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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):      
August 7, 2018

Vishay Precision Group, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
1-34679
27-0986328
(State or Other Jurisdiction of
(Commission File Number)
(I.R.S. Employer Identification
Incorporation or Organization)
 
Number)

3 Great Valley Parkway, Suite 150
 
Malvern, PA
19355
(Address of Principal Executive Offices)
(Zip Code)
(484) 321-5300
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[   ]      
Written communications pursuant to Rule 425 under the Securities Act
 
     
 
[   ]      
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
 
     
 
[   ]      
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
 
     
 
[   ]      
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
Emerging growth company ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02 Results of Operations and Financial Conditions.
On August 7, 2018, Vishay Precision Group, Inc. issued a press release announcing results for the second quarter of fiscal 2018. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and shall not be deemed to be “filed” for any purpose.
Item 9.01 Financial Statements and Exhibits.
Exhibit No.
     
Description
99.1
 
Press release, dated August 7, 2018.





SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Vishay Precision Group, Inc.
 
 
Date: August 7, 2018
By:  
/s/ William M. Clancy
 
 
Name: William M. Clancy
 
 
Title:    Executive Vice President and Chief
 
 
Financial Officer





EXHIBIT INDEX
Exhibit No.
     
Description
99.1
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
For Immediate Release
VPG Reports Fiscal 2018 Second Quarter Results
MALVERN, Pa. (August 7, 2018) - Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and systems, today announced its results for its fiscal 2018 second quarter ended June 30, 2018.
Second Quarter Highlights:
Growth in revenues to $74.2 million, up 19% year-over-year
Gross margin was 42.3% for the quarter as compared to 39.7% for the prior year period
Operating income increased by 93% to $11.3 million as compared to $5.9 million in the prior year period
Operating margin for the quarter was 15.2%, compared to 9.4% for the prior year period
Earnings increased 111% to $0.57 per diluted share, compared to $0.27 reported last year
Adjusted diluted EPS* increased 97% to $0.57, compared to prior year $0.29
Book-to-bill remained strong at 1.13, reflecting healthy, stable end-markets

Ziv Shoshani, Chief Executive Officer of VPG, commented, “We continue to secure business opportunities across all of our end markets as reflected in our increased revenues.  Our second quarter 2018 operating results reaffirmed that strong operating margins are firmly established in our enterprise when we execute our business strategy in a solid business environment, as we did again this quarter.”
The Company grew second fiscal quarter 2018 net earnings attributable to VPG stockholders to $7.7 million, or $0.57 per diluted share, compared to $3.6 million, or $0.27 per diluted share, in the second fiscal quarter of 2017. This growth was assisted by a foreign currency exchange rate in the second quarter of 2018 relative to the prior year period that increased net income by $0.2 million, or $0.01 per diluted share.
In the six fiscal months ended June 30, 2018, net earnings attributable to VPG stockholders grew to $12.7 million, or $0.94 per diluted share, compared to $5.6 million or $0.42 per diluted share, in the six fiscal months ended July 1, 2017. Foreign currency exchange rates for the six fiscal months ended June 30, 2018 had no impact on net income relative to the prior year period.
The second fiscal quarter 2018 adjusted net earnings attributable to VPG stockholders approximately doubled to $7.7 million, or $0.57 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $3.9 million, or $0.29 per diluted share, for the comparable prior year period.
Six fiscal months ended June 30, 2018 adjusted net earnings attributable to VPG stockholders approximately doubled to $12.7 million, or $0.94 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $6.4 million, or $0.48 per diluted share, for the comparable prior year period.
Segments
Foil Technology Products segment revenues grew 16.7% to $34.2 million in the second fiscal quarter of 2018, up from $29.3 million in the second fiscal quarter of 2017; sequential revenue was flat compared to the first quarter of 2018. The year-over-year increase in revenues was attributable to precision resistors growth in all regions for distribution and OEM customers, primarily for the test and measurement market. Additionally, strain gage products increased across all regions in the force measurement and test and measurement markets.
Gross profit margin for the Foil Technology Products segment was 46.1% for the second fiscal quarter of 2018, an increase compared to 41.9% in the second fiscal quarter of 2017 and an increase compared to 42.8% in the first fiscal quarter of 2018. The year-over-year increase in gross margin was due to an increase in volumes, labor efficiencies experienced in the second quarter of 2018 and a positive exchange

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rate impact. The sequential increase in gross margin was primarily attributable to labor and manufacturing efficiencies in the second quarter of 2018.
Force Sensors segment revenues grew 23.7% to $19.4 million in the second fiscal quarter of 2018, up from $15.7 million in the second fiscal quarter of 2017; sequential revenue increased slightly, up from $19.2 million in the first quarter of 2018. The year-over-year increase in revenues was mainly attributable to OEM customers in the force measurement and precision weighing markets primarily in the Americas.
Gross profit margin for the Force Sensors segment was 29.4% for the second fiscal quarter of 2018, an increase compared to 28.9% in the second fiscal quarter of 2017 and an increase compared to 27.3% in the first fiscal quarter of 2018. Gross margins were up compared to the prior year period primarily due to the volume increase experienced in the second fiscal quarter of 2018 partially offset by a negative exchange rate impact. The sequential increase in gross margins was primarily due to an increase in volume and freight savings experienced in the second fiscal quarter of 2018.
Weighing and Control Systems segment revenues grew by 19.1% to $20.7 million in the second fiscal quarter of 2018, up from $17.4 million in the second fiscal quarter of 2017; sequential revenue increased 4.9% from $19.7 million in the first fiscal quarter of 2018. The increased year-over-year revenues were attributable to all product lines in all regions, in addition to positive exchange rate impact. The sequential increase in revenue was primarily attributable to a volume increase mainly in the steel product line in Asia partially offset by lower volume in Europe for our on-board weighing and process weighing product lines as well as a negative exchange rate impact.
The second fiscal quarter 2018 gross profit margin for the segment was 48.0%, an increase compared to 45.8% from the second fiscal quarter of 2017 and 43.9% from the first fiscal quarter of 2018. The year-over-year increase in gross margin was primarily due to volume, positive exchange rate impact and cost savings. The sequential increase in gross margin was primarily due to the volume increase experienced in the second fiscal quarter of 2018.
Near-Term Outlook
“In light of a continued solid business environment, at constant second fiscal quarter 2018 exchange rates and taking into account the normal seasonality of our business, we expect net revenues in the range of $70 million to $77 million for the third fiscal quarter of 2018,” concluded Mr. Shoshani.
*Use of Non-GAAP Financial Information
We define “adjusted net earnings” as net earnings attributable to VPG stockholders before restructuring costs and associated tax effects. The reconciliation table within this release reconciles the Company's non-GAAP measures, which are provided for comparison with other results, to the most directly comparable U.S. GAAP measures. Management believes that these measures are meaningful because they provide insight with respect to intrinsic operating results.
Conference Call and Webcast
A conference call will be held today (August 7) at 10:00 a.m. ET (9:00 a.m. CT). To access the conference call, interested parties may call 1-888-317-6003 or internationally 1-412-317-6061 and use passcode 9209556, or log on to the investor relations page of the VPG website at www.vpgsensors.com.
A replay will be available approximately one hour after the completion of the call by calling toll-free 1-877-344-7529 or internationally 1-412-317-0088 and by using the passcode 10122235. The replay will also be available on the investor relations page of the VPG website at www.vpgsensors.com for a limited time.
About VPG
Vishay Precision Group, Inc. (VPG) is an internationally recognized designer, manufacturer and marketer of: components based on its resistive foil technology; sensors; and sensor-based measurement systems specializing in the growing markets of stress, force, weight, pressure, and current measurements. VPG is a market leader of foil technology products, providing ongoing technology innovations in precision foil resistors and foil strain gages, which are the foundation of the company's force sensors products and its’

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weighing and control systems. The product portfolio consists of a variety of well-established brand names recognized for precision and quality in the marketplace. To learn more, visit VPG at www.vpgsensors.com.
Forward-Looking Statements
From time to time, information provided by us, including but not limited to statements in this report, or other statements made by or on our behalf, may contain "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those anticipated.
Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; difficulties or delays in completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; difficulties in implementing our cost reduction strategies, such as underutilization of production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to difficulties in transferring production to achieve efficiencies; significant developments from the recent and potential changes in tariffs and trade regulation; and other factors affecting our operations, markets, products, services, and prices that are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
For Investors
ICR, Inc.
Michael Callahan, 203-682-8311
[email protected]

For Media
ICR, Inc.
Phil Denning, 646-277-1258
[email protected]




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VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Operations
 
 
 
(Unaudited - In thousands, except per share amounts)
 
 
 
 
 
 
 
 
Fiscal quarter ended
 
June 30, 2018
 
July 1, 2017
Net revenues
$
74,231

 
$
62,319

Costs of products sold
42,865

 
37,560

Gross profit
31,366

 
24,759

Gross profit margin
42.3
%
 
39.7
%
 
 
 
 
Selling, general, and administrative expenses
19,990

 
18,591

Restructuring costs
61

 
315

Operating income
11,315

 
5,853

Operating margin
15.2
%
 
9.4
%
 
 
 
 
Other income (expense):
 
 
 
Interest expense
(478
)
 
(468
)
Other
(272
)
 
(571
)
Other income (expense) - net
(750
)
 
(1,039
)
 
 
 
 
Income before taxes
10,565

 
4,814

 
 
 
 
Income tax expense
2,882

 
1,198

 
 
 
 
Net earnings
7,683

 
3,616

Less: net earnings attributable to noncontrolling interests
(10
)
 
(3
)
Net earnings attributable to VPG stockholders
$
7,693

 
$
3,619

 
 
 
 
Basic earnings per share attributable to VPG stockholders
$
0.57

 
$
0.27

Diluted earnings per share attributable to VPG stockholders
$
0.57

 
$
0.27

 
 
 
 
Weighted average shares outstanding - basic
13,464

 
13,257

Weighted average shares outstanding - diluted
13,513

 
13,446



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VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Operations
 
 
 
(Unaudited - In thousands, except per share amounts)
 
 
 
 
 
 
 
 
Six fiscal months ended
 
June 30, 2018
 
July 1, 2017
Net revenues
$
147,322

 
$
122,106

Costs of products sold
87,451

 
74,830

Gross profit
59,871

 
47,276

Gross profit margin
40.6
%
 
38.7
%
 
 
 
 
Selling, general, and administrative expenses
40,309

 
36,609

Restructuring costs
61

 
869

Operating income
19,501

 
9,798

Operating margin
13.2
%
 
8.0
%
 
 
 
 
Other income (expense):
 
 
 
Interest expense
(920
)
 
(920
)
Other
(921
)
 
(1,100
)
Other income (expense) - net
(1,841
)
 
(2,020
)
 
 
 
 
Income before taxes
17,660

 
7,778

 
 
 
 
Income tax expense
5,019

 
2,159

 
 
 
 
Net earnings
12,641

 
5,619

Less: net (earnings) loss attributable to noncontrolling interests
(40
)
 
5

Net earnings attributable to VPG stockholders
$
12,681

 
$
5,614

 
 
 
 
Basic earnings per share attributable to VPG stockholders
$
0.95

 
$
0.42

Diluted earnings per share attributable to VPG stockholders
$
0.94

 
$
0.42

 
 
 
 
Weighted average shares outstanding - basic
13,409

 
13,233

Weighted average shares outstanding - diluted
13,511

 
13,442




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VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Balance Sheets
 
 
 
(In thousands)
 
 
 
 
June 30, 2018
 
December 31, 2017
 
(Unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
74,713

 
$
74,292

Accounts receivable, net
52,103

 
46,789

Inventories:
 
 
 
Raw materials
19,502

 
16,601

Work in process
23,936

 
23,160

Finished goods
21,984

 
20,174

Inventories, net
65,422

 
59,935

 
 
 
 
Prepaid expenses and other current assets
11,660

 
10,299

Total current assets
203,898

 
191,315

 
 
 
 
Property and equipment, at cost:
 
 
 
Land
3,412

 
3,434

Buildings and improvements
50,376

 
50,276

Machinery and equipment
97,772

 
95,158

Software
8,160

 
7,955

Construction in progress
2,172

 
2,252

Accumulated depreciation
(107,399
)
 
(103,401
)
Property and equipment, net
54,493

 
55,674

 
 
 
 
Goodwill
18,799

 
19,181

 
 
 
 
Intangible assets, net
18,966

 
20,475

 
 
 
 
Other assets
18,743

 
19,906

Total assets
$
314,899

 
$
306,551



6



VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Balance Sheets
 
 
 
(In thousands)
 
 
 
 
June 30, 2018
 
December 31, 2017
 
(Unaudited)
 
 
Liabilities and equity
 
 
 
Current liabilities:
 
 
 
Trade accounts payable
$
11,049

 
$
13,678

Payroll and related expenses
14,932

 
15,892

Other accrued expenses
16,758

 
15,952

Income taxes
2,888

 
2,515

Current portion of long-term debt
4,088

 
3,878

Total current liabilities
49,715

 
51,915

 
 
 
 
Long-term debt, less current portion
26,690

 
28,477

Deferred income taxes
2,300

 
2,300

Other liabilities
13,781

 
14,131

Accrued pension and other postretirement costs
16,115

 
16,424

Total liabilities
108,601

 
113,247

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Equity:
 
 
 
Common stock
1,307

 
1,288

Class B convertible common stock
103

 
103

Treasury stock
(8,765
)
 
(8,765
)
Capital in excess of par value
195,668

 
192,904

Retained earnings
55,604

 
43,076

Accumulated other comprehensive loss
(37,598
)
 
(35,450
)
Total Vishay Precision Group, Inc. stockholders' equity
206,319

 
193,156

Noncontrolling interests
(21
)
 
148

Total equity
206,298

 
193,304

Total liabilities and equity
$
314,899

 
$
306,551






7



VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Cash Flows
 
 
 
(Unaudited - In thousands)
 
 
 
 
 
 
 
 
Six fiscal months ended
 
June 30, 2018
 
July 1, 2017
Operating activities
 
 
 
Net earnings
$
12,641

 
$
5,619

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
5,332

 
5,318

Gain on disposal of property and equipment
(83
)
 
(141
)
Share-based compensation expense
801

 
492

Inventory write-offs for obsolescence
1,158

 
982

Deferred income taxes
1,086

 
(104
)
Other
455

 
(445
)
Net changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(6,141
)
 
(6,928
)
Inventories, net
(7,304
)
 
(761
)
Prepaid expenses and other current assets
(1,724
)
 
(1,397
)
Trade accounts payable
(390
)
 
1,020

Other current liabilities
1,536

 
3,676

Net cash provided by operating activities
7,367

 
7,331

 
 
 
 
Investing activities
 
 
 
Capital expenditures
(6,134
)
 
(3,146
)
Proceeds from sale of property and equipment
106

 
326

Net cash used in investing activities
(6,028
)
 
(2,820
)
 
 
 
 
Financing activities
 
 
 
Principal payments on long-term debt and capital leases
(3,847
)
 
(1,314
)
Proceeds from revolving facility
11,000

 
16,000

Payments on revolving facility
(6,000
)
 
(16,000
)
Distributions to noncontrolling interests
(129
)
 
(46
)
Payments of employee taxes on certain share-based arrangements
(801
)
 
(303
)
Net cash provided by (used in) financing activities
223

 
(1,663
)
Effect of exchange rate changes on cash and cash equivalents
(1,141
)
 
1,858

Increase in cash and cash equivalents
421

 
4,706

 
 
 
 
Cash and cash equivalents at beginning of period
74,292

 
58,452

Cash and cash equivalents at end of period
$
74,713

 
$
63,158

 
 
 
 
Supplemental disclosure of non-cash investing transactions:
 
 
 
Capital expenditures purchased
$
(3,988
)
 
$
(3,146
)
Supplemental disclosure of non-cash financing transactions:
 
 
 
Conversion of exchangeable notes to common stock
$
(2,794
)
 
$
(1,303
)




8



VISHAY PRECISION GROUP, INC.
 
 
 
 
 
Reconciliation of Consolidated Adjusted Gross Profit Margin
 
 
(Unaudited - In thousands)
 
 
 
 
 
 
Fiscal quarter ended
Six fiscal months ended
 
June 30, 2018
 
July 1, 2017
June 30, 2018
July 1, 2017
Gross profit
$
31,366

 
$
24,759

$
59,871

$
47,276

Gross profit margin
42.3
%
 
39.7
%
40.6
%
38.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted gross profit
$
31,366

 
$
24,759

$
59,871

$
47,276

 Adjusted gross profit margin
42.3
%
 
39.7
%
40.6
%
38.7
%

VISHAY PRECISION GROUP, INC.
 
 
 
 
 
 
 
Reconciliation of Consolidated Adjusted Operating Margin
 
 
 
 
(Unaudited - In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal quarter ended
 
Six fiscal months ended
 
June 30, 2018
 
July 1, 2017
 
June 30, 2018
 
July 1, 2017
Operating income
$
11,315

 
$
5,853

 
$
19,501

 
$
9,798

Operating margin
15.2
%
 
9.4
%
 
13.2
%
 
8.0
%
 
 
 
 
 
 
 
 
Reconciling items affecting operating margin
 
 
 
 
 
 
 
Restructuring costs
61

 
315

 
61

 
869

 
 
 
 
 
 
 
 
Adjusted operating income
$
11,376

 
$
6,168

 
$
19,562

 
$
10,667

 Adjusted operating margin
15.3
%
 
9.9
%
 
13.3
%
 
8.7
%




9



VISHAY PRECISION GROUP, INC.
 
 
 
 
 
 
 
Reconciliation of Adjusted Earnings Per Share
 
 
 
 
 
 
(Unaudited - In thousands, except per share data)
 
 
 
 
 
 
 
Fiscal quarter ended
 
Six fiscal months ended
 
June 30, 2018
 
July 1, 2017
 
June 30, 2018
 
July 1, 2017
Net earnings attributable to VPG stockholders
$
7,693

 
$
3,619

 
$
12,681

 
$
5,614

 
 
 
 
 
 
 
 
Reconciling items affecting operating margin
 
 
 
 
 
 
 
Restructuring costs
61

 
315

 
61

 
869

Less reconciling items affecting income tax expense
 
 
 
 
 
 
 
Tax effect of reconciling items
9

 
13

 
9

 
56

Adjusted net earnings attributable to VPG stockholders
$
7,745

 
$
3,921

 
$
12,733

 
$
6,427

 
 
 
 
 
 
 
 
Adjusted net earnings per diluted share
$
0.57

 
$
0.29

 
$
0.94

 
$
0.48

 
 
 
 
 
 
 
 
Weighted average shares outstanding - diluted
13,513

 
13,446

 
13,511

 
13,442





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