Vishay Precision Group Inc.

11/05/2024 | Press release | Distributed by Public on 11/05/2024 07:52

Quarterly Report for Quarter Ending September 28, 2024 (Form 10-Q)

vpg-20240928
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2024
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 1-34679
VISHAY PRECISION GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 27-0986328
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer Identification Number)
3 Great Valley Parkway, Suite 150
Malvern, PA, 19355
484-321-5300
(Address of Principal Executive Offices) (Zip Code) (Registrant's Telephone Number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.10 par value VPG New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. ýYes ¨No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer ý
Non-accelerated filer ¨ Smaller reporting company ☐
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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes ýNo
As of November 5, 2024, the registrant had 12,215,668 shares of its common stock and 1,022,887 shares of its Class B convertible common stock outstanding.
VISHAY PRECISION GROUP, INC.
FORM 10-Q
September 28, 2024
CONTENTS
Page Number
PART I.
FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Condensed Balance Sheets
- September 28, 2024 (Unaudited) and December 31, 2023
3
Consolidated Condensed Statements of Operations
(Unaudited) - Fiscal Quarters Ended September 28, 2024 and September 30, 2023
5
Consolidated Condensed Statements of Operations
(Unaudited) - Nine Fiscal Months Ended September 28, 2024 and September 30, 2023
6
Consolidated Condensed Statements of Comprehensive Income (Loss)
(Unaudited) - Fiscal Quarters Ended September 28, 2024 and September 30, 2023
7
Consolidated Condensed Statements of Comprehensive Income (Loss)
(Unaudited) - Nine Fiscal Months Ended September 28, 2024 and September 30, 2023
8
Consolidated Condensed Statements of Cash Flows
(Unaudited) -Nine Fiscal Quarters Ended September 28, 2024 and September 30, 2023
9
Consolidated Condensed Statements of Equity
(Unaudited) - Fiscal Quarters Ended September 28, 2024 and September 30, 2023
10
Consolidated Condensed Statements of Equity
(Unaudited) - Nine Fiscal Months Ended September 28, 2024 and September 30, 2023
11
Notes to Unaudited Consolidated Condensed Financial Statements
12
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
25
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
41
Item 4.
Controls and Procedures
41
PART II.
OTHER INFORMATION
Item 1.
Legal Proceedings
42
Item 1A.
Risk Factors
42
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
42
Item 3.
Defaults Upon Senior Securities
42
Item 4.
Mine Safety Disclosures
42
Item 5.
Other Information
42
Item 6.
Exhibits
43
SIGNATURES
44
-2-
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Balance Sheets
(In thousands)
September 28, 2024 December 31, 2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 81,077 $ 83,965
Accounts receivable, net 52,821 56,438
Inventories:
Raw materials 34,027 33,973
Work in process 28,275 26,594
Finished goods 26,000 27,572
Inventories, net 88,302 88,139
Prepaid expenses and other current assets 20,137 14,520
Total current assets 242,337 243,062
Property and equipment:
Land 4,186 4,154
Buildings and improvements 73,759 72,952
Machinery and equipment 133,281 131,738
Software 10,198 9,619
Construction in progress 10,761 11,379
Accumulated depreciation (145,391) (139,206)
Property and equipment, net 86,794 90,636
Goodwill 45,610 45,734
Intangible assets, net 41,807 44,634
Operating lease right-of-use assets 25,239 26,953
Other assets 20,739 20,547
Total assets $ 462,526 $ 471,566
Continues on the following page.
-3-
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Balance Sheets
(In thousands)
September 28, 2024 December 31, 2023
Liabilities and equity (Unaudited)
Current liabilities:
Trade accounts payable $ 9,986 $ 11,698
Payroll and related expenses 17,819 18,971
Other accrued expenses 21,989 22,427
Income taxes 1,150 4,524
Current portion of operating lease liabilities 4,053 4,004
Total current liabilities 54,997 61,624
Long-term debt 31,383 31,856
Deferred income taxes 3,645 3,490
Operating lease liabilities 20,645 22,625
Other liabilities 14,145 14,770
Accrued pension and other postretirement costs 7,054 7,276
Total liabilities 131,869 141,641
Equity:
Common stock 1,336 1,330
Class B convertible common stock 103 103
Treasury stock (25,335) (17,460)
Capital in excess of par value 202,872 202,672
Retained earnings 191,209 182,066
Accumulated other comprehensive loss (39,564) (38,869)
Total Vishay Precision Group, Inc. stockholders' equity 330,621 329,842
Noncontrolling interests 36 83
Total equity 330,657 329,925
Total liabilities and equity $ 462,526 $ 471,566
See accompanying notes.
-4-
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)
Fiscal quarter ended
September 28, 2024 September 30, 2023
Net revenues $ 75,727 $ 85,854
Costs of products sold 45,467 49,919
Gross profit 30,260 35,935
Selling, general and administrative expenses 26,337 26,558
Restructuring costs 82 1,153
Operating income 3,841 8,224
Other (expense) income :
Interest expense (648) (1,119)
Other (2,646) 1,671
Other (expense) income (3,294) 552
Income before taxes 546 8,776
Income tax expense 1,874 2,419
Net (loss) earnings (1,328) 6,357
Less: net earnings attributable to noncontrolling interests 23 77
Net (loss) earnings attributable to VPG stockholders $ (1,351) $ 6,280
Basic (loss) earnings per share attributable to VPG stockholders $ (0.10) $ 0.46
Diluted (loss) earnings per share attributable to VPG stockholders $ (0.10) $ 0.46
Weighted average shares outstanding - basic 13,254 13,600
Weighted average shares outstanding - diluted 13,254 13,686
See accompanying notes.
-5-
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)
Nine fiscal months ended
September 28, 2024 September 30, 2023
Net revenues $ 233,869 $ 265,520
Costs of products sold 136,108 153,674
Gross profit 97,761 111,846
Selling, general and administrative expenses 80,232 80,472
Restructuring costs 864 1,431
Operating income 16,665 29,943
Other (expense) income :
Interest expense (1,925) (3,195)
Other 915 2,965
Other (expense) income (1,010) (230)
Income before taxes 15,654 29,713
Income tax expense 6,508 8,023
Net earnings 9,146 21,690
Less: net earnings attributable to noncontrolling interests 3 210
Net earnings attributable to VPG stockholders $ 9,143 $ 21,480
Basic earnings per share attributable to VPG stockholders $ 0.68 $ 1.58
Diluted earnings per share attributable to VPG stockholders $ 0.68 $ 1.57
Weighted average shares outstanding - basic 13,367 13,596
Weighted average shares outstanding - diluted 13,405 13,670
See accompanying notes.
-6-
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Comprehensive Income (Loss)
(Unaudited - In thousands)
Fiscal quarter ended
September 28, 2024 September 30, 2023
Net (loss) earnings $ (1,328) $ 6,357
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 6,809 (3,653)
Pension and other postretirement actuarial items (8) -
Other comprehensive income (loss) 6,801 (3,653)
Comprehensive income 5,473 2,704
Less: comprehensive income attributable to noncontrolling interests 23 77
Comprehensive income attributable to VPG stockholders $ 5,450 $ 2,627
See accompanying notes.
-7-
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Comprehensive Income (Loss)
(Unaudited - In thousands)
Nine fiscal months ended
September 28, 2024 September 30, 2023
Net earnings $ 9,146 $ 21,690
Other comprehensive loss, net of tax:
Foreign currency translation adjustment (679) (3,831)
Pension and other postretirement actuarial items (16) 2
Other comprehensive loss (695) (3,829)
Comprehensive income 8,451 17,861
Less: comprehensive income attributable to noncontrolling interests 3 210
Comprehensive income attributable to VPG stockholders $ 8,448 $ 17,651
See accompanying notes.
-8-
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
Nine fiscal months ended
September 28, 2024 September 30, 2023
Operating activities
Net earnings $ 9,146 $ 21,690
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 11,771 11,559
Loss (gain) on sale of property and equipment (154) 38
Share-based compensation expense 1,060 1,885
Inventory write-offs for obsolescence 1,722 1,567
Deferred income taxes 512 691
Foreign currency impacts and other items (1,213) (2,755)
Net changes in operating assets and liabilities:
Accounts receivable 3,340 1,604
Inventories (1,816) (7,811)
Prepaid expenses and other current assets (5,576) 1,990
Trade accounts payable (743) (1,151)
Other current liabilities (3,921) (1,082)
Other non current assets and liabilities, net (767) (170)
Accrued pension and other postretirement costs, net (322) (945)
Net cash provided by operating activities 13,039 27,110
Investing activities
Capital expenditures (6,965) (9,848)
Proceeds from sale of property and equipment 647 50
Purchase of short term investment - (1,000)
Net cash used in investing activities (6,318) (10,798)
Financing activities
Payments on revolving facility - (7,000)
Debt issuance costs (569) -
Purchase of treasury stock (7,815) (1,196)
Distributions to noncontrolling interests (50) (138)
Payments of employee taxes on certain share-based arrangements (860) (825)
Net cash used in financing activities (9,294) (9,159)
Effect of exchange rate changes on cash and cash equivalents (315) (1,083)
(Decrease) Increase in cash and cash equivalents (2,888) 6,070
Cash and cash equivalents at beginning of period 83,965 88,562
Cash and cash equivalents at end of period $ 81,077 $ 94,632
Supplemental disclosure of investing transactions:
Capital expenditures accrued but not yet paid $ 1,354 $ 1,204
Supplemental disclosure of financing transactions:
Excise tax on net share repurchases accrued but not yet paid 60 -
See accompanying notes.
-9-
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Equity
(Unaudited - In thousands, except share amounts)
Fiscal quarter ended

September 28, 2024
Common
Stock 		Class B
Convertible
Common Stock 		Treasury Stock Capital in
Excess of
Par Value 		Retained
Earnings 		Accumulated
Other
Comprehensive
Income (Loss) 		Total VPG Inc.
Stockholders'
Equity 		Noncontrolling
Interests 		Total
Equity
Balance at June 29, 2024 $ 1,336 $ 103 $ (23,388) $ 202,765 $ 192,560 $ (46,365) $ 327,011 $ 23 $ 327,034
Net (loss) earnings - - - - (1,351) - (1,351) 23 (1,328)
Other comprehensive income - - - - - 6,801 6,801 - 6,801
Share-based compensation expense
- - - 107 - - 107 - 107
Purchase of treasury stock. (63,227 shares)
- - (1,928) - - - (1,928) - (1,928)
Excise tax on net share repurchase - - (19) - - - (19) - (19)
Distributions to noncontrolling interests - - - - - - - (10) (10)
Balance at September 28, 2024 $ 1,336 $ 103 $ (25,335) $ 202,872 $ 191,209 $ (39,564) $ 330,621 $ 36 $ 330,657
Fiscal quarter ended

September 30, 2023
Common
Stock 		Class B
Convertible
Common Stock 		Treasury Stock Capital in
Excess of
Par Value 		Retained
Earnings 		Accumulated
Other
Comprehensive
Income (Loss) 		Total VPG Inc.
Stockholders'
Equity 		Noncontrolling
Interests 		Total
Equity
Balance at July 1, 2023 $ 1,330 $ 103 $ (11,924) $ 201,611 $ 171,559 $ (41,076) $ 321,603 $ 62 $ 321,665
Net earnings - - - - 6,280 - 6,280 77 6,357
Other comprehensive loss - - - - - (3,653) (3,653) - (3,653)
Share-based compensation expense
- - - 656 - - 656 - 656
Purchase of treasury stock. (22,894 shares)
- - (776) - - - (776) - (776)
Distributions to noncontrolling interests - - - - - - - (92) (92)
Balance at September 30, 2023 $ 1,330 $ 103 $ (12,700) $ 202,267 $ 177,839 $ (44,729) $ 324,110 $ 47 $ 324,157
See accompanying notes.
-10-
VISHAY PRECISION GROUP, INC.
Consolidated Condensed Statements of Equity
(Unaudited - In thousands, except share amounts)
Nine Fiscal Months Ended September 28, 2024
Common
Stock 		Class B
Convertible
Common Stock 		Treasury Stock Capital in
Excess of
Par Value 		Retained
Earnings 		Accumulated
Other
Comprehensive
Income (Loss) 		Total VPG, Inc.
Stockholders'
Equity 		Noncontrolling
Interests 		Total
Equity
Balance at December 31, 2023 $ 1,330 $ 103 $ (17,460) $ 202,672 $ 182,066 $ (38,869) $ 329,842 $ 83 $ 329,925
Net earnings - - - - 9,143 - 9,143 3 9,146
Other comprehensive loss
- - - - - (695) (695) - (695)
Share-based compensation expense
- - - 1,060 - - 1,060 - 1,060
Restricted stock issuances (55,219 shares)
6 - - (860) - - (854) - (854)
Purchase of treasury stock (244,702 shares)
- - (7,815) - - - (7,815) - (7,815)
Excise tax on net share repurchase
- - (60) - - - (60) - (60)
Distributions to noncontrolling interests - - - - - - - (50) (50)
Balance at September 28, 2024 $ 1,336 $ 103 $ (25,335) $ 202,872 $ 191,209 $ (39,564) $ 330,621 $ 36 $ 330,657
Nine Fiscal Months Ended September 30, 2023
Common
Stock 		Class B
Convertible
Common Stock 		Treasury Stock Capital in
Excess of
Par Value 		Retained
Earnings 		Accumulated
Other
Comprehensive
Income (Loss) 		Total VPG, Inc.
Stockholders'
Equity 		Noncontrolling
Interests 		Total
Equity
Balance at December 31, 2022 $ 1,325 $ 103 $ (11,504) $ 201,164 $ 156,359 $ (40,900) $ 306,547 $ (25) $ 306,522
Net earnings - - - - 21,480 - 21,480 210 21,690
Other comprehensive loss
- - - - - (3,829) (3,829) - (3,829)
Share-based compensation expense
- - - 1,885 - - 1,885 - 1,885
Restricted stock issuances (47,189 shares)
5 - - (782) - - (777) - (777)
Purchase of treasury stock (35,206 shares)
- - (1,196) - - - (1,196) - (1,196)
Distributions to noncontrolling interests - - - - - - - (138) (138)
Balance at September 30, 2023 $ 1,330 $ 103 $ (12,700) $ 202,267 $ 177,839 $ (44,729) $ 324,110 $ 47 $ 324,157
See accompanying notes.
-11-
Vishay Precision Group, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
Note 1 - Basis of Presentation
Background
Vishay Precision Group, Inc. ("VPG" or the "Company") is a global leader in precision measurement and sensing technologies that help power the future by bridging the physical world with the digital one. Many of our specialized sensors, weighing solutions, and measurement systems are "designed-in" by our customers, and address growing applications across a diverse array of industries and markets. Our products are marketed under brand names that we believe are characterized as having a very high level of precision and quality, and we employ an operationally diversified structure to manage our businesses..
Interim Financial Statements
These unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements and therefore do not include all information and footnotes necessary for the presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 2023 and 2022 and for each of the three years in the period ended December 31, 2023, included in VPG's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024. The results of operations for the fiscal quarter ended September 28, 2024 are not necessarily indicative of the results to be expected for the full year. VPG reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first quarter, which always begins on January 1, and the fourth quarter, which always ends on December 31. The four fiscal quarters in 2024 and 2023 end on the following dates:
2024 2023
Quarter 1 March 30, April 1,
Quarter 2 June 29, July 1,
Quarter 3 September 28, September 30,
Quarter 4 December 31, December 31,
Recent Accounting Pronouncements
The Company evaluates the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB").
Recent accounting pronouncements not yet adopted:
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities' segment disclosures by requiring disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment's profit or loss and assets. The ASU also allows, in addition to the measure that is most consistent with U.S. GAAP, the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. The ASU is effective for the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendment also includes other changes to improve the effectiveness of income tax disclosures, including further disaggregation of income taxes paid for individually significant jurisdictions. This ASU is effective for annual periods beginning after December 15, 2024. Adoption of this ASU should be applied on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.
-12-
Note 1 - Basis of Presentation (continued)
Note 2 - Revenues
Revenue Recognition
The following table disaggregates net revenue by geographic region from contracts with customers based on net revenues generated by subsidiaries within that geographic location (in thousands):
Fiscal quarter ended

September 28, 2024 		Fiscal quarter ended

September 30, 2023
Sensors Weighing Solutions Measurement Systems Total Sensors Weighing Solutions Measurement Systems Total
United States $ 10,068 $ 11,154 $ 14,751 $ 35,973 $ 11,860 $ 12,622 $ 15,520 $ 40,002
Germany 6,193 1,913 181 8,287 6,731 2,198 674 9,603
Other Europe 1,282 9,104 197 10,583 1,564 11,006 120 12,690
Israel 5,179 102 - 5,281 4,773 89 - 4,862
Asia 5,479 2,901 1,778 10,158 7,604 3,054 2,899 13,557
Canada - - 5,445 5,445 - - 5,140 5,140
Total $ 28,201 $ 25,174 $ 22,352 $ 75,727 $ 32,532 $ 28,969 $ 24,353 $ 85,854
Nine Fiscal Months Ended September 28, 2024 Nine Fiscal Months Ended September 30, 2023
Sensors Weighing Solutions Measurement Systems Total Sensors Weighing Solutions Measurement Systems Total
United States $ 29,931 $ 33,491 $ 39,204 $ 102,626 $ 39,089 $ 40,729 $ 39,053 $ 118,871
Germany 20,850 6,901 3,081 30,832 23,693 7,668 4,945 36,306
Other Europe 4,086 31,588 458 36,132 4,286 33,437 425 38,148
Israel 15,238 267 - 15,505 12,867 215 - 13,082
Asia 16,378 9,119 6,873 32,370 25,589 10,041 6,446 42,076
Canada - 101 16,303 16,404 - - 17,037 17,037
Total $ 86,483 $ 81,467 $ 65,919 $ 233,869 $ 105,524 $ 92,090 $ 67,906 $ 265,520
The following table disaggregates net revenue from contracts with customers by market sector (in thousands).
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Test & Measurement $ 14,337 $ 17,080 $ 43,955 $ 54,449
Avionics, Military & Space 8,581 8,294 21,769 28,285
Transportation 12,802 15,490 38,985 40,993
Other Markets 14,826 16,402 48,750 54,124
Industrial Weighing 8,578 10,533 28,021 33,586
General Industrial 4,538 4,643 14,702 14,858
Steel 12,065 13,412 37,687 39,225
Total $ 75,727 $ 85,854 $ 233,869 $ 265,520
Contract Assets & Liabilities
Contract assets are established when revenues are recognized prior to a contractual payment due from the customer. When a payment becomes due based on the contract terms, the Company will reduce the contract asset and record a receivable. Contract liabilities are deferred revenues that are recorded when cash payments are received or due in advance of our performance obligations. Our payment terms vary by the type and location of the products offered. The term between invoicing and when payment is due is not significant.
-13-
Note 2 - Revenues (continued)
The outstanding contract assets and liability accounts were as follows (in thousands):
Contract Asset Contract Liability
Unbilled Revenue Accrued Customer Advances
Balance at December 31, 2023 $ 2,989 $ 8,712
Balance at September 28, 2024 5,005 8,272
Increase (decrease) $ 2,016 $ (440)
The amount of revenue recognized during the nine fiscal months ended September 28, 2024 that was included in the contract liability balance at December 31, 2023 was $7.2 million.
Note 3 - Goodwill
The Company tests the goodwill in each of its goodwill reporting units for impairment at least annually, as of the first day of its fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred.
The change in the carrying amount of goodwill by segment is as follows (in thousands):
Total Measurement Systems Weighing Solutions
KELK Acquisition DSI Acquisition DTS Acquisition Stress-Tek Acquisition
Balance at December 31, 2023 $ 45,734 $ 6,488 $ 16,902 $ 16,033 $ 6,311
Foreign currency translation adjustment $ (124) $ (126) $ 2 $ - $ -
Balance at September 28, 2024 $ 45,610 $ 6,362 $ 16,904 $ 16,033 $ 6,311
Note 4 - Leases
The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms ranging from less than one year to twelve years, four months
The Company has no finance leases.
Leases recorded on the balance sheet consist of the following (in thousands):
Leases September 28, 2024 December 31, 2023
Assets
Operating lease right of use asset $ 25,239 $ 26,953
Liabilities
Operating lease - current $ 4,053 $ 4,004
Operating lease - non-current $ 20,645 $ 22,625
Other information related to lease term and discount rate is as follows:
September 28, 2024
Operating leases weighted average remaining lease term (in years) 7.23 years
Operating leases weighted average discount rate 5.03 %
The components of lease expense are as follows (in thousands):
-14-
Note 4 - Leases (continued)
Fiscal quarter ended Nine Fiscal Months Ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Operating lease cost $ 1,319 $ 1,331 $ 4,024 $ 3,822
Short-term lease cost 6 24 31 115
Sublease income (111) (95) (334) (293)
Total net lease cost $ 1,214 $ 1,260 $ 3,721 $ 3,644
Right of use assets obtained in exchange for new operating lease liability during the nine fiscal months ended September 28, 2024 were $1.5 million. The Company paid $3.9 million and $3.8 million for its operating leases for each of the nine fiscal months ended September 28, 2024 and September 30, 2023, which are included in operating cash flows on the consolidated condensed statements of cash flows.
Undiscounted maturities of operating lease payments as of September 28, 2024 are summarized as follows (in thousands):
2024 (excluding the nine months ended September 28, 2024) $ 1,302
2025 4,787
2026 4,099
2027 3,698
2028 3,465
Thereafter 11,953
Total future minimum lease payments $ 29,304
Less: amount representing interest (4,606)
Present value of future minimum lease payments $ 24,698
Note 5 - Income Taxes
VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology based on projected full-year pre-tax earnings among the taxing jurisdictions in which we operate with adjustments for discrete items. The effective tax rate was 343.2% and 27.6% for the fiscal quarter ended September 28, 2024, and September 30, 2023, respectively. The effective tax rate for the fiscal quarter ended September 28, 2024 differs from the federal statutory rate of 21% due to foreign income taxed at different tax rates and changes in our valuation allowance on deferred tax assets. The effective tax rate for the fiscal quarter ended September 30, 2023 differs from the federal statutory rate of 21% due to foreign income taxed at different tax rates and changes in our valuation allowance on deferred tax assets.
The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company's best estimate of the potential tax exposures in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company's tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties.
Note 6 - Long-Term Debt
Long-term debt consists of the following (in thousands):
September 28, 2024 December 31, 2023
Credit Agreement - Revolving Facility $ 32,000 $ 32,000
Deferred financing costs (617) (144)
Total long-term debt $ 31,383 $ 31,856
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Note 6 - Long-Term Debt (continued)
Credit Agreement
On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the "2020 Credit Agreement") among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank, National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders (the "Agent"), pursuant to which the terms of the Company's multi-currency, secured credit facility were revised to provide a secured revolving facility (the "2020 Revolving Facility") in an aggregate principal amount of $75.0 million, with a sublimit of $10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the Credit Agreement. The proceeds of the 2020 Revolving Facility may be used on an ongoing basis for working capital and general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of
$25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement terminates on March 20, 2025. Because the Credit Agreement expires less than one year from the end of the first fiscal quarter of 2024, the outstanding balance of long-term debt has been reclassified as a current liability.
On May 5, 2023, the Company entered into Amendment No. 1 to Third Amended and Restated Credit Agreement (the "Credit Agreement Amendment") amending the Third Amended and Restated Credit Agreement, dated March 20, 2020. The primary purpose of the changes made in the Credit Agreement Amendment was to update the interest rate provisions to replace LIBOR with SOFR for U.S. dollar denominated loans as well as update the other applicable reference borrowing rates for foreign currency loans which took effect on June 15, 2023. Interest payable on amounts borrowed under the 2020 Revolving Facility, taking into account the effect of the Credit Agreement Amendment, is based upon the following: (a) for revolving credit loans denominated in US Dollars, the SOFR rate plus applicable credit spread; and (b) for revolving credit loans denominated in foreign currencies, at other applicable local reference rates plus an interest margin. Depending upon the Company's leverage ratio, an interest rate margin ranging from 1.50% to 2.75% per annum is added to the applicable SOFR rate to determine the interest payable on the SOFR loans. The Company is required to pay a quarterly fee of 0.25% per annum to 0.40% per annum on the unused portion of the 2020 Revolving Facility, which is determined based on the Company's leverage ratio each quarter. Additional customary fees apply with respect to letters of credit.
On August 15, 2024, the Company entered into a Fourth Amended and Restated Credit Agreement (the "2024 Credit Agreement") among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and HSBC as joint lead arrangers and joint bookrunner, and JPMorgan Chase Bank, N.A, as agent for such lenders, pursuant to which the 2020 Credit Agreement, was amended and restated to, among other things, extend the maturity date from March 20, 2025 to August 15, 2029 and adjust the interest rate and commitment fee. The 2024 Credit Agreement provides for a multi-currency, secured credit facility (the "2024 Revolving Facility") in an aggregate principal amount of $75.0 million, with a sublimit of $10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the 2024 Credit Agreement, the proceeds of which may be used for working capital and general corporate purposes, and a portion of which were used to refinance the 2020 Revolving Facility. The Company may elect to make loans under the 2024 Revolving Facility in US Dollars, Euros, Canadian Dollars, Sterling, Japanese Yen or such other freely convertible foreign currency.
Amounts borrowed under the 2024 Revolving Facility accrue interest in an amount equal to a floating rate plus a specified margin. Such floating rates are (i) for loans denominated in US Dollars, at the Company's option, either (a) the greatest of: the Agent's prime rate, the Federal Funds rate, or a 1.00% floor (the "US Base Rate"), or (b) the SOFR, (ii) for loans denominated in Canadian Dollars, at the Company's option, either (x) the greatest of: the PRIMCAN Index rate, the average 30 day rate for loans accruing interest based on the Canadian Overnight Repo Rate Average ("CORRA") (the "Canadian Base Rate"), or (y) CORRA, (iii) for loans denominated in Pounds Sterling, the Sterling Overnight Index Average ("SONIA"), (iv) for loans denominated in Euros, the Euro Interbank Offered Rate ("EURIBOR"), and (v) for loans denominated in Japanese Yen, the Tokyo Interbank Offered Rate ("TIBOR"). The specified interest margin for US Base Rate Loans and Canadian Base Rate Loans is 0.25%. Depending upon the Company's leverage ratio, the interest rate margin for loans based on SOFR, CORRA, SONIA, EURIBOR and TIBOR ranges from 1.75% to 3.00% per annum. The Company is required to pay a quarterly fee of 0.20% per annum to 0.40% per annum on the unused portion of the 2024 Revolving Facility, which is also determined based on the Company's leverage ratio. Additional customary fees apply with respect to letters of credit.
The obligations of the Company under the 2024 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company's domestic subsidiaries. The obligations of the Company and the guarantors under the 2024 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such guarantors. The 2024 Credit Agreement restricts the Company from paying cash dividends and requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of a specified interest coverage ratio and a leverage ratio, each tested as of the last day of each fiscal quarter. If the Company is not in compliance with any of these covenant restrictions, the 2024 Revolving Facility could be terminated by the lenders, and all amounts outstanding pursuant to the 2024 Credit Agreement could become immediately payable.
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Note 7 - Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss), net of tax, consist of the following (in thousands):
Foreign Currency Translation Adjustment Pension
and Other
Postretirement
Actuarial Items 		Total
Balance at January 1, 2024 $ (39,262) $ 393 $ (38,869)
Other comprehensive loss before reclassifications (679) - (679)
Amounts reclassified from accumulated other comprehensive loss - (16) (16)
Balance at September 28, 2024 $ (39,941) $ 377 $ (39,564)
Foreign Currency Translation Adjustment Pension
and Other
Postretirement
Actuarial Items 		Total
Balance at January 1, 2023 $ (41,489) $ 589 $ (40,900)
Other comprehensive loss before reclassifications (3,831) - (3,831)
Amounts reclassified from accumulated other comprehensive income - 2 2
Balance at September 30, 2023 $ (45,320) $ 591 $ (44,729)
Reclassifications of pension and other postretirement actuarial items out of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost (see Note 8).
Note 8 - Pension and Other Postretirement Benefits
Employees of VPG participate in various defined benefit pension and other postretirement benefit ("OPEB") plans. The following table sets forth the components of the net periodic benefit cost for the Company's defined benefit pension and OPEB plans (in thousands):
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Note 8 - Pension and Other Postretirement Benefits ( continued)
Fiscal quarter ended

September 28, 2024 		Fiscal quarter ended

September 30, 2023
Pension
Plans 		OPEB
Plans 		Pension
Plans 		OPEB
Plans
Net service cost $ 66 $ 4 $ 67 $ 4
Interest cost 191 27 193 28
Expected return on plan assets (211) - (216) -
Amortization of actuarial losses (gains) 4 (3) 7 (6)
Net periodic benefit cost $ 50 $ 28 $ 51 $ 26
Nine Fiscal Months Ended

September 28, 2024 		Nine Fiscal Months Ended

September 30, 2023
Pension
Plans 		OPEB
Plans 		Pension
Plans 		OPEB
Plans
Net service cost $ 199 $ 12 $ 204 $ 12
Interest cost $ 572 $ 81 $ 575 $ 84
Expected return on plan assets $ (630) $ - $ (642) $ -
Amortization of actuarial losses (gains) $ 13 $ (9) $ 22 $ (18)
Net periodic benefit cost $ 154 $ 84 $ 159 $ 78
Note 9 - Share-Based Compensation
The Vishay Precision Group, Inc. 2022 Stock Incentive Plan (the "2022 plan") permits issuance of up to 608,000 shares of common stock. At September 28, 2024, the Company had reserved 442,558 shares of common stock for future grants of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the 2022 plan. If any outstanding awards are forfeited by the holder or canceled by the Company, the underlying shares would be available for re-grant to others. If shares are withheld for payment of taxes, those shares do not become available for grant under the 2022 plan.
On March 7, 2024 and in accordance with their respective employment agreements, VPG's three executive officers were granted annual equity awards in the form of RSUs, of which 50% are performance-based. The awards have an aggregate target grant-date fair value of $1.7 million and were comprised of 49,190 RSUs. Fifty percent of these awards will vest on January 1, 2027, subject to the executives' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2027, subject to the executives' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative "adjusted free cash flow" and "net earnings goals", each weighted equally.
On March 7, 2024, certain non-executive VPG employees were granted annual equity awards in the form of RSUs. Certain employees received awards, of which 75% are performance-based and certain employees received awards of which 50% are performance-based. The awards have an aggregate grant-date fair value of $0.6 million and were comprised of 16,821 RSUs. The non-performance portion of these awards (twenty-five percent for certain employees and fifty percent for certain employees) will vest on January 1, 2027, subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2027, subject to the employees' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative earnings and cash flow goals, each weighted equally.
On May 22, 2024, and in accordance with the Company's 2024 Non-Employee Director Compensation Plan, the Board of Directors approved the issuance of an aggregate of 14,826 RSUs to the independent board members of the Board of Directors. The awards have an aggregate grant-date fair value of $0.5 million and will vest on or before the 2025 Annual Stockholders Meeting in May 2025, subject to each applicable director's continued service on the Board of Directors. Vesting of equity awards is subject to acceleration under certain circumstances.
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Note 9 - Share-Based Compensation (continued)
On August 14, 2024, and in accordance with the Company's 2024 Non-Employee Director Compensation Plan, the Board of Directors approved the issuance of an aggregate of 1,835 RSUs to an independent board member of the Board of Directors in connection with his appointment to the Board of Directors. The award had an aggregate grant-date fair value of $0.06 million and will vest on or before the 2025 Annual Stockholders Meeting in May 2025, subject to such independent director's continued service on the Board of Directors. Vesting of such equity awards is subject to acceleration under certain circumstances.
The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met. The following table summarizes share-based compensation expense recognized (in thousands):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Share-based compensation expense $ 107 $ 656 $ 1,060 $ 1,885
During the fiscal third quarter of 2024, a net adjustment of $0.5 million decreasing share-based compensation expense was recorded based on the evaluation of performance objectives associated with awards granted in 2022, 2023 and 2024. It was determined that certain objectives were not likely to be fully met, necessitating a reversal of certain compensation expenses associated with those awards.
Note 10 - Segment Information
VPG reports in three reporting segments: Sensors, Weighing Solutions, and Measurement Systems. The Sensors segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The Measurement Systems segment is comprised of highly specialized systems for steel production, materials development, and safety testing.
The chief operating decision maker ("CODM") is our chief executive officer. The CODM evaluates each operating segment's performance. The evaluation of the segment's performance is based on multiple performance measures including gross profits, revenues, and operating income, exclusive of certain items. Management believes that evaluating segment performance, excluding items such as restructuring and severance costs, impairment of goodwill and indefinite-lived intangible assets, acquisition costs, and other items is meaningful because they relate to occurrences or events that are outside of our core operations, and management believes that the use of these measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods.
The following table sets forth reporting segment information (in thousands):
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Note 10 - Segment Information (continued)
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Net revenues:
Sensors $ 28,201 $ 32,532 $ 86,484 $ 105,524
Weighing Solutions 25,174 28,970 81,466 92,090
Measurement Systems 22,352 24,352 65,919 67,906
Total $ 75,727 $ 85,854 $ 233,869 $ 265,520
Gross profit:
Sensors $ 8,730 $ 11,681 $ 30,528 $ 41,374
Weighing Solutions 8,840 11,207 30,416 34,443
Measurement Systems 12,690 13,047 36,815 36,029
Total $ 30,260 $ 35,935 $ 97,759 $ 111,846
Reconciliation of segment operating income to consolidated results:
Sensors $ 3,640 $ 6,543 $ 15,262 $ 26,043
Weighing Solutions 2,845 5,393 11,781 16,894
Measurement Systems 5,130 5,605 15,070 14,246
Unallocated G&A expenses (7,692) (8,164) (24,584) (25,809)
Restructuring costs (82) (1,153) (864) (1,431)
Operating income $ 3,841 $ 8,224 $ 16,665 $ 29,943
Restructuring costs:
Sensors $ (59) $ - $ (601) $ -
Weighing Solutions (23) (1,153) (23) (1,349)
Measurement Systems - - - (32)
Corporate/Other - - (240) (50)
$ (82) $ (1,153) $ (864) $ (1,431)
Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. The table below summarizes intersegment sales (in thousands):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Sensors to Weighing Solutions $ 332 $ 417 $ 1,323 $ 1,178
Sensors to Measurement Systems 4 4 17 52
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Note 11 - Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share attributable to VPG stockholders (in thousands, except earnings per share):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Numerator:
Numerator for basic earnings per share:
Net (loss) earnings attributable to VPG stockholders $ (1,351) $ 6,280 $ 9,143 $ 21,480
Denominator:
Denominator for basic earnings per share:
Weighted average shares 13,254 13,600 13,367 13,596
Effect of dilutive securities:
Restricted stock units - 86 38 74
Dilutive potential common shares - 86 38 74
Denominator for diluted earnings per share:
Adjusted weighted average shares 13,254 13,686 13,405 13,670
Basic (loss) earnings per share attributable to VPG stockholders $ (0.10) $ 0.46 $ 0.68 $ 1.58
Diluted (loss) earnings per share attributable to VPG stockholders $ (0.10) $ 0.46 $ 0.68 $ 1.57
Note 12 - Additional Financial Statement Information
Other Income (Expense) Other
The caption "Other" on the consolidated condensed statements of operations consists of the following (in thousands):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Foreign currency exchange gain (loss) $ (2,912) $ 1,283 $ (36) $ 2,138
Interest income 370 543 1,192 1,265
Pension expense (8) (72) (28) (217)
Other (96) (83) (213) (221)
$ (2,646) $ 1,671 $ 915 $ 2,965
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Note 12 - Additional Financial Statement Information ( continued)
Foreign currency exchange gains (loss) represent the impact of changes in foreign currency exchange rates. For the fiscal quarter and nine fiscal months ended September 28, 2024, the change in foreign currency exchange gains and losses during the periods, as compared to the prior year periods, is largely due to exposure to currency fluctuations with the Japanese yen, Israeli shekel and the Canadian dollar.
For the fiscal quarter and nine fiscal months ended September 30, 2023, the change in foreign currency exchange gains and losses during the periods, as compared to the prior year periods, is largely due to exposure to currency fluctuations with the Israeli shekel, the Canadian dollar, the EURO and the British pound.
Other Accrued Expenses
Other accrued expenses consist of the following (in thousands):
September 28, 2024 December 31, 2023
Customer advance payments $ 8,272 $ 8,712
Accrued restructuring 169 249
Goods received, not yet invoiced 1,638 2,837
Accrued taxes, other than income taxes 1,901 1,370
Accrued commissions 4,095 4,077
Accrued professional fees 2,016 1,343
Accrued technical warranty 778 770
Current accrued pensions and other post retirement costs 511 511
Other 2,609 2,558
$ 21,989 $ 22,427
Note 13 - Fair Value Measurements
ASC Topic 820, Fair Value Measurement,establishes a valuation hierarchy of the inputs used to measure fair value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that reflect the Company's own assumptions.
An asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands):
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Note 13 - Fair Value Measurements (continued)
Fair value measurements at reporting date using:
Total
Fair Value 		Level 1
Inputs 		Level 2
Inputs 		Level 3
Inputs
September 28, 2024
Assets
Assets held in rabbi trusts $ 6,281 $ 71 $ 6,210 $ -
December 31, 2023
Assets
Assets held in rabbi trusts $ 5,841 $ 59 $ 5,782 $ -
The Company maintains non-qualified trusts, referred to as "rabbi" trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at September 28, 2024 and December 31, 2023, and company-owned life insurance assets. The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company's insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the cash equivalents held in the rabbi trust are considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.
The fair value of the long-term debt, excluding capitalized deferred financing costs, at September 28, 2024 and December 31, 2023 approximates its carrying value as the revolving debt is reset on a monthly basis based on current market rates, plus a base rate as specified in the debt agreement. The fair value of long-term debt is considered a Level 2 measurement within the fair value hierarchy. The Company's financial instruments include cash and cash equivalents, accounts receivable, short-term notes payable, and accounts payable. The carrying amounts for these financial instruments reported in the consolidated condensed balance sheets approximate their fair values.
Note 14 - Restructuring Costs
Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required either to record additional expense in future periods or to reverse part of the previously recorded charges.
The Company recorded $0.1 million and $1.2 million of restructuring costs during the fiscal quarter ended September 28, 2024 and September 30, 2023, respectively and $0.9 million and $1.4 million of restructuring costs during the nine fiscal months ended September 28, 2024 and September 30, 2023, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs.
The following table summarizes recent activity related to all restructuring programs. The accrued restructuring liability balance as of September 28, 2024 and December 31, 2023, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands):
Balance at December 31, 2023 $ 249
Restructuring charges in 2024 864
Cash payments (794)
Foreign currency exchange translation (150)
Balance at September 28, 2024 $ 169
Note 15 - Stockholder's Equity
On August 8, 2022, the Board of Directors (the "Board") of the Company authorized the repurchase of up to 600,000 shares of the Company's outstanding common stock (the "Stock Repurchase Plan"). The Stock Repurchase Plan was originally set to expire on August 11, 2023. On August 8, 2023, the Company announced that its Board of Directors extended the term of the
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previously approved stock repurchase plan to August 9, 2024. The stock repurchase plan expired in accordance with its terms on August 9, 2024. From August 8, 2022 to August 9, 2024, the Company had repurchased an aggregate of 518,328 shares of its common stock under the stock repurchase plan for consideration of $16.5 million.
Note 16 - Commitments and Contingencies
During the second quarter of 2024, the Israel Tax Authority has issued a Value Added Tax (VAT) assessment to the Company, in the amount of ILS 8.4 million (approximately $2.2 million), pertaining to claims of VAT between the years 2019 to 2023.
The Company believes that the liability for the assessment is not probable and intends to file an appeal against this assessment.
Given the early stage of this matter, the Company is currently unable to predict the likely outcome or estimate the potential financial impact, if any, of this matter.
Note 17 - Subsequent Event
On September 30, 2024, the Company acquired Nokra Optische Prueftechnik und Automation GmbH, a Germany-based, privately held maker of precision measuring and testing equipment for manufacturing, for a total consideration of Euro 3.95 million.
Nokra's laser-based measuring systems expand our existing measurement and inspection solutions for steel and aluminum rolling mills, as well as for the metal processing industry. Nokra's laser-based measurement gauge systems are used to precisely measure the thickness, flatness, contour, width or 3D profile of various metals depending on the application, in both inline and offline production.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
VPG is a global leader in precision measurement and sensing technologies that help power the future by bridging the physical world with the digital one. Many of our specialized sensors, weighing solutions, and measurement systems are "designed-in" by our customers, and address growing applications across a diverse array of industries and markets. Our products are marketed under brand names that we believe are characterized as having a very high level of precision and quality, and we employ an operationally diversified structure to manage our businesses.
Driven by the continued proliferation of data generated by the expanding use of sensors across a widening array of industrial and non-industrial applications, precision measurement and sensing technologies help ensure and deliver required levels of quality of mission-critical or high-value data. VPG's products are often at the first stage of a data value chain (i.e., the process of converting the physical world into a digital format that can be used for a specific purpose) and as such impact the effectiveness of vast number of critical, high-value downstream processes. Over the past few years, we have seen a broadening of precision sensing applications in both our traditional industrial markets and new markets, due to the development of higher functionality in our customers' end products. Our precision measurement solutions are used across a wide variety of end markets upon which we focus, including industrial, test and measurement, transportation, steel, medical, agriculture, avionics, military and space, and consumer product applications. The Company has a long heritage of innovation in sensor technologies that provide accuracy, reliability and repeatability that make our customers' products safer, smarter, and more productive. As the functionality of customers' products continues to increase, and they integrate more precision measurement sensors and related systems into their solutions, we believe this will offer substantial growth opportunities for our products and expertise.
The impact of the continuing Israel-Hamas war and Israel-Hezbollah and Israel-Iran conflicts
In response to Hamas's terrorist attack on Israel on October 7, 2023, Israel's security cabinet declared war against Hamas and a military campaign against Hamas and, later, Hezbollah commenced in parallel to both terrorist organizations' continued rocket and terror attacks. In addition, Israel has come under attack by Iran and has responded to such attacks militarily.
Such geopolitical and military instabilities, impact of sanctions and trade restrictions imposed as a result thereof, operational disruptions at facilities located in Israel as a result of military call-ups of the Company's employees in Israel, closure of the offices there, potential impact of litigation and risks related to supply chain disruptions, might affect the Company's business and results from operations.
As of November 5, 2024 (date of filing), our facilities in Israel remain open and operate at normal level. The extent and duration of the current war and other conflicts, the possibility of further spread of the conflict to other countries in the region as well as involving other political and military entities in the Middle East, poses risks to our operations and may lead to disruptions which could adversely affect our business, prospects, financial condition and results of operations.
While sales to customers in Israel is relatively a small portion of our revenues, our operations in Israel include offices, that are the workplace for key executives including our chief executive officer, as well as two manufacturing facilities located in the central part of Israel which source approximately 25 percent of our total worldwide revenues. We have implemented a contingency plan that we believe will secure supply of materials and logistics, build safety stock of finished goods and transfer these goods to our distribution centers outside of Israel.
We continue to take measures with regards to the safety of our employees. We may, however, determine at some point in the future to temporarily discontinue production in Israel for the safety of our employees. We could also face future production slowdowns or interruptions at either manufacturing location in Israel due to personnel absences or resource constraints such as the inability to source materials for production.
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Overview of Financial Results
VPG reports in three product segments: Sensors, Weighing Solutions, and Measurement Systems. The Sensors segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The Measurement Systems segment is comprised of highly specialized systems for steel production, materials development, and safety testing.
Net revenues for the fiscal quarter ended September 28, 2024 were $75.7 million versus $85.9 million for the comparable prior year period. Net loss attributable to VPG stockholders for the fiscal quarter ended September 28, 2024 were $(1.4) million, or $(0.10) per diluted share, versus $6.3 million, or $0.46 per diluted share, for the comparable prior year period.
Net revenues for the nine fiscal months ended September 28, 2024 were $233.9 million versus $265.5 million for the comparable prior year period. Net earnings attributable to VPG stockholders for the nine fiscal months ended September 28, 2024 were $9.1 million, or $0.68 per diluted share, versus $21.5 million, or $1.57 per diluted share, for the comparable prior year period.
The results of operations for the fiscal quarters ended September 28, 2024 and September 30, 2023 include items affecting comparability as listed in the reconciliations below. The reconciliations below include certain financial measures which are not recognized in accordance with U.S. generally accepted accounting principles ("GAAP"), including adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA, and adjusted EBITDA. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance. Non-GAAP measures such as adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA, and adjusted EBITDA do not have uniform definitions. These measures, as calculated by VPG, may not be comparable to similarly titled measures used by other companies. Management believes that these non-GAAP measures are useful to investors because each presents what management views as our core operating results for the relevant period. The adjustments to the applicable GAAP measures relate to occurrences or events that are outside of our core operations, and management believes that the use of these non-GAAP measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods. In addition, the Company has historically provided these or similar non-GAAP measures and understands that some investors and financial analysts find this information helpful in analyzing the Company's performance and in comparing the Company's financial performance to that of its peer companies and competitors. Management believes that the Company's non-GAAP measures are regarded as supplemental to its GAAP financial results.
Gross Profit Operating Income Net (Loss) Earnings Attributable to VPG Stockholders Diluted Earnings Per share
Three months ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
As reported - GAAP $ 30,260 $ 35,935 $ 3,841 $ 8,224 $ (1,351) $ 6,280 $ (0.10) $ 0.46
As reported - GAAP Margins 40.0 % 41.9 % 5.1 % 9.6 %
Acquisition purchase accounting adjustments (a) - 214 - 214 - 214 - 0.02
Restructuring costs - - 82 1,153 82 1,153 0.01 0.08
Foreign currency exchange (loss) gain (b) - - - - 2,912 (1,283) 0.22 (0.09)
Less: Tax effect of reconciling items and discrete tax items - - - - (839) (77) (0.06) -
As Adjusted - Non GAAP $ 30,260 $ 36,149 $ 3,923 $ 9,591 $ 2,482 $ 6,441 $ 0.19 $ 0.47
As Adjusted - Non GAAP Margins 40.0 % 42.1 % 5.2 % 11.2 %
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Gross Profit Operating Income Net Earnings Attributable to VPG Stockholders Diluted Earnings Per share
Nine fiscal months ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
As reported - GAAP $ 97,761 $ 111,846 $ 16,665 $ 29,943 $ 9,143 $ 21,480 $ 0.68 $ 1.57
As reported - GAAP Margins 41.8 % 42.1 % 7.1 % 11.3 %
Acquisition purchase accounting adjustments (a) - 304 - 304 - 304 - 0.02
Restructuring costs - - 864 1,431 864 1,431 0.06 0.11
Severance cost 347 347 0.03
Foreign currency exchange gain (b)
- - - - 34 (2,139) - (0.16)
Less: Tax effect of reconciling items and discrete tax items - - - - (1,913) (357) (0.14) (0.03)
As Adjusted - Non GAAP $ 97,761 $ 112,150 $ 17,876 $ 31,678 $ 12,301 $ 21,433 $ 0.92 $ 1.57
As Adjusted - Non GAAP Margins 41.8 % 42.2 % 7.6 % 11.9 %
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Net (loss) earnings attributable to VPG stockholders $ (1,351) $ 6,280 $ 9,143 $ 21,480
Interest Expense 648 1,119 1,925 3,195
Income tax expense 1,874 2,419 6,508 8,023
Depreciation 2,988 2,954 8,996 8,806
Amortization 925 880 2,776 2,753
EBITDA 5,084 $ 13,652 29,348 $ 44,257
EBITDA MARGIN 6.7 % 15.9 % 12.5 % 16.7 %
Acquisition purchase accounting adjustments (a) - 214 - 304
Restructuring costs 82 1,153 864 1,431
Severance cost - - 347 -
Foreign currency exchange gain (b) 2,912 (1,283) 34 (2,139)
ADJUSTED EBITDA $ 8,079 $ 13,736 $ 30,594 $ 43,853
ADJUSTED EBITDA MARGIN 10.7 % 16.0 % 13.1 % 16.5 %
(a) Acquisition purchase accounting adjustments include fair market value adjustments associated with inventory recorded as a component of costs of products sold.
(b) Impact of foreign currency exchange rates on assets and liabilities.
Financial Metrics
We utilize several financial measures and metrics to evaluate performance and assess the future direction of our business. These key financial measures and metrics include net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover.
Gross profit margin is computed as gross profit as a percentage of net revenues. Gross profit is generally net revenues less costs of products sold, but could also include certain other period costs. Gross profit margin is a function of net revenues, but also reflects our cost-cutting programs and our ability to contain fixed costs.
End-of-period backlog is one indicator of potential future sales. We include in our backlog only open orders that have been released by the customer for shipment in the next twelve months. If demand falls below customers' forecasts, or if customers do
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not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty. Therefore, backlog is not necessarily indicative of the results expected for future periods.
Another important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the amount of product ordered during a period compared with the amount of product shipped during that period. A book-to-bill ratio that is greater than one indicates that revenues may increase in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of lower demand and may foretell declining sales. The book-to-bill ratio is also impacted by the timing of orders, particularly from our project-based product lines.
We focus on inventory turnover as a measure of how well we manage our inventory. We define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory (computed using each quarter-end balance) for this same period. A higher level of inventory turnover reflects more efficient use of our capital.
The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following tables show net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover for our business as a whole and by segment during the five quarters beginning with the third quarter of 2023 through the third quarter of 2024.
3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter
(dollars in thousands)
2023 2023 2024 2024 2024
Net revenues $ 85,854 $ 89,528 $ 80,783 $ 77,359 $ 75,727
Gross profit margin 41.9 % 43.0 % 43.4 % 41.9 % 40.0 %
End-of-period backlog $ 128,800 $ 117,300 $ 109,603 $ 104,858 $ 100,191
Book-to-bill ratio 0.90 0.84 0.93 0.95 0.91
Inventory turnover 2.20 2.27 2.05 1.99 2.01
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3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter
(dollars in thousands) 2023 2023 2024 2024 2024
Sensors
Net revenues $ 32,532 $ 34,259 $ 29,414 $ 28,869 $ 28,201
Gross profit margin 35.9 % 40.2 % 36.5 % 38.3 % 31.0 %
End-of-period backlog $ 52,400 $ 49,000 $ 45,024 $ 41,627 $ 39,995
Book-to-bill ratio 0.83 0.85 0.91 0.90 0.89
Inventory turnover 2.38 2.36 2.09 2.02 2.28
Weighing Solutions
Net revenues $ 28,970 $ 30,438 $ 28,845 $ 27,447 $ 25,174
Gross profit margin 38.7 % 35.6 % 39.1 % 37.6 % 35.1 %
End-of-period backlog $ 30,800 $ 28,800 $ 27,109 $ 25,077 $ 25,590
Book-to-bill ratio 0.89 0.91 0.95 0.93 1.00
Inventory turnover 2.18 2.46 2.31 2.20 2.10
Measurement Systems
Net revenues $ 24,352 $ 24,831 $ 22,524 $ 21,043 $ 22,352
Gross profit margin 53.6 % 56.0 % 58.1 % 52.4 % 56.8 %
End-of-period backlog $ 45,600 $ 39,500 $ 37,470 $ 38,154 $ 34,605
Book-to-bill ratio 0.98 0.73 0.94 1.04 0.82
Inventory turnover 1.94 1.87 1.62 1.65 1.55
Net revenues for the third fiscal quarter of 2024 decreased 2.1% from the second fiscal quarter of 2024 and decreased 11.8% from the third fiscal quarter of 2023 across all three reporting segments.
Net revenues in the Sensors reporting segment decreased 2.3% compared to the second fiscal quarter of 2024 and decreased 13.3% from the third fiscal quarter of 2023. The year-over-year decrease in Sensors reporting segment revenues was primarily attributable to lower sales of precision resistors in the Test and Measurement and AMS markets. Sequentially, the decrease primarily reflected lower sales of advanced sensors in the Other markets, mainly for consumer applications, which was partially offset by higher sales of precision resistors in the AMS and Test and Measurement end markets.
Net revenues in the Weighing Solutions reporting segment decreased 8.3% from the second fiscal quarter of 2024 and decreased 13.1% from the third fiscal quarter of 2023. Sequentially, the decreases in revenues were primarily attributable to lower sales in the Industrial Weighing, Transportation, and Other markets. The year-over-year decrease in revenues was mainly attributable to lower sales in our Transportation and Industrial Weighing markets, as well as in our Other markets primarily for precision agriculture and medical applications.
Net revenues in the Measurement Systems reporting segment increased 6.2% from the second fiscal quarter of 2024 and decreased 8.2% from the third fiscal quarter of 2023. Sequentially, the increase in revenue was primarily due to higher sales of Diversified Technical Systems Inc. ("DTS") products in the AMS and Transportation markets. The year-over-year decrease was primarily attributable to decreased revenue in the Steel, Transportation, and in our Other markets.
Overall gross profit margin in the third fiscal quarter of 2024 decreased 1.9% as compared to the second fiscal quarter of 2024 and decreased 1.9% from the third fiscal quarter of 2023.
Sequentially, the decrease in the gross profit margins in the Sensors and Weighing Solutions reporting segments was partially offset by an increase in the gross profit margin in the Measurement Systems reporting segment.
In the Sensors reporting segment, sequentially, the lower gross profit margin was primarily due to lower volume and temporary operational and labor inefficiencies.
In the Weighing Solutions reporting segment, the sequential decrease in gross profit margin was primarily due to lower volum and unfavorable product mix. The sequential increase in the gross profit margins in the Measurement Systems reporting segment was a result of higher volume and favorable product mix.
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Compared to the third fiscal quarter of 2023, the Measurement Systems reporting segment had a higher gross profit margins, while the Sensors and Weighing Solutions reporting segments had lower gross profit margins.
The Sensors reporting segment had a lower gross profit margin the third fiscal quarter of 2024 as compared to the third fiscal quarter of 2023 mainly due to lower volume.
The Weighing Solutions reporting segment had a lower gross profit margin as compared to the third fiscal quarter of 2023 primarily due to lower volume and unfavorable product mix. In the Measurement Systems reporting segment, the gross profit margin was slightly higher as compared to the third fiscal quarter of 2023 primarily due to favorable product mix, partially offset by lower volume.
Optimize Core Competence
The Company's core competencies include our innovative deep technical and applications-specific expertise to add value to our customers' products, our strong brands and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and our proven M&A strategy. We continue to optimize all aspects of our development, manufacturing and sales processes, including by increasing our technical sales efforts; continuing to innovate in product performance and design; and refining our manufacturing processes.
Our Sensors segment research group developed innovations that enhance the capability and performance of our strain gages, while simultaneously reducing their size and power consumption as part of our advanced sensors product line. We believe this unique foil technology will create new markets as customers "design in" these next generation products in existing and new applications. Our development engineering team is also responsible for creating new processes to further automate manufacturing and improve productivity and quality. Our advanced sensors manufacturing technology also offers us the capability to produce high-quality foil strain gages in a highly automated environment, which we believe results in reduced manufacturing and lead times, improved quality and increased margins. As a sign of our commitment to these businesses, we signed a long-term lease for a state-of-the-art facility that has been constructed in Israel.
Our design, research, and product development teams, in partnership with our marketing teams, drive our efforts to bring innovations to market. We intend to leverage our insights into customer demand to continually develop and roll out new, innovative products within our existing lines and to modify our existing core products in ways that make them more appealing, addressing changing customer needs and industry trends in terms of form, fit, and function.
We also seek to achieve significant production cost savings through the transfer, expansion, and construction of manufacturing operations in countries such as India, Japan, and Israel, where we can benefit from improved efficiencies or available tax and other government-sponsored incentives. In the past several years, we incurred restructuring expense related to closing and downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India and China, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.
Acquisition Strategy
We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments. Historically, our growth and acquisition strategy had been largely focused on vertical product integration, using our foil strain gages in our load cell products, and incorporating those products into our weighing solutions. In recent years, we widened our acquisition strategy to include a broader set of precision measurement systems and product companies.
We expect to expand our expertise, and our acquisition focus, outside our traditional vertical approach to other precision measurement solutions, including in the fields of measurement of force, weight, pressure, torque, tilt, motion, and acceleration. We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing and distribution footprint. On September 30, 2024, the Company acquired Nokra Optische Prueftechnik und Automation GmbH, a Germany-based, privately held maker of precision measuring and testing equipment for manufacturing. Please see our Current Report on Form 8-K dated September 30, 2024, for more information.
Research and Development
Research and development ("R&D") will continue to play a key role in our efforts to introduce innovative products to generate new sales and to improve profitability. We expect to continue to expand our position as a leading supplier of precision foil technology products. We believe our R&D efforts should provide us with a variety of opportunities to leverage technology, products, and our manufacturing base in order to ultimately improve our financial performance.
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Cost Management
To be successful, we believe we must seek new strategies for controlling operating costs. Through automation in our plants, we believe we can optimize our capital and labor resources in production, inventory management, quality control, and warehousing. We are in the process of moving some manufacturing to more cost effective locations. This may enable us to become more efficient and cost competitive, and also maintain tighter controls of the operation.
Production transfers, facility consolidations, and other long-term cost-cutting measures require us to initially incur significant severance and other exit costs. We are realizing the benefits of our restructuring through lower labor costs and other operating expenses and expect to continue reaping these benefits in future periods. However, these programs to improve our profitability also involve certain risks which could materially impact our future operating results, as further detailed in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 29, 2024.
We are evaluating plans to further reduce our costs by consolidating additional manufacturing operations. These plans may require us to incur restructuring and severance costs in future periods. While streamlining and reducing fixed overhead, we are exercising caution so that we will not negatively impact our customer service or our ability to further develop products and processes.
Goodwill
We test the goodwill in each of our reporting units for impairment at least annually, as of the first day of our fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred. Determining whether to test goodwill for impairment, and the application of goodwill impairment tests, require significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Changes in these estimates could materially affect the determination of fair value for each reporting unit. A slowdown or deferral of orders for a business, with which we have goodwill associated, could impact our valuation of that goodwill.
Foreign Currency
We are exposed to foreign currency exchange rate risks, particularly due to transactions in currencies other than the functional currencies of certain subsidiaries. U.S. GAAP requires that entities identify the "functional currency" of each of their subsidiaries and measure all elements of the financial statements in that functional currency. A subsidiary's functional currency is the currency of the primary economic environment in which it operates. In cases where a subsidiary is relatively self-contained within a particular country, the local currency is generally deemed to be the functional currency. However, a foreign subsidiary that is a direct and integral component or extension of the parent company's operations generally would have the parent company's currency as its functional currency. We have subsidiaries that fall into each of these categories.
Foreign Subsidiaries which use the Local Currency as the Functional Currency
Our operations in Europe, Canada, and certain locations in Asia primarily generate and expend cash using local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency. For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated condensed balance sheets have been translated at the rate of exchange as of the balance sheet date. Translation adjustments do not impact the results of operations and are reported as a separate component of equity.
For those subsidiaries where the local currency is the functional currency, revenues and expenses are translated at the average exchange rate for the period. While the translation of revenues and expenses into U.S. dollars does not directly impact the consolidated condensed statement of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies.
Foreign Subsidiaries which use the U.S. Dollar as the Functional Currency
Our operations in Israel and certain locations in Asia primarily generate cash in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly related to payroll, which are incurred in the local currency and significant lease assets and liabilities.
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Effects of Foreign Currency Exchange Rate on Operations
For the fiscal quarter ended September 28, 2024, exchange rates increased net revenues by $0.0 million, and increased costs of products sold and selling, general, and administrative expenses by $0.2 million, when compared to the comparable prior year period.
For the nine fiscal months ended September 28, 2024, exchange rates decreased net revenues by $0.9 million, and decreased costs of products sold and selling, general, and administrative expenses by $1.3 million, when compared to the comparable prior year period.
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Results of Operations
Statement of operations' captions as a percentage of net revenues and the effective tax rates were as follows:
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Costs of products sold 60.0 % 58.1 % 58.2 % 57.9 %
Gross profit 40.0 % 41.9 % 41.8 % 42.1 %
Selling, general, and administrative expenses 34.8 % 30.9 % 34.3 % 30.3 %
Operating income 5.1 % 9.6 % 7.1 % 11.3 %
Income before taxes 0.7 % 10.2 % 6.7 % 11.2 %
Net (loss) earnings (1.8) % 7.4 % 3.9 % 8.2 %
Net earnings attributable to VPG stockholders (1.8) % 7.3 % 3.9 % 8.1 %
Effective tax rate 343.2 % 27.6 % 41.6 % 27.0 %
Net Revenues
Net revenues were as follows (dollars in thousands):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Net revenues $ 75,727 $ 85,854 $ 233,869 $ 265,520
Change versus comparable prior year period
$ (10,127) $ (31,651)
Percentage change versus prior year period
(11.8) % (11.9) %
Changes in net revenues were attributable to the following:
vs. prior year
quarter 		vs. prior year-
to-date
Change attributable to:
Change in volume (12.0) % (12.0) %
Change in average selling prices 0.2 % 0.4 %
Foreign currency effects 0.0 % (0.3) %
Net change (11.8) % (11.9) %
During the fiscal quarter and nine fiscal months ended September 28, 2024, net revenues decreased 11.8% and 11.9%, respectively, as compared to the comparable prior year periods, due to lower volume across all three reporting segments.
Gross Profit Margin
Gross profit as a percentage of net revenues was as follows:
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Gross profit margin 40.0 % 41.9 % 41.8 % 42.1 %
The gross profit margin for the fiscal quarter ended September 28, 2024 decreased 1.9% and for the nine fiscal months ended September 28, 2024, decreased by 0.3% as compared to the comparable prior year periods. For the fiscal quarter period, the Measurement Systems reporting segment had higher gross profit margins, while the Sensors and Weighing Solutions reporting segments had a lower gross profit margin. For the nine fiscal months ended September 28, 2024, the Measurement Systems
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reporting segment had higher gross profit margins, while the Sensors and Weighing Solutions reporting segments had a lower gross profit margin.
Segments
Analysis of revenues and gross profit margins for each of our reportable segments is provided below.
Sensors
Net revenues of the Sensors segment were as follows (dollars in thousands):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Net revenues $ 28,201 $ 32,532 $ 86,484 $ 105,524
Change versus comparable prior year period
$ (4,331) $ (19,040)
Percentage change versus prior year period
(13.3)% (18.0)%
Changes in Sensors segment net revenues were attributable to the following:
vs. prior year
quarter 		vs. prior year-
to-date
Change attributable to:
Change in volume (13.6) % (18.6) %
Change in average selling prices 0.4 % 0.8 %
Foreign currency effects (0.1) % (0.2) %
Net change (13.3) % (18.0) %
The Sensors segment revenue of $28.2 million in the third fiscal quarter of 2024 decreased 13.3% from $32.5 million in the third fiscal quarter of 2023; sequentially, revenue decreased 2.3% compared to $28.9 million in the second fiscal quarter of 2024. The year-over-year decrease in revenues was primarily attributable to lower sales of precision resistors in the Test and Measurement and AMS markets. Sequentially, the decrease primarily reflected lower sales of advanced sensors in the Other markets, mainly for consumer applications, which was partially offset by higher sales of precision resistors in the AMS and Test and Measurement end markets.
Gross profit as a percentage of net revenues for the Sensors segment was as follows:
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Gross profit margin 31.0 % 35.9 % 35.3 % 39.2 %
Gross profit margin for the Sensors segment was 31.0% for the third fiscal quarter of 2024. as compared to 35.9% in the third fiscal quarter of 2023, and decreased compared to 38.3% in the second fiscal quarter of 2024. The year-over-year decrease in gross profit margin was primarily due to .lower volume. Sequentially, the lower gross profit margin was primarily due to lower volume and temporary operational and labor inefficiencies.
Weighing Solutions
Net revenues of the Weighing Solutions segment were as follows (dollars in thousands):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Net revenues
$ 25,174 $ 28,970 $ 81,466 $ 92,090
Change versus comparable prior year period
$ (3,796) $ (10,624)
Percentage change versus prior year period
(13.1) % (11.5) %
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Changes in Weighing Solutions segment net revenues were attributable to the following:
vs. prior year
quarter 		vs. prior year-
to-date
Change attributable to:
Change in volume (13.4) % (11.8) %
Change in average selling prices (0.2) % 0.0 %
Foreign currency effects 0.5 % 0.3 %
Net change (13.1) % (11.5) %
The Weighing Solutions segment revenue of $25.2 million in the third fiscal quarter of 2024 decreased 13.1% compared to $29.0 million in the third fiscal quarter of 2023 and was 8.3% lower than $27.4 million in the second fiscal quarter of 2024. The year-over-year decline in revenues was mainly attributable to lower sales in our Transportation and Industrial Weighing markets, as well as in our Other markets primarily for precision agriculture and medical applications. Sequentially, the decrease in revenues was primarily attributable to lower sales in the Industrial Weighing, Transportation, and Other markets.
Gross profit as a percentage of net revenues for the Weighing Solutions segment was as follows:
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Gross profit margin 35.1 % 38.7 % 37.3 % 37.4 %
Gross profit margin for the Weighing Solutions segment was 35.1% for the third fiscal quarter of 2024, which decreased compared to 38.7% in the third fiscal quarter of 2023, and decreased compared to 37.6% in the second fiscal quarter of 2024. The year-over-year and sequential decrease in gross profit margin were primarily due to lower volume and unfavorable product mix.
Measurement Systems
Net revenues of the Measurement Systems segment were as follows (dollars in thousands):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Net revenues $ 22,352 $ 24,352 $ 65,919 $ 67,906
Change versus comparable prior year period
$ (2,000) $ (1,987)
Percentage change versus prior year period
(8.2) % (2.9) %
Changes in Measurement Systems segment net revenues were attributable to the following:
vs. prior year
quarter 		vs. prior year-
to-date
Change attributable to:
Change in volume (8.3) % (2.8) %
Change in average selling prices 0.5 % 0.5 %
Foreign currency effects (0.4) % (0.6) %
Net change (8.2) % (2.9) %
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The Measurement Systems segment revenue of $22.4 million in the third fiscal quarter of 2024 decreased 8.2% year-over-year from $24.4 million in the third fiscal quarter of 2023 and was 6.2% higher than $21.0 million in the second fiscal quarter of 2024. The year-over-year decrease was primarily attributable to decreased revenue in the Steel, Transportation, and in our Other markets. Sequentially, the increase in revenue was primarily due to higher sales of Diversified Technical Systems Inc. ("DTS") products in the AMS and Transportation markets.
Gross profit as a percentage of net revenues for the Measurement Systems segment were as follows:
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Gross profit margin 56.8 % 53.6 % 55.8 % 53.1 %
Gross profit margin for the Measurement Systems segment was 56.8%, compared to 53.6% (or 54.5% adjusted to exclude $214.0 thousand of purchase accounting adjustment related to the DTS and DSI acquisitions), in the third fiscal quarter of 2023, and 52.4% in the second fiscal quarter of 2024. The year-over-year adjusted gross profit margin was higher due to product mix. The sequentially higher adjusted gross profit margin reflected lower volume and favorable product mix.
Selling, General, and Administrative Expenses
Selling, general, and administrative ("SG&A") expenses are summarized as follows (dollars in thousands):
Fiscal quarter ended Nine fiscal months ended
September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023
Total SG&A expenses $ 26,337 $ 26,558 $ 80,232 $ 80,472
As a percentage of net revenues 34.8 % 30.9 % 34.3 % 30.3 %
SG&A expenses for the fiscal quarter and nine fiscal months ended September 28, 2024 decreased $0.2 million and $0.2 million, respectively, compared to the comparable prior year periods.
Restructuring Costs
Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required either to record additional expense in future periods or to reverse part of the previously recorded charges.
The Company recorded $0.1 million and $1.2 million of restructuring costs during the fiscal quarter ended September 28, 2024 and September 30, 2023, respectively, and $0.9 million and $1.4 million of restructuring costs during the nine fiscal months ended September 28, 2024 and September 30, 2023, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, in connection with various cost reduction programs.
Other Income (Expense)
Foreign currency exchange loss for the fiscal quarter and nine fiscal months ended September 28, 2024 was higher compared to the comparable prior year periods mainly due to volatility in the global currency markets and the strengthening of the U.S dollar against the Japanese yen which increased the value of yen-based liabilities relative to the dollar..
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The following table analyzes the components of the line "Other" on the consolidated condensed statements of operations (in thousands):
Fiscal quarter ended
September 28, 2024 September 30, 2023 Change
Foreign currency exchange gain (loss) $ (2,912) $ 1,283 $ (4,195)
Interest income 370 543 (173)
Pension expense (8) (72) 64
Other (96) (83) (13)
$ (2,646) $ 1,671 $ (4,317)
Nine fiscal months ended
September 28, 2024 September 30, 2023 Change
Foreign currency exchange gain (loss) $ (36) $ 2,138 $ (2,174)
Interest income 1,192 1,265 (73)
Pension expense (28) (217) 189
Other (213) (221) 8
$ 915 $ 2,965 $ (2,050)
Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. For the fiscal quarter and nine fiscal months ended September 28, 2024, the change in foreign currency exchange gains and losses during the periods, as compared to the prior year periods, is largely due to exposure to currency fluctuations with the Israeli shekel, the Japanese Yen, the Canadian dollar and the British pound.
Income Taxes
VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology based on projected full-year pre-tax earnings among the taxing jurisdictions in which we operate with adjustments for discrete items. The effective tax rate for the fiscal quarter ended September 28, 2024 was 343.2% compared to 27.6% for the fiscal quarter ended September 30, 2023. The effective tax rate for the fiscal quarter ended September 28, 2024 was higher than the prior year period primarily due to changes in the mix of worldwide income and an increase in our valuation allowance on deferred tax assets. The effective tax rate for the nine fiscal months ended September 28, 2024 was 41.6% compared to 27.0% for the nine fiscal months ended September 30, 2023. The effective tax rate for the nine fiscal months ended September 28, 2024 was higher than the prior year period primarily due to changes in the mix of worldwide income and an increase in our valuation allowance on deferred tax assets.
The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company's best estimate of the potential tax exposures in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company's tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties.
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Financial Condition, Liquidity, and Capital Resources
We believe that our current cash and cash equivalents, credit facilities and projected cash from operations will be sufficient to meet our liquidity needs for at least the next 12 months.
On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the "2020 Credit Agreement") among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank, National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders (the "Agent"), pursuant to which the terms of the Company's multi-currency, secured credit facility were revised to provide a secured revolving facility (the "2020 Revolving Facility") in an aggregate principal amount of $75.0 million, with a sublimit of $10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the Credit Agreement. The proceeds of the 2020 Revolving Facility may be used on an ongoing basis for working capital and general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of $25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement terminates on March 20, 2025.
On May 5, 2023, the Company entered into Amendment No. 1 to Third Amended and Restated Credit Agreement (the "Credit Agreement Amendment"), by and among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank, National Association as joint lead arrangers and the Agent, as agent for such lenders. The Credit Agreement Amendment amended the 2020 Credit Agreement. The primary purpose of the changes made in the Credit Agreement Amendment were to update the interest rate provisions to replace LIBOR with SOFR for U.S. dollar denominated loans as well as update the other applicable reference borrowing rates for foreign currency loans which took effect on June 15, 2023. Interest payable on amounts borrowed under the 2020 Revolving Facility is based upon the following: (a) for revolving credit loans denominated in US Dollars, the SOFR rate plus applicable credit spread; and (b) for revolving credit loans denominated in foreign currencies, at other applicable local reference rates plus an interest margin. Depending upon the Company's leverage ratio, an interest rate margin ranging from 1.50% to 2.75% per annum is added to the applicable SOFR rate to determine the interest payable on the SOFR loans. The Company is required to pay a quarterly fee of 0.25% per annum to 0.40% per annum on the unused portion of the 2020 Revolving Facility, which is determined based on the Company's leverage ratio each quarter. Additional customary fees apply with respect to letters of credit.
On August 15, 2024, the Company entered into a Fourth Amended and Restated Credit Agreement (the "2024 Credit Agreement") among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and HSBC as joint lead arrangers and joint bookrunner, and JPMorgan Chase Bank, N.A, as agent for such lenders, pursuant to which the 2020 Credit Agreement, as amended, was amended and restated to, among other things, extend the maturity date from March 20, 2025 to August 15, 2029 and adjust the interest rate and commitment fee. The 2024 Credit Agreement provides for a multi-currency, secured credit facility (the "2024 Revolving Facility") in an aggregate principal amount of $75.0 million, with a sublimit of $10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the 2024 Credit Agreement, the proceeds of which may be used for working capital and general corporate purposes, and a portion of which were used to refinance the 2020 Revolving Facility. The Company may elect to make loans under the 2024 Revolving Facility in US Dollars, Euros, Canadian Dollars, Sterling, Japanese Yen or such other freely convertible foreign currency.
The obligations of the Company under the 2024 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company's domestic subsidiaries. The obligations of the Company and the guarantors under the 2024 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such guarantors. The 2024 Credit Agreement restricts the Company from paying cash dividends and requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of specific financial ratios. The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The Company was in compliance with its financial maintenance covenants at September 28, 2024. If the Company is not in compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable.
Our business has historically generated significant cash flow. For the nine fiscal months ended September 28, 2024, cash provided by operating activities was $13.0 million compared to $27.1 million in the comparable prior year period. Our net cash used in investing activities for the nine fiscal months ended September 28, 2024 was lower compared to the prior year period mainly due to lower capital spending. Our net cash used in financing activities for the nine fiscal months ended September 28, 2024 was significantly higher when compared with the prior year period due to the stock repurchases made during the period.
Approximately 92% and 92% of our cash and cash equivalents balance at September 28, 2024 and December 31, 2023, respectively, was held by our non-U.S. subsidiaries.
See the following table for the percentage of cash and cash equivalents, by region, at September 28, 2024 and December 31, 2023:
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September 28, 2024 December 31, 2023
Israel 39 % 36 %
Asia 24 % 22 %
Europe 10 % 17 %
Germany 14 % 5 %
United States 8 % 8 %
Canada 5 % 12 %
100 % 100 %
We earn a significant amount of our operating income outside the United States, the majority of which is deemed to be indefinitely reinvested in foreign jurisdictions. As a result, as discussed above, a significant portion of our cash and short-term investments are held by foreign subsidiaries. The Company will continue to evaluate its cash needs, however we currently do not intend, nor do we foresee a need, to repatriate funds in excess of what is already planned. The Company will evaluate the possibility of repatriating future cash provided such repatriation can be accomplished in a tax efficient manner. In addition, we expect existing domestic cash, short-term investments, and cash flows from operations to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as debt repayment and capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.
If we should require more capital in the United States than is generated by our domestic operations, for example, to fund significant discretionary activities, such as business acquisitions, we could elect to repatriate future earnings from foreign jurisdictions or raise capital in the United States through debt or equity issuances. These alternatives could result in higher tax expense, increased interest expense, or dilution of our earnings. We consider the majority of the undistributed earnings of our foreign subsidiaries, as of September 28, 2024, to be indefinitely reinvested.
Adjusted free cash flow generated during the nine fiscal months ended September 28, 2024, was $6.7 million. We refer to the amount of cash provided by operating activities ($13.0 million) in excess of our capital expenditures ($7.0 million) and net of proceeds from the sale of assets ($0.8 million) as "adjusted free cash flow."
The following table summarizes the components of net cash at September 28, 2024 and December 31, 2023 (in thousands):
September 28, 2024 December 31, 2023
Cash and cash equivalents $ 81,077 $ 83,965
Third-party long-term debt:
Revolving debt 32,000 32,000
Deferred financing costs (617) (144)
Total third-party debt 31,383 31,856
Net cash $ 49,694 $ 52,109
Measurements such as "adjusted free cash flow" and "net cash" do not have uniform definitions and are not recognized in accordance with U.S. GAAP. Such measures should not be viewed as alternatives to GAAP measures of performance or liquidity. However, management believes that "adjusted free cash flow" is a meaningful measure of our ability to fund acquisitions, and that an analysis of "net cash" assists investors in understanding aspects of our cash and debt management. These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies.
Our financial condition as of September 28, 2024 remains strong, with a current ratio (current assets to current liabilities) of 4.4 to 1.0, as compared to a ratio of 3.9 to 1.0 at December 31, 2023.
Cash paid for property and equipment for the nine fiscal months ended September 28, 2024 was $7.0 million compared to $9.8 million in the comparable prior year period.
As of September 28, 2024 and December 31, 2023, we did not have any off-balance sheet arrangements.
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Safe Harbor Statement
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 or constitute "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; impact of inflation; potential issues respecting the United States federal government debt ceiling; global labor and supply chain challenges; difficulties or delays in identifying, negotiating and 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; political, economic, and health (including pandemics) instabilities; instability caused by military hostilities in the countries in which we operate (including Israel); 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; compliance issues under applicable laws, such as export control laws, including the outcome of our voluntary self-disclosure of export control non-compliance; significant developments from the recent and potential changes in tariffs and trade regulation; our efforts and efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter-in-place orders and business closures and the related impact on resource allocations, manufacturing and supply chains; our status as a "critical", "essential" or "life-sustaining" business in light of COVID-19 business closure laws, orders and guidance being challenged by a governmental body or other applicable authority; our ability to execute our new corporate strategy and business continuity, operational and budget plans; 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, 2023. We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this report or as of the dates otherwise indicated in such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the market risks previously disclosed in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024.
Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are: (1) recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms; and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Our management, including our CEO and CFO, believes that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must consider the benefits of controls relative to their costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. While the design of any system of controls is to provide reasonable assurance of the effectiveness of disclosure controls, such design is also based in part upon certain assumptions about the likelihood of future events, and such assumptions, while reasonable, may not take into account all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and may not be prevented or detected.
Changes in Internal Control over Financial Reporting
During our last fiscal quarter ended September 28, 2024, there was no change in our internal control over financial reporting that materially affected, or is reasonable likely to materially affect, internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is subject to various legal proceedings that constitute ordinary, routine litigation incidental to its business. The Company believes that the foregoing matters will not have a material adverse effect on the Company's business or its financial condition, results of operations, and cash flows.
Item 1A. RISK FACTORS
In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024. There have been no material changes in reported risk factors from the information reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information about repurchases of the Company's common stock during the three-month period ended September 28, 2024.
Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans (a)
June 30, 2024 -July 31, 2024 42,676 0.0311 42,676 102,223
August 1, 2024 - August 31, 2024 20,551 $ 0.03 20,551 81,672
September 1, 2024 - September 28, 2024 - - - -
Total 63,227 63,227
(a) On August 8, 2022, the Board of Directors (the "Board") of the Company authorized the repurchase of up to 600,000 shares of the Company's outstanding common stock (the "Stock Repurchase Plan"). The Stock Repurchase Plan was set to expire on August 11, 2023, and the Board authorized purchases thereunder to be made through an issuer repurchase plan adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), open market purchases or private transactions, in accordance with the applicable federal securities laws, including Rule 10b-18 under the Exchange Act. On August 8, 2023, the Company announced that its Board of Directors extended the term of the previously approved stock repurchase plan to August 9, 2024.The stock repurchase plan expired in accordance with its terms on August 9, 2024. As of August 9, 2024, the Company had repurchased 518,328 shares under the Stock Repurchase Plan.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
During the fiscal quarter ended September 28, 2024, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended).
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Item 6. EXHIBITS
10.1
Vishay Precision Group, Inc. 2024 Non-Employee Director Compensation Plan
10.2
Fourth Amended and Restated Credit Agreement, dated August 15, 2024, by and among Vishay Precision Group, Inc., the lenders party thereto, Wells Fargo Bank, National Association, JPMorgan Chase Bank, National Association and HSBC Bank.
31.1
Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Ziv Shoshani, Chief Executive Officer.
31.2
Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - William M. Clancy, Chief Financial Officer.
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Ziv Shoshani, Chief Executive Officer.
32.2
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - William M. Clancy, Chief Financial Officer.
101 Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended September 28, 2024 , furnished in XBRL (eXtensible Business Reporting Language).
104 Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101.
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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 thereunto duly authorized.
VISHAY PRECISION GROUP, INC.
/s/ William M. Clancy
William M. Clancy
Executive Vice President and Chief Financial Officer
(as a duly authorized officer and principal financial and accounting officer)
Date: November 5, 2024
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