Vishay Precision Group, Inc.

Welcome everyone. The VPG fourth quarter 2025 earnings call will begin shortly. In the meantime, if you would like to pre-register 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. Thank you. Hello everyone and thank you for joining the VPG fourth quarter 2025 earnings call. My name is Claire and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad. I will now hand over to Steve Cantor, Senior Director, Investor Relations at VPG to begin. Please go.

Thank you, Claire. Good morning, everyone. Welcome to VPG's 2025 Fourth Quarter Earnings Conference Call. Our Q4 press release and slides have been posted on VPG's website. 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 VPG's operations, we encourage you to refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2024, 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 fourth quarter and on our strategy. Bill will provide financial details in our outlook for the first quarter of 2026. Moving to slide three. To summarize our Q4 25 results, Q4 marked our fifth consecutive quarter with a book to bill over one led by sensors. While Q4 gross margin reflected the number of headwinds, we expect gross margin to improve in Q1. With sensors ramping and backlog at the multi-year high, we expect higher shipments beginning in Q2 and continued progress on our growth initiatives. Specifically, fourth quarter revenues of 80.6 million was up 11% year over year and 1% sequentially. reflecting solid execution across the portfolio. We achieved another quarter of a positive booking trends as our consolidated orders of 81.3 million grew 2% sequentially. This resulted in a book to bill of 1.01, the fifth consecutive quarter of book to bill of one or better. We continue to make good progress across our business development initiatives, including humanoid robots and semiconductor equipment. These efforts generated 11.8 million in orders during the fourth quarter, bringing total orders from these initiatives to 37.8 million for the full year of 2025, which exceeded our goal of 30 million for the year. Our fourth quarter adjusted gross margin of 37% was impacted by 3 million of headwinds, including unusual unfavorable product mix, inventory reductions, and discrete inventory and manufacturing impacts. We expect gross margin to improve in Q1. We are currently ramping production of sensors products and expect to realize higher sales in the second quarter. I will now review the business performance by segments. Moving to slide four, beginning with our sensor segment, fourth quarter revenue declined 4% sequentially, but was 18% higher than a year ago. Compared to the third quarter, continued strength in test and measurement related to semiconductor equipment was offset by softer sales to the AMS and the general industrial market. Booking for sensors continued its positive trend and reached its highest level in 13 quarters. Sensor bookings rose 4% sequentially and were 30% above a year ago, resulting in a book-to-bill of 1.15. The bookings growth from the third quarter was driven by higher orders in general industrial, our other markets for consumer electronics, and AMS. In addition, we are pleased with the demand related to the test and measurement market, particularly for semiconductor test equipment applications. Total sensors orders were up 18% in the second half of 2025 compared to the first half, with sensors backlog at the highest level since Q3 of 2023. We are currently hiring to ramp up production to meet demand, which should lead to increased sales beginning of Q2. A key highlight continues to be our growing momentum with humanoid robots developments in Q4. We received $800,000 in humanoid-related orders, including a follow-on bookings for our first two customers and an initial prototype order for the third. This new customer is an emerging robotics company developing humanoids to enhance productivity and streamline daily operations in both homes and warehouse environment. In addition, in January, we received a follow-on orders from one of our initial two humanoid customers of approximately $1 million. 2026 is expected to be a pivotal year for the overall humanoid robotics market as leading companies move decisively from prototype into early production and real world deployment. Technical challenges remain, but they play directly to our strength and create strong demand for our high value, high performance solutions that solve their problems to advance dexterity, stability, responsiveness, and safety. While the timing and scale of production ramps across the humanoid robot market remains unclear, we expect 2026 to bring continued momentum for VPG. Our infrastructure and supply chain teams are prepared to support customers' production demands. Moving to slide five, turning to our weighing solution segment. Fourth quarter sales increased modestly from the third quarter and grew 7.8% from prior year. The sequential increase was primarily evident in our industrial weighing market. Weighing solutions orders were up 14.9% sequentially to 28.2 million resulting in a book to bill of 1.02. Specific areas of strength were in our other markets for precision ag, medical, construction, and e-bike applications. Orders were also higher in the transportation for onboard weighing systems for heavy use trucks. While there are signs that some of these end markets have reached their cyclical bottom, we continue to see mixed trends across our OEM customers. Moving to slide six, turning to our measurement system segment, revenue in the fourth quarter of $22.4 million increased 9% sequentially and 6% from a year ago. The sequential increase reflected a record high sales for DSI R&D tool for development of new metal alloys. We also had higher sales in AMS for testing new avionics platforms. Fourth quarter measurement systems orders of 18.1 million declined 16% from the third quarter and resulted in a book-to-bill of 0.81. Lower orders in our steel market which mostly reflected the timing of projects in the middle of a soft global steel market, offset stronger sales of DTS products used in crash safety testing. Our pipeline remain healthy, and given the timing of customers' projects, we expect to return to a positive book to build in Q1. Moving to slide seven, Looking at the year in total fiscal 2025 was a year of transformation for VPG. While our revenues of $307.2 million grew slightly from the prior year, sales in the second half were up 9% from the first half. In addition, we had a steady improvement in orders through the year, particularly in the sensor segment. Our performance in our business development initiatives of 37.8 million in 2025 exceeded our goal of 30 million for the year. We also delivered 4.5 million of targeted cost reductions as part of ongoing cost efficiency plans. Moving to slide eight, most significantly during 2025, we took steps to position VPG for its next phase of accelerated growth. Over the past several years, we strengthened and streamlined our operation to support higher volume opportunities and sharpen how we develop and track our growth initiatives. Those efforts have prepared us to move into the next phase, which involves a fundamental rewiring of our business. As we announced in November, a key component is the creation of the two new senior executives positions and corresponding organizations. The office of the chief business and product officer and the office of chief operating officer. Each organization has a clear mandate. The CBPO's focus is on accelerating growth by refining our internal sales and product development processes. thus expanding our opportunity set and increasing our conversion rate with both new and existing customers. The CEO organization is supporting this accelerated growth by driving improvements in operational efficiency and readiness while also reducing our cost structure. Creating this cross-divisional center of excellence organizations marks a major shift from the diversified operating structure that define much of our history. The reason is simple. The opportunities ahead are being driven by large mainstream market and technology trends and are bigger and more significant than ever. As we enter Q1 transition period, the new organization will work on the core and cross-company processes redesigning them into standardized, scalable, unified, and up-to-date global processes, while also implementing industry best practices. The new processes will be fully placed in Q2. We expect an additional $3 million of SG&A costs in 2026 to support the new organizational structure as well as new IT platforms. as a result of the new organization. We expect 2 million in savings through cost reduction initiatives. The net effect is 1 million to support the new organization. A key trend driving our long-term opportunities is the emergence of physical AI technologies. Physical AI is the class of AI systems that perceives the real world, makes decisions, and drive physical actions to machine or control systems. It sits at the intersection of AI and machine learning, sensors, controls, and humanoids. As physical AI gains broader adoption, certain types are expected to have bigger, longer-term impact than others. VPG is looking to provide solutions in the humanoids and autonomous logistics. As a result, we are excited about our growth prospects. We have set an internal goal this year to grow our top line in the mid to high single digits as we anticipate a stronger second half reflecting strengthening economic trends and capital investments, as well as continued progress with our ongoing growth initiatives. Given our current pipeline, from business development initiatives, we are setting a target of 45 million for 2026, which represents a 20% increase from 2025. Before turning the call to bill, I would like to thank our employees for their dedication, their past year, and their embrace of the changes we are making. I want to thank our customers for their trust and confidence as we continue to work hard to exceed their expectations. I will now turn it over to Bill Clancy. Bill?