Vishay Precision Group, Inc.

Hello, everyone, and welcome to the VPG's third quarter of the school 2024 earnings school. My name is Ezra and I will be your coordinator today. I would like if you would like to ask a question, please press star followed by one on your telephone keypad. Now, if you change your mind, please press star followed by two. I will now hand you over to your host, Steve Cantor, senior director of investor relations to begin. Steve, please go ahead.

Thank you, Ezra, and good morning, everyone. Welcome to our third quarter 2024 earnings call. Our Q3 release and 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 Security Litigation Reform Act. Our actual results may vary from forward-looking statements. For 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, 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. Ziv.

Thank you, Steve. I will begin with some commentary on our results and trends for the third quarter. Bill will provide financial details about the quarter and our outlook for the fourth quarter of 2024. Moving to slide three, Overall, third quarter was as follows. Total sales were mostly stable sequentially. The business environment continues to be mixed, as higher demand in some markets was offset by weakness in others. We continue to focus on broadening our funnel of new business opportunities. We are streamlining operations, mainly in the sensors and weighing solution segments. The recent acquisition of NOCRA expand our product offering in the steel market. Moving to slide four, looking at the third quarter results in details. We reported sales of 75.7 million, which was above the mid range of our guidance. Orders of 68.6 million declined from 73.5 million in the second quarter. resulting in a book-to-bill ratio of 0.91. Trends continue to be mixed in our markets as orders generally represented customers' ongoing replenishment of inventories. The majority of bookings declined related to certain cyclical markets, including steel and consumer. This contrasted with higher orders in the test and measurement and AMS which remains well below peak levels. Operationally, we reduced our manufacturing operations to align with near-term revenue trends. These steps resulted in temporary labor inefficiencies, primarily in our sensor segment. Combined with the impact of sequentially lower revenues, these inefficiencies contributed to a gross margin of 40% in the third quarter. We do not expect these labor inefficiencies to continue in the fourth quarter. As we continue our growth-focused investments in business development, marketing, and R&D, we are streamlining our operating costs and implementing our long-term cost reduction plans. Over the past few years, these programs have improved our gross margin and going forward will position us to realize potential operating leverage as our revenue recovers. I will now review our business segment performance for the third quarter. Moving to slide five, beginning with our sensor segment, third quarter revenue was $28.2 million, down 13.3% from a year ago and 2.3% sequentially. Compared to the second quarter, sales of precision resistors, primarily in the test and measurement and AMS, were higher, but were offset by lower sales of advanced sensors, mainly for consumer applications. Book-to-bill for sensors was .89, as the third quarter orders for sensors of 25.1 million softened sequentially primarily due to lower bookings for consumer-related applications. This offset higher orders in the test and measurement and AMS, while semiconductor equipment manufacturers' customers have placed semi-annual orders to replenish their inventories. The semiconductor market remains cyclically soft. Regarding business development activities, we continued our focus on expanding our precision resistors in fiber optics equipment. During the third quarter, we achieved design qualification for our resistor products in telecommunications market, as well as recording an order from a supplier of source laser used in fiber optics equipment. For advanced sensors, we continued our progress with a project with a leading developer of humanoid robots and are now in discussion with the second maker of such robots. In consumer, we received initial orders from a large global bicycle accessory company, and in medical, we achieved a key design win with a maker of infusion pumps. Moving to slide six, in the weighing solution segment, Third quarter sales were 25.2 million, a decline of 13.1% from a year ago, and 8.3% from the second quarter. Sequentially, the decline was mainly due to lower sales in the industrial weighing, transportation, and in other markets. Book-to-bill for weighing solutions was 1.0%, orders of 25.2 million were essentially even with the second quarter as lower orders in the transportation market offset higher bookings in the industrial weighing and other markets. Overall, slowing industrial production and capital spending around the world continues to be a headwind. In our other markets, we have seen modest improvement in precision ag while construction and medical remain slow. As a key area of business development focus for weighing solutions continues to be on expanding our content with OEM customers in precision agriculture, construction equipment, and medical equipment. Moving to slide seven, turning to our measurement system segment, third quarter revenue was $22.4 million, down 8.2% year over year, but up 6.2% sequentially. The sequential growth was mainly due to higher sales of DTS products in the AMS and transportation markets, which offset declines in our other markets and in steel. Book-to-bill ratio for measurement systems was 0.82, reflecting orders of 18.2 million. This was a decline of 16.9% from the second quarter, primarily due to lower bookings in steel and transportation. While the steel market in China remains soft, we are expanding our business in India which is one of the fastest-growing markets globally for steel production. In transportation, orders soften for our DTS crash test data recorders due primarily to project timing. Moving to slide 8, we were pleased to announce the acquisition of Nokra, a German niche supplier for laser-based measurement systems. which strategically expand our product offering to the steel and metal processing market. NOCRA precision laser-based systems provide an effective alternative for measuring the thickness and flatness of metal sheets during production. In 2025, we expect to grow NOCRA revenues as we leverage KELC strong brand sales channels and existing customer base. We finance the transaction with cash and expect it to be immediately accretive. Given our strong balance sheet, our capital allocation strategy, prioritize internal investments, and funding additional M&A opportunities that add high-quality businesses to the VPG platform. Moving to slide nine, before turning the call to Bill, I want to highlight the release of our initial sustainability report. This report marks a significant milestone in VPG's sustainability journey. We take great pride on how VPG contributes to a more sustainable world by helping to make our customers, products, and processes safer, smarter, and more productive to deliver long-term value creation globally. We look forward to sharing more milestones in the future. I will now turn it over to Bill Clancy for additional financial details. Bill?