Vishay Precision Group, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Performance: Challenging year with revenue of $306.5 million, impacted by macroeconomic and cyclical headwinds. Fourth quarter revenue declined 4% sequentially, but consolidated orders grew 5.5% sequentially with a book-to-bill of 1.0.
• 2025 Priorities: Focus on business development in robotics, consumer, data center, medical, and aerospace and defense, with $18 million in 2024 projects and potential $100 million in aggregate over 3-4 years. Continued efficiency initiatives with at least $5 million cost reductions, optimizing India facility, and M&A as a complement to growth.
• Financial Details: Fourth quarter 2024 revenue $72.7 million, adjusted gross margin 38.3%, operating margin 0.3%, adjusted net earnings $400,000. Q1 2025 net revenues expected $70-76 million at constant fourth quarter 2024 exchange rates.

Segment Performance

• Sensors segment: Fourth quarter revenue declined 8.7% sequentially. However, sensor bookings grew 7.0% sequentially with a book-to-bill of 1.04. Order growth was driven by higher demand for precision resistors in test and measurement, semiconductor back-end equipment, and avionic, military, and space (AMS) markets.
• Weighing solutions segment: Fourth quarter sales increased 2.2% from the third quarter, driven by industrial weighing, precision agriculture, and construction applications. Orders of $28.9 million grew 14.5% sequentially with a book-to-bill of 1.12.
• Measurement systems segment: Fourth quarter revenue was $21.2 million, down 5.3% sequentially. Included a $1 million acquisition impact from NOCRA. Orders declined 8.9% sequentially with $5 million push-outs, but NOCRA's laser-based thickness measurement technology broadens Kelk's offering in the steel market.

Guidance

• Fourth quarter 2024 revenue was $72.7 million.
• Q1 2025 net revenues expected to be in the range of $70 million to $76 million at constant fourth fiscal quarter 2024 exchange rates.
• 2025 budgeting $10 to $12 million for capital expenditures.
• Assumed operational tax rate of approximately 27% for the full year of 2025.

Risks

• Macro and cyclical headwinds impacting revenue.
• Near-term visibility limited.
• Potential impact of tariffs on costs, though limited for Vishay given India-based manufacturing.

Question and Answer

Q: Talk about Sensors segment, test and measurement, avionics, turnaround expectations A: Sensor book-to-bill over 1, positive signs in semiconductor equipment and AMS, expecting positive trend in Q1-Q2, acceleration in second half.

Q: Steel market, tariffs impact A: Limited impact due to India-based manufacturing, potential backwind from tariffs on US loaders business.

Q: $5 million cost savings timings and nature A: Mix of moving to low-cost countries, automation, yield and efficiency improvements in larger manufacturing bases.

Q: NOCRA revenue contribution, accretive to operating income A: NOCRA was net zero in Q4 2024, expected $6 million in 2025, providing positive margins.

Q: Macro certainty, capital spending, inventory replenishment A: Optimism from EU rate cuts, European customer demand, inventory depletion, and business development initiatives.

Q: New product development timeline, margin profile A: Business development funnel built over 18-24 months, $18 million in 2024, $30 million in 2025, potential $100 million over 3-4 years; margins similar or better than existing profile.