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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):      
November 6, 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 November 6, 2018, Vishay Precision Group, Inc. issued a press release announcing results for the third 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 November 6, 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: November 6, 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 Third Quarter Results
MALVERN, Pa. (November 6, 2018) - Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and systems, today announced its results for its fiscal 2018 third quarter ended September 29, 2018.
Third Quarter Highlights:
Growth in revenues to $75.5 million, up 20.2% year-over-year
Gross profit margin was 40.5% for the quarter as compared to 38.6% for the prior year period
Operating income increased by 92% to $10.6 million as compared to $5.5 million in the prior year period
Operating margin for the quarter was 14.1%, compared to 8.8% for the prior year period
Earnings increased 75% to $0.56 per diluted share, compared to $0.32 reported last year
Adjusted diluted EPS* increased 111% to $0.57, compared to $0.27 in the prior year period
Cash from operations was $10.6 million with free cash flow* of $6.8 million

Ziv Shoshani, Chief Executive Officer of VPG, commented, “Our continued focus on execution delivered another quarter of solid revenues and net earnings. Free cash for the quarter was strong, along with a stable book-to-bill, demonstrating a solid business environment. We remain dedicated to delivering solid revenues, margins and net earnings to continue to enhance shareholder value."
The Company grew third fiscal quarter 2018 net earnings attributable to VPG stockholders to $7.5 million, or $0.56 per diluted share, compared to $4.3 million, or $0.32 per diluted share, in the third fiscal quarter of 2017. Foreign currency exchange rates for the third quarter of 2018 decreased net income by $0.1 million, or $0.01 per diluted share, relative to the prior year period.
In the nine fiscal months ended September 29, 2018, net earnings attributable to VPG stockholders grew to $20.2 million, or $1.50 per diluted share, compared to $9.9 million or $0.73 per diluted share, in the nine fiscal months ended September 30, 2017. Foreign currency exchange rates for the nine fiscal months ended September 29, 2018 decreased net income by $0.2 million or $0.01 per diluted share relative to the prior year period.
The third fiscal quarter 2018 adjusted net earnings attributable to VPG stockholders more than doubled to $7.7 million, or $0.57 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $3.6 million, or $0.27 per diluted share, for the comparable prior year period. Included as an adjustment to net earnings attributable to VPG stockholders for the fiscal quarter ended September 30, 2017, were net proceeds of $1.5 million related to a one time lease termination payment at the Company's Tianjin, People's Republic of China location.
Nine fiscal months ended September 29, 2018, adjusted net earnings attributable to VPG stockholders doubled to $20.5 million, or $1.51 per diluted share, compared to adjusted net earnings attributable to VPG stockholders of $10.0 million, or $0.74 per diluted share, for the comparable prior year period.
Segments
Foil Technology Products segment revenues grew 22.5% to $35.9 million in the third fiscal quarter of 2018, up from $29.3 million in the third fiscal quarter of 2017; sequential revenue increased 5.0% compared to $34.2 million in the second quarter of 2018. The year-over-year increase in revenues was attributable to precision resistor products in all regions for distribution and OEM customers primarily in the test and measurement market, strain gage products in all regions mainly for OEM customers in the force measurement and test and measurement markets and Pacific Instruments products in the Americas for end users customers in the avionics, military and space market. The sequential increase in revenue was attributable to Pacific Instruments products in the Americas for end users in the avionics, military and space market.

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Gross profit margin for the Foil Technology Products segment was 43.9% for the third fiscal quarter of 2018, an increase compared to 41.7% in the third fiscal quarter of 2017, and a decrease compared to 46.1% in the second fiscal quarter of 2018. The year-over-year increase in gross profit margin was primarily due to an increase in volume. Sequentially, gross profit margin decreased due to an increase in variable costs as a result of manufacturing inefficiencies in addition to a reduction in inventory, partially offset by an increase in volume.
Force Sensors segment revenues grew 6.1% to $17.6 million in the third fiscal quarter of 2018, up from $16.6 million in the third fiscal quarter of 2017; sequential revenue decreased 9.1%, compared to $19.4 million in the second quarter of 2018. The year-over-year increase in revenues was mainly attributable to OEM customers in the force measurement market, primarily in the Americas. The sequential decrease in revenue was mainly attributable to OEM and distribution customers in the force measurement and precision weighing markets, mainly in the Americas.
Gross profit margin for the Force Sensors segment was 25.9% for the third fiscal quarter of 2018, a decrease compared to 28.6% in the third fiscal quarter of 2017, and a decrease compared to 29.4% in the second fiscal quarter of 2018. The year-over-year decrease in gross profit margin was primarily due to the U.S. imposition of tariffs on goods from China, wage increases and a reduction in inventory partially offset by the increase in volumes. Sequentially, gross profit margin decreased due to a decrease in volume, a reduction in inventory and the U.S. imposition of tariffs on goods from China.
Weighing and Control Systems segment revenues grew by 30.1% to $22.0 million in the third fiscal quarter of 2018, up from $16.9 million in the third fiscal quarter of 2017; sequential revenue increased 6.3% from $20.7 million in the second fiscal quarter of 2018. The increase in revenues year-over-year was attributable to all product lines in all regions. The sequential increase in revenue was primarily attributable to a volume increase in the steel product line in Europe and onboard weighing and process weighing product lines in the Americas.
The third fiscal quarter 2018 gross profit margin for the Weighing and Control System segment was 46.6%, an increase compared to 43.1% from the third fiscal quarter of 2017, and a decrease compared to 48.0% from the second fiscal quarter of 2018. The year-over-year increase in gross profit margin was primarily due to the increase in volume. Sequential gross profit margin decreased due to unfavorable product mix, manufacturing inefficiencies and the U.S. imposition of tariffs on goods from China, partially offset by an increase in volume.
Near-Term Outlook
“In light of a continued solid business environment, at constant third fiscal quarter 2018 exchange rates, we expect net revenues in the range of $73 million to $80 million for the fourth 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, acquisition purchase accounting adjustments, net proceeds from lease termination and associated tax effects. "Free cash flow" is defined as the amount of cash generated from operations ($10.6 million for the third fiscal quarter of 2018), in excess of our capital expenditures ($3.8 million for the third fiscal quarter of 2018) net of proceeds, if any, from the sale of assets ($0.0 million for the third fiscal quarter of 2018). 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 (November 6) 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 9273112, or log on to the investor relations page of the VPG website at www.vpgsensors.com.

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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 10125948. 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’ 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]




3




VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Operations
 
 
 
(Unaudited - In thousands, except per share amounts)
 
 
 
 
 
 
 
 
Fiscal quarter ended
 
September 29, 2018
 
September 30, 2017
Net revenues
$
75,490

 
$
62,805

Costs of products sold
44,910

 
38,538

Gross profit
30,580

 
24,267

Gross profit margin
40.5
%
 
38.6
%
 
 
 
 
Selling, general, and administrative expenses
19,721

 
18,314

Restructuring costs
228

 
423

Operating income
10,631

 
5,530

Operating margin
14.1
%
 
8.8
%
 
 
 
 
Other income (expense):
 
 
 
Interest expense
(413
)
 
(472
)
Other
(172
)
 
1,506

Other income (expense) - net
(585
)
 
1,034

 
 
 
 
Income before taxes
10,046

 
6,564

 
 
 
 
Income tax expense
2,479

 
2,239

 
 
 
 
Net earnings
7,567

 
4,325

Less: net earnings attributable to noncontrolling interests
20

 
70

Net earnings attributable to VPG stockholders
$
7,547

 
$
4,255

 
 
 
 
Basic earnings per share attributable to VPG stockholders
$
0.56

 
$
0.32

Diluted earnings per share attributable to VPG stockholders
$
0.56

 
$
0.32

 
 
 
 
Weighted average shares outstanding - basic
13,474

 
13,291

Weighted average shares outstanding - diluted
13,534

 
13,470



4



VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Operations
 
 
 
(Unaudited - In thousands, except per share amounts)
 
 
 
 
 
 
 
 
Nine fiscal months ended
 
September 29, 2018
 
September 30, 2017
Net revenues
$
222,812

 
$
184,911

Costs of products sold
132,361

 
113,368

Gross profit
90,451

 
71,543

Gross profit margin
40.6
%
 
38.7
%
 
 
 
 
Selling, general, and administrative expenses
60,030

 
54,923

Restructuring costs
289

 
1,292

Operating income
30,132

 
15,328

Operating margin
13.5
%
 
8.3
%
 
 
 
 
Other income (expense):
 
 
 
Interest expense
(1,333
)
 
(1,392
)
Other
(1,093
)
 
406

Other income (expense) - net
(2,426
)
 
(986
)
 
 
 
 
Income before taxes
27,706

 
14,342

 
 
 
 
Income tax expense
7,498

 
4,398

 
 
 
 
Net earnings
20,208

 
9,944

Less: net earnings (loss) attributable to noncontrolling interests
(20
)
 
75

Net earnings attributable to VPG stockholders
$
20,228

 
$
9,869

 
 
 
 
Basic earnings per share attributable to VPG stockholders
$
1.51

 
$
0.74

Diluted earnings per share attributable to VPG stockholders
$
1.50

 
$
0.73

 
 
 
 
Weighted average shares outstanding - basic
13,431

 
13,253

Weighted average shares outstanding - diluted
13,519

 
13,452




5



VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Balance Sheets
 
 
 
(In thousands)
 
 
 
 
September 29, 2018
 
December 31, 2017
 
(Unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
78,628

 
$
74,292

Accounts receivable, net
54,003

 
46,789

Inventories:
 
 
 
Raw materials
18,479

 
16,601

Work in process
24,490

 
23,160

Finished goods
21,694

 
20,174

Inventories, net
64,663

 
59,935

 
 
 
 
Prepaid expenses and other current assets
12,487

 
10,299

Total current assets
209,781

 
191,315

 
 
 
 
Property and equipment, at cost:
 
 
 
Land
3,409

 
3,434

Buildings and improvements
50,536

 
50,276

Machinery and equipment
100,868

 
95,158

Software
8,308

 
7,955

Construction in progress
2,089

 
2,252

Accumulated depreciation
(109,342
)
 
(103,401
)
Property and equipment, net
55,868

 
55,674

 
 
 
 
Goodwill
18,923

 
19,181

 
 
 
 
Intangible assets, net
18,759

 
20,475

 
 
 
 
Other assets
18,407

 
19,906

Total assets
$
321,738

 
$
306,551



6



VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Balance Sheets
 
 
 
(In thousands)
 
 
 
 
September 29, 2018
 
December 31, 2017
 
(Unaudited)
 
 
Liabilities and equity
 
 
 
Current liabilities:
 
 
 
Trade accounts payable
$
9,842

 
$
13,678

Payroll and related expenses
16,176

 
15,892

Other accrued expenses
17,989

 
15,952

Income taxes
2,914

 
2,515

Current portion of long-term debt
4,367

 
3,878

Total current liabilities
51,288

 
51,915

 
 
 
 
Long-term debt, less current portion
23,550

 
28,477

Deferred income taxes
2,331

 
2,300

Other liabilities
13,981

 
14,131

Accrued pension and other postretirement costs
16,025

 
16,424

Total liabilities
107,175

 
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
196,039

 
192,904

Retained earnings
63,151

 
43,076

Accumulated other comprehensive loss
(37,299
)
 
(35,450
)
Total Vishay Precision Group, Inc. stockholders' equity
214,536

 
193,156

Noncontrolling interests
27

 
148

Total equity
214,563

 
193,304

Total liabilities and equity
$
321,738

 
$
306,551






7



VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Cash Flows
 
 
 
(Unaudited - In thousands)
 
 
 
 
 
 
 
 
Nine fiscal months ended
 
September 29, 2018
 
September 30, 2017
Operating activities
 
 
 
Net earnings
$
20,208

 
$
9,944

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
7,939

 
7,977

Gain on disposal of property and equipment
(146
)
 
(193
)
Share-based compensation expense
1,172

 
959

Inventory write-offs for obsolescence
1,633

 
1,662

Deferred income taxes
1,584

 
264

Other
536

 
(907
)
Net changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(8,128
)
 
(7,030
)
Inventories, net
(6,935
)
 
(3,280
)
Prepaid expenses and other current assets
(2,600
)
 
(2,937
)
Trade accounts payable
(1,342
)
 
1,176

Other current liabilities
4,031

 
7,166

Net cash provided by operating activities
17,952

 
14,801

 
 
 
 
Investing activities
 
 
 
Capital expenditures
(9,966
)
 
(4,366
)
Proceeds from sale of property and equipment
169

 
442

Net cash used in investing activities
(9,797
)
 
(3,924
)
 
 
 
 
Financing activities
 
 
 
Principal payments on long-term debt and capital leases
(4,728
)
 
(1,971
)
Proceeds from revolving facility
22,000

 
27,000

Payments on revolving facility
(19,000
)
 
(27,000
)
Distributions to noncontrolling interests
(101
)
 
(60
)
Payments of employee taxes on certain share-based arrangements
(801
)
 
(303
)
Net cash (used in) financing activities
(2,630
)
 
(2,334
)
Effect of exchange rate changes on cash and cash equivalents
(1,189
)
 
2,896

Increase in cash and cash equivalents
4,336

 
11,439

 
 
 
 
Cash and cash equivalents at beginning of period
74,292

 
58,452

Cash and cash equivalents at end of period
$
78,628

 
$
69,891

 
 
 
 
Supplemental disclosure of non-cash investing transactions:
 
 
 
Capital expenditures purchased
$
(7,559
)
 
$
(4,366
)
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
Nine fiscal months ended
 
September 29, 2018
 
September 30, 2017
September 29, 2018
September 30, 2017
Gross profit
$
30,580

 
$
24,267

$
90,451

$
71,543

Gross profit margin
40.5
%
 
38.6
%
40.6
%
38.7
%
 
 
 
 
 
 
Reconciling items affecting gross profit margin
 
 
 
 
 
Acquisition purchase accounting adjustments

 
42


42

 
 
 
 
 
 
Adjusted gross profit
$
30,580

 
$
24,309

$
90,451

$
71,585

 Adjusted gross profit margin
40.5
%
 
38.7
%
40.6
%
38.7
%

VISHAY PRECISION GROUP, INC.
 
 
 
 
 
 
 
Reconciliation of Consolidated Adjusted Operating Margin
 
 
 
 
(Unaudited - In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal quarter ended
 
Nine fiscal months ended
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Operating income
$
10,631

 
$
5,530

 
$
30,132

 
$
15,328

Operating margin
14.1
%
 
8.8
%
 
13.5
%
 
8.3
%
 
 
 
 
 
 
 
 
Reconciling items affecting operating margin
 
 
 
 
 
 
 
Acquisition purchase accounting adjustments

 
42

 

 
42

Restructuring costs
228

 
423

 
289

 
1,292

 
 
 
 
 
 
 
 
Adjusted operating income
$
10,859

 
$
5,995

 
$
30,421

 
$
16,662

 Adjusted operating margin
14.4
%
 
9.5
%
 
13.7
%
 
9.0
%




9



VISHAY PRECISION GROUP, INC.
 
 
 
 
 
 
 
Reconciliation of Adjusted Earnings Per Share
 
 
 
 
 
 
(Unaudited - In thousands, except per share data)
 
 
 
 
 
 
 
Fiscal quarter ended
 
Nine fiscal months ended
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Net earnings attributable to VPG stockholders
$
7,547

 
$
4,255

 
$
20,228

 
$
9,869

 
 
 
 
 
 
 
 
Reconciling items affecting operating margin
 
 
 
 
 
 
 
Acquisition purchase accounting adjustments

 
42

 

 
42

Restructuring costs
228

 
423

 
289

 
1,292

Reconciling items affecting other income/expense
 
 
 
 
 
 
 
Net proceeds from lease termination

 
(1,544
)
 

 
(1,544
)
Less reconciling items affecting income tax expense
 
 
 
 
 
 
 
Tax effect of reconciling items
35

 
(394
)
 
44

 
(339
)
Adjusted net earnings attributable to VPG stockholders
$
7,740

 
$
3,570

 
$
20,473

 
$
9,998

 
 
 
 
 
 
 
 
Adjusted net earnings per diluted share
$
0.57

 
$
0.27

 
$
1.51

 
$
0.74

 
 
 
 
 
 
 
 
Weighted average shares outstanding - diluted
13,534

 
13,470

 
13,519

 
13,452





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