as revenue grows. To augment our organic initiatives and to leverage our strong business platform and balance sheet, we are continuing to look at attractive M&A that provides us with additional scale and product offering to expand our opportunities. Moving to slide five, turning to the first quarter results in detail. We reported sales of $80.8 million, which was at the low end of our guidance. We were pleased with our gross margin performance, which reached a record level for VPG. Bill will provide more comments regarding our gross margin on a consolidated basis and by segment. Our cash flow was solid, and we generated $13.2 million of adjusted EBITDA, an adjusted EBITDA margin of 15.3%, and adjusted free cash flow of 4.2 million. Our book-to-bill improved to 0.93 compared to 0.84 in the fourth quarter. Orders of 75.3 million were even with the fourth quarter levels and reflected continued mixed trends across our markets. Specifically, orders in avionic military and space, transportation, and in consumer applications were sequentially higher while bookings in the industrial weighing and test and measurement markets were weaker as some customers continued to work down their inventory levels. Given the cross-currents in the current macroeconomic environment, our expected recovery in demand has been pushed out to the latter part of this year. I will now review the quarter's highlights by segments. Moving to slide 6, beginning with our sensors segment, First quarter revenue of 29.4 million declined 19.9% from a year ago and 14.1% compared to the fourth quarter. Sequentially, the decrease primarily reflected lower revenue of precision resistors in the test and measurement and AMS markets. Orders for sensors of 26.7 million were 8.9% lower sequentially, which resulted in a book to bill of 0.91. Bookings for precision resistors were soft as distributors and OEM customers continued their cautious orders patterns. Bookings for the semiconductor test and AMS market were lower, reflecting the timing of customer orders and projects. We are pleased with our progress with advanced sensors for both ongoing and new OEM engagements. While sales of advanced sensors softened modestly compared to the fourth quarter and a year ago, orders for consumer applications continue to improve. Moving to slide seven, turning to our weighing solution segment, sales of 28.8 million were 9.5% lower than a year ago, and 5.2% lower than the fourth quarter of 23. Sequentially lower sales of force sensors in our other markets for precision agriculture and construction applications and lower sales of force sensors in our industrial weighing markets were partially offset by increased sales in the transportation market. Book to bill for weighing solutions was 0.95, orders of 27.5 million, was essentially flat with the fourth quarter. This reflects soft demand in our industrial weighing market, as well as in other markets for precision agriculture and construction equipment, offset by increased orders in transportation. Moving to slide eight, turning to our measurement system segment. First quarter revenue of $22.5 million grew 11.1% from a year ago and decreased 9.3% sequentially. The sequential decrease in revenue was primarily due to lower sales of DTS products in the AMS and transportation markets, partially offset by higher sales in the steel market. As we have discussed before, the measurement systems businesses are project-driven and sales trends reflect the timing of customer projects. Book-to-bill ratio for measurement systems was 0.94, as orders of 21.1 million increased 16.4% from the fourth quarter. The sequential order growth was driven by higher orders for Calc products, as well as higher orders for DTS, which included in a multi-million order for North American developer of Evitol, or electric vertical takeoff and landing aircraft. These offset lower orders for DSI's metal alloy development systems. Moving to slide nine, we are continuing to implement our balanced allocation strategy that creates stockholders' value to organic growth, successful M&A, and warranted stock repurchases. In the first quarter, we repurchased $2.8 million of stock or 85,000 shares. From August 2022, when we announced the buyback program to the end of Q1 of 24, we have repurchased $11.4 million of stock. In addition, to further leverage our business platform, we have continued to look for attractive and value-creating acquisition opportunities. Before turning the call to Bill, I would like to add the following points. We are excited about the business development efforts around VPG that we are aimed at accelerating our long-term growth. At the same time, we are maintaining our ongoing focus on cost controls and operational excellence. I will now turn it over to Bill Clancy for additional financial details. Bill.