Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vishay Precision Group Inc achieved record gross margin despite lower revenue, reflecting ongoing cost reduction initiatives.
- The company continues to repurchase its common stock, enhancing shareholder value.
- Vishay Precision Group Inc is focusing on strategic growth initiatives, targeting larger and faster-growing markets through both organic and inorganic strategies.
- The company received an initial order for a new solution targeting aluminum mills, expanding its market reach.
- Vishay Precision Group Inc reported solid cash flow generation with adjusted EBITDA of $12.3 million and adjusted free cash flow of $4.2 million.
Negative Points
- Vishay Precision Group Inc experienced a revenue decline compared to the previous year and the last quarter, with sales at the low end of guidance.
- Orders remained flat sequentially, reflecting continued soft demand in key sectors like industrial weighing and semiconductor test equipment.
- The company's Sensors segment saw a significant decline in revenue and bookings, particularly in precision resistors and semiconductor test equipment.
- Weighing solutions segment also reported lower sales and flat orders, indicating soft demand in industrial weighing and precision agriculture markets.
- The expected recovery in demand has been pushed out to later in the year, indicating ongoing challenges in the macroeconomic environment.
Q & A Highlights
Q: Can you discuss your expectations for growth investments and OpEx projections for the year?
A: Ziv Shoshani, President and CEO of Vishay Precision Group, explained that the company is slightly behind on hiring for business development and engineering, which is intended to accelerate organic growth. The OpEx for the year will primarily support cost reduction initiatives and high-volume product lines, with some investments already realized in Q1.
Q: Is the current higher gross margin sustainable and part of the long-term model?
A: Ziv Shoshani confirmed that the target of a 45% gross margin is still viable and believes that the current gross margin, which is ahead of plan, is sustainable due to favorable exchange rates, product mix, and sales revenue.
Q: Can you provide details on the multimillion-dollar award from an EV toll customer in the measurement systems segment?
A: Ziv Shoshani stated that the eVTOL sector is a new area for DTS, which traditionally served automotive and defense markets. The company expects this sector to grow by at least 20% year-over-year, with significant prototype testing already underway with key customers.
Q: What are the current trends and expectations for the avionics, military, and space segment going into the second quarter?
A: Ziv Shoshani mentioned that the company is selling two product lines to the AMS market: precision resistors and DTS products. The precision resistors are project-based and sustainable, while DTS products, particularly for military applications, are awaiting funding release. He expressed hope that significant orders would be placed in the second half of the year.
Q: What are the operational efficiencies and structural changes in gross margin expectations?
A: Ziv Shoshani highlighted that the company's gross margin has structurally improved due to enhanced manufacturing efficiencies and cost reductions, which offset the impact of lower volume. This improvement supports the company's long-term profitability targets.
Q: What is the status of operational tax rates and their impact on financial projections for 2024?
A: William Clancy, CFO, noted that the GAAP tax rate increased primarily due to a higher proportion of income in higher tax rate jurisdictions. The operational tax rate for 2024 is projected to be between 26% and 28%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
