Vishay Precision Group, Inc.

Good morning everyone and welcome to the CPG fourth quarter fiscal 2024 earnings call. My name is Ezra and I will be your coordinator today. If you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I will now hand you over to Steve Cantor, Senior Director of Investors Relations to begin. Steve, please go ahead.

Robert Marlayson, Thank you. Robert Marlayson, Good morning, everyone, welcome to vpg 2024 fourth quarter earnings conference call our Q4 and full year press release and accompanying slides have been posted on our website. Robert Marlayson, And 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, 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. Please refer to slide three of the quarterly presentation. Ziv.

Thank you, Steve. I'll begin by reviewing our sales and business trends for fiscal 2024 and the fourth quarter, and then provide an update on our 2025 priorities, particularly our business development activity. Bill will provide financial detail for the fourth quarter and for our Q1 guidance. Beginning with our 2024 performance, it was a challenging year for VPG. Revenue of $306.5 million reflected continued macroeconomic and cyclical headwinds. Moving to slide four. These headwinds impacted our fourth quarter revenue, which declined 4% sequentially. Revenues were lower in avionic military and space, or AMS, test and measurement, and in our other markets, mainly consumer. On the other hand, our consolidated orders grew 5.5% sequentially and resulted in a book-to-bill of 1.0. This marked the first quarter of a positive book-to-bill in eight quarters and a return to a sequential order growth after six consecutive quarters. Booking in our sensors and weighing solution segment grew to their highest quarterly level of the year, while measurement systems booking reflected cyclical softness and a push out of 5 million of orders of which 2 million is expected to be booked in Q1 of 25. Although near-term visibility remains limited, we are encouraged by these order trends and believe they may signal the beginning of the recovery and support our increased optimism for 2025. I'll now review the business segment performance. Moving to slide five. Beginning with our sensor segment, fourth quarter revenue declined 8.7% sequentially. However, it's important to note that sensor bookings grew 7.0% sequentially, resulting in a book-to-bill of 1.04. The order growth reflected higher demand for precision resistors in the test and measurement for semiconductor back-end equipment and in AMS. all the trends for advanced sensor stringages were stable. Moving to slide six, in the weighing solution segment, fourth quarter sales increased 2.2% from the third quarter. The increase was driven by higher revenue in the industrial weighing market and for precision agriculture and construction applications. This offset lower sales in the transportation market. Wang solution orders of 28.9 million grew 14.5% from the third quarter, resulting in a book-to-bill of 1.12. Bookings were higher for general industrial and for transportation applications as well as in our other markets, mainly in the medical and construction. Moving to slide seven, in the measurement system segment, Revenue in the fourth quarter of $21.2 million declined 5.3% sequentially. The sales decline reflected lower DSI sales, which offset approximately $1 million of added sales related to the acquisition of NOCRA at the end of September. We are pleased to report that the integration of NOCRA is proceeding on track. NOCRA differentiated laser-based thickness measurement technology broadens our Calc product offering in the steel market. We believe we can grow this business to 6 million in 2025 as we continue to leverage Calc's brand and the sales channels. In the fourth quarter, measurement systems orders declined 8.9% sequentially. which includes 5 million in customer push-outs, of which 2 million is expected to be booked in Q1 of 25. This change was primarily related to orders of DTS products in the AMS market and DSI systems for the steel market, which offset the additional orders for NOCRA as a result book-to-bill for measurement systems of 0.78 declined from 0.82 in the third quarter. Moving to slide eight, our priorities for 2025 are clear. First, our business development activity is focused on securing design wins in new applications and new customers in robotics, consumer, data center, medical, and aerospace and defense. These opportunities are being driven by mega trends such as industrial automation, and electrification. In 2024, our business development projects contributed about 18 million in revenue. While we are pleased with the early momentum of these efforts, the potential is significant. Typically, the design cycle and lead time for our projects from the initial customer discussions to revenue can be as much as 30 months. Over the next three to four years, we believe that these new opportunities may contribute 100 million of revenue in aggregate across our business segments. We expect to further broaden our business development funnel over this period of time. I want to highlight a couple of the current initiatives. Our project with a leading developer of a humanoid robot to provide advanced sensor stringages continues to proceed well. The project reflects our ability to utilize our extensive expertise in deep engineering design and manufacturing to create high-performance solutions. In the fourth quarter, we received additional prototype orders from this customer. Since the beginning of this project, we have received approximately 1.5 million in prototype revenue. With the project now moving to the pre-production phase, we believe this opportunity could generate millions of dollars in revenue annually, as the humanoid robot are expected to be deployed in larger numbers over the next two to three years. As I indicated last quarter, we are also in the process of providing prototypes to more humanoid robotic developers. In January, we announced a partnership with the University of Alabama to test new DSI system for testing and developing ceramic materials. This innovative system builds on our flagship simulation tool utilized in metal alloy testing and marks our entry into the new and untapped market for VPG. Its focus on the testing of ceramic and composite non-conductive materials, which require extremely high temperatures. Since we do not address the ceramics test market today, this represents a significant growth opportunity that could potentially double the size of DSI over time. Another priority for 2025 is to continue to implement our long-term efficiency initiatives, This effort in 2024 yielded approximately 5 million net improvements resulting from manufacturing efficiencies and higher selling prices. In 2025, we have put in place a minimum of 5 million for additional annual cost reductions. A focal point of our strategy is optimizing our facility in India, which supports high-volume businesses development initiatives. and plays a vital role in our manufacturing consolidation. As a result, our manufacturing footprint in China is dedicated to supporting the Chinese domestic market. To improve efficiency, we are moving most of our shared functional services to the India facility. This transition, expected to take about 18 months, should save us an additional $1 million annually once completed. M&A continues to be an important complement to our organic growth initiatives. Our strong balance sheet provides us with the means to acquire larger businesses with recognized brands and growth paths. Before turning the call to Bill for additional comments, I want 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?