Earnings call transcript: Vishay Precision beats EPS expectations in Q2 2025

Published 05/08/2025, 17:54
 Earnings call transcript: Vishay Precision beats EPS expectations in Q2 2025

Vishay Precision Group Inc. (VPG), a precision measurement technology company with a market capitalization of $357 million, reported its Q2 2025 earnings on August 5, revealing an earnings per share (EPS) of $0.17, surpassing the forecast of $0.15 by 13.33%. Revenue fell slightly short of expectations, coming in at $75.16 million against a forecast of $75.71 million. Despite the revenue miss, the company’s stock saw a pre-market surge of 8.82%, reflecting investor optimism on the earnings beat and strategic developments discussed in the call. According to InvestingPro, the stock currently trades at a P/E ratio of 117x, indicating high growth expectations from investors.

Key Takeaways

  • EPS beat expectations by 13.33%, reaching $0.17.
  • Revenue slightly missed estimates, totaling $75.16 million.
  • Stock price increased by 8.82% in pre-market trading.
  • Humanoid robotics and new UHTC system developments show promising future growth.
  • Cost reduction initiatives on track to save $5 million in 2025.

Company Performance

Vishay Precision demonstrated strong performance in Q2 2025, with a 4.8% increase in revenue from the previous quarter. The company continues to capitalize on its strategic initiatives, including innovations in humanoid robotics and ultra-high temperature testing systems (UHTC). The adjusted gross margin improved to 41%, up 2.7 percentage points from Q1, indicating effective cost management and operational efficiency.

Financial Highlights

  • Revenue: $75.2 million, a 4.8% increase from Q1.
  • EPS: $0.17, exceeding the forecast of $0.15.
  • Adjusted gross margin: 41%, up 2.7 percentage points from Q1.
  • Adjusted EBITDA: $7.9 million, representing 10.5% of revenue.
  • Cash position: $90.3 million, increased by $6.4 million from Q1.

Earnings vs. Forecast

Vishay Precision’s EPS of $0.17 beat the forecast of $0.15 by 13.33%, marking a positive surprise for investors. However, the revenue of $75.16 million was slightly below the expected $75.71 million, reflecting a 0.73% miss. Despite the revenue shortfall, the EPS beat highlights the company’s ability to manage costs effectively and improve profitability.

Market Reaction

Following the earnings announcement, Vishay Precision’s stock rose by 8.82% in pre-market trading, reaching $28.37. This upward movement positions the stock closer to its 52-week high of $31.2 and reflects investor confidence in the company’s strategic direction and financial health.

Outlook & Guidance

Looking ahead, Vishay Precision projects Q3 2025 revenue to range between $73 million and $81 million. The company remains committed to reducing fixed costs by $5 million in 2025 and expects capital expenditures of $10-$12 million. With ongoing developments in robotics and testing systems, VPG is poised for potential growth in new markets.

Executive Commentary

CEO Ziv Shashani expressed satisfaction with the company’s order trends, stating, "We are pleased with the positive order trends, which have continued for the third consecutive quarter." He emphasized the company’s readiness to meet future customer demands, particularly in the robotics sector, saying, "We are not going to be the bottleneck."

Risks and Challenges

  • Geopolitical tensions and trade policies could impact global economic stability.
  • Variability in transportation and steel markets may affect production costs.
  • Potential supply chain disruptions could hinder production timelines.
  • Competition in the robotics sector may challenge market share growth.
  • Execution risks associated with new product launches and innovations.

Q&A

During the earnings call, analysts inquired about the market potential for humanoid robotics and the impact of transportation and steel market variability. The company reiterated its commitment to cost reduction and readiness to scale production for future customer demands, highlighting strategic focus areas to mitigate potential risks.

Full transcript - Vishay Precision Group Inc (VPG) Q2 2025:

Ezra, Call Coordinator: Hello, everyone, and welcome to the VPG Second Quarter twenty twenty five Earnings Call. My name is Ezra, and I will be your coordinator today. I will now hand you over to our host, Steve Cantor, Senior Director of Investor Relations to begin. Please go ahead.

Steve Cantor, Senior Director of Investor Relations, VPG: Thank you, Ezra, and good morning, everyone. Welcome to VPG’s twenty twenty five second quarter earnings call. Our Q2 press release and slides have been posted on our website at vpgsensors.com. An audio recording of today’s call will be available on the Internet for a limited time and also can be accessed on our website. Today’s remarks are governed by the Safe Harbor provisions of the 1995 Private Securities Litigation Reform Act.

Our actual results may vary from forward looking statements. For a discussion of the risks associated with VPG’s operations, we encourage you to refer to our SEC filings, especially the Form 10 ks for the year ended 12/31/2024, and our other recent SEC filings. On the call today are Ziv Shashani, CEO and President and Bill Clancy, CFO. And now I’ll turn the call to Ziv for some prepared remarks. Please refer to Slide three of the quarterly presentation.

Ziv?

Ziv Shashani, CEO and President, VPG: Thank you, Steve. I will begin with some commentary on our results and trends for the second quarter. Bill will then provide financial details about the quarter and our outlook for the 2025. Moving to Slide three. Beginning with revenue, second quarter revenue of $75,200,000 grew 4.8% from the first quarter.

We are pleased to report continued positive bookings trends across several key markets, reflecting a moderately improved business environment. Our consolidated orders grew 7.5% sequentially, making the third consecutive quarter of sequential growth. This resulted in a consolidated book to bill of 1.06 with Measurement Systems and Sensors segments reporting a book to bill of one point two and one point one two respectively. Adjusted gross margin improved to 41, driven by sequentially stronger performance across all three business segments. I want to highlight the Wind Solutions segment in particular, which delivered a record quarterly adjusted gross margin.

We continue to advance our business development and cost optimization initiatives. Our operation execution translated into a solid cash generation with $6,000,000 in cash from operation and $4,700,000 in adjusted free cash flow. Before reviewing our sales and orders performance by division segment, I want to comment on the impact of tariffs on our second quarter results. Tariff changes impacted our gross margin negatively by approximately $500,000 due to the timing of our offsetting price increases. We expect this gap to narrow in the third quarter as our price adjustments becomes effective.

While tariff policies continue to change and are difficult to predict, we are confident in our ability to respond given our manufacturing footprint, the geographical distribution and our sales and our deep customer relationships. Moving to Slide four. Beginning with our Sensors segment, second quarter revenue decreased 1.8% sequentially, reflecting mixed trends across its markets. As higher sales of strain gauges products were offset by lower sales for precision resistors. Sensors booking rose 3.7% sequentially, reaching the highest level in six quarters and resulting in a book to bill of 1.12.

The bookings growth was driven by higher orders in the Test and Measurement for precision resistors and higher demand for Stringage’s sensors in AMS and Industrial Weighing, which was partially offset by lower orders for the test and measurement. For precision resistors, we recorded a $1,500,000 of order for fiber optics data center application, and we expect an additional order in Q3. Regarding humanoid robots, from April 2025 through July, we received approximately $1,500,000 in follow on orders from our initial humanoid customer. The humanoid robot market is still in its infancy and the initial real world deployment of this robot is expected now in 2026. As the technology and use case continues to develop, we are optimistic about the long term potential for this market has for VPG and we focus on high precision, high performance segment of this rapidly evolving market.

Moving to Slide five, turning to our weighing solutions segment. Second quarter sales increased 11.3% from the first quarter. The increase was driven primarily by higher sales in the transportation and industrial weighing markets and in our other markets for medical and precision agriculture applications. WAN solution orders grew 3.6% sequentially to 27,200,000.0 resulting in a book to bill of 0.92. Higher orders for Precision Agriculture and Medical Applications and Industrial Weing offset lower orders in the Transportation and General Industrial.

Moving to Slide six. Turning to our Measurement Systems segment. Revenue in the second quarter of nineteen point two million dollars increased 5.1% sequentially. The increase reflected higher sales of DTS data acquisition modules in the AMS market, which offset lower sales to the transportation and steel markets. Second quarter Measurement Systems orders of $23,000,000 increased 18.1% sequentially and resulted in a book to bill of 1.2.

Bookings reflected higher demand primarily in the AMS and steel markets. In the current quarter, we expect to complete the beta installation at the University of Alabama of our new UHTC system. This system is designed to perform band testing on nonconductive materials such as ceramics, which are used in critical high performance applications such as for hypersonic missiles in aerospace as well as in avionics, energy and industrial applications. We believe our differentiated solution can increase test throughput by tenfold while testing materials at ultra high temperature of around 2,000 degrees C that is required for these advanced applications. We are now in discussion with the second university regarding beta testing for this system.

Moving to Slide seven, I would like to provide a brief update on our three top strategic priorities for 2025. First, we are encouraged by our business development initiatives, which generated orders of approximately $17,000,000 through the first half of this year. This puts on track to achieve our goal for 2025 of securing $30,000,000 of orders for either new customers or new application with existing customers. What is significant is not only the magnitude of these orders, but the breadth which runs across our businesses. To support these initiatives, we are continuing to improve our sales processes and systems as well as our use of digital marketing channels.

Second, we continue to reduce costs and increase operational efficiencies through product relocation and efficiency improvements. The measure we have taken through the 2025 put us on course to reduce fixed costs by about 5,000,000 for the full 2025 compared to prior year excluding inflation. These measures entail mainly the consolidated of production and shared services to lower cost countries. Third, we continue to pursue high quality acquisitions to build scale and expand our cash flow. We remain disciplined and patient in our search for the right opportunity.

In summary, we are pleased with the positive order trends, which have continued for the third consecutive quarter and our ongoing progress with our growth and cost initiatives. Global economic activity has remained stable in 2025 and improved modestly in several areas. Despite the ongoing macro uncertainties due to tariffs, trade policies and geopolitical tensions. I will now turn it over to Bill Clancy. Bill?

Bill Clancy, CFO, VPG: Thank you, Steve. Referring to Slide eight and the reconciliation tables of the slide deck, our second quarter twenty twenty five revenues were $75,200,000 Adjusted gross margin of 41% in the second quarter increased by two seventy basis points from 38.3% in the first quarter, reflecting higher volume, favorable product mix and favorable exchange rates, which offset net tariff costs. Sequentially by segment, adjusted gross margin for Sensors of 32.2% increased due to an increase in inventories and favorable FX rates, which offset the impact of lower volume and net tariff costs. Wane Solutions adjusted gross margin of 40.2% increased from the first quarter and reached an all time record, primarily due to higher volume and favorable foreign exchange rates, which offset the impact of net tariff costs. Gross margin for Measurement Systems of 54.6% increased from the first quarter due to higher volume and favorable product mix.

Moving to Slide nine. Our adjusted operating margin of 4.8%, which excluded start up and restructuring costs amounting to 885,000 improved from 1.1% in the 2025. Selling, general and administrative expense for the second quarter was $27,700,000 with 36.9% of revenues, which increased from 26,700,000 with 34.5% of revenues for the 2025. On an adjusted basis, second quarter twenty twenty five SG and A was approximately $27,100,000 or 36% of sales, excluding approximately $500,000 of severance costs. The increase in SG and A is mainly due to unfavorable foreign exchange rates.

The operational tax rate in the second quarter was 31% and for the full year of 2025, we are forecasting an operational tax rate of approximately 28. We reported net earnings of $248,000 or $02 per diluted share. Adjusting for manufacturing startup costs, restructuring, severance costs and foreign currency exchange losses, adjusted net earnings for the second quarter was $2,300,000 or $0.17 per diluted share compared to $468,000 or $04 per diluted share in the 2025. Moving to Slide 10. Adjusted EBITDA was $7,900,000 or 10.5% of revenue compared to 5,100,000 or 7.2% of revenue in the first quarter.

Capital expenditures in the second quarter was $1,300,000 For 2025, we are forecasting $10,000,000 to $12,000,000 for capital expenditures. We generated adjusted free cash flow of $4,700,000 for the second quarter, which compared to $3,700,000 in the first quarter. As of the end of the second quarter, our cash position was $90,300,000 an increase of $6,400,000 from the first quarter. As part of our ongoing cost reduction and efficiency initiatives, in July 2025, we completed the sale of a building which generated approximately $11,000,000 in net proceeds. We used these proceeds to reduce our outstanding bank revolver balance, which will reduce our annual interest expense by about $700,000 Regarding the outlook, for the 2025 at constant 2025 exchange rates, we expect net revenue to be in the range of 73,000,000 to $81,000,000 In summary, bookings of $79,900,000 grew sequentially for the third straight quarter resulting in a book to bill of 1.06.

Our business development initiatives continued to advance and we generated solid cash flow as we continue to implement our cost reduction programs. With that, let’s open the lines for questions. Thank you.

Ezra, Call Coordinator: Thank you very much. We will now open the floor for the Q and A session. Our first question comes from Josh Nichols with B. Riley. Your line is now open.

Please go ahead.

Josh Nichols, Analyst, B. Riley: Yes. Thanks for the question and great to see the continued trend in improving business activity. Just want to touch on for a minute, I think you mentioned you received $17,000,000 of this business development revenue. You have a goal of getting to $30,000,000 this year. Presumably, do you expect some additional revenue from humanoid robot some of your humanoid robotics customers later this year?

And then you mentioned one customer is expected to move into production next year. How do you expect the size of those orders would change relative to what you’re getting today, assuming that that customer does move into production versus earlier stage demo today orders that you guys are doing?

Ziv Shashani, CEO and President, VPG: Good morning. Regarding the humanoid robotics project, as we indicated, we have received a $1,500,000 order from April to July. We are pleased with the progress of this customer and our design position on their robot. At the same time, we have to continue and support the production schedule, which are still changing by our customers. So we may expect to get more orders.

At this point in time, the customer continues to evaluate based on their schedule. But if but potentially, we could see an order, it really depends on the customer. This is regarding the first humanoid customer. The second humanoid customer, I did indicate in prior calls that we did provide an initial prototype lines, prototype products. The feedback was good and we are expecting to provide another we are expecting to see a larger order in the near future.

Regarding 2026, we Vishay Precision Group is set to support our customers regardless of the volume. We are set regarding the infrastructure. And once the customer is ready to ramp up on higher volume, the company is ready to support their production. So based on prior discussions that we had with the customer, once and if there would be changes in volume, we are ready to support those customers. We do hope to see those higher volume orders coming in 2026, but it really depends on the customer schedule.

Josh Nichols, Analyst, B. Riley: Thanks. And just to drill down into that a little bit. I think you previously mentioned somewhere in the range of like $500 to $1,200 per robot. Is that still what you’re expecting? And is the margin profile for these customers relatively in line with the corporate average or a little bit better?

Or how is that going to impact the businesses at scale?

Ziv Shashani, CEO and President, VPG: Okay. I did provide a price range given the volume that has been discussed naturally. Once higher volume would be discussed, We already we understand that probably a different pricing model will have to be supported and the company is prepared for that. Regarding the profit schedule, I think it’s a little bit premature still to provide this type of information.

Josh Nichols, Analyst, B. Riley: Fair enough. Appreciate the detail there. I guess just one more question. I mean, the business activity has been improving, but if you look like I mean, the company has been coming off an extended downturn and now things are starting to pick up. We’ve seen a healthy uptick in operating income.

Meanwhile, you’ve been cash flow positive even throughout the more challenging times. How do you see like the scalability of the business in terms of EBITDA and operating margin as your sales get back up to a higher level of cadence next year and think about the scale that comes into play on the margin front? As you know,

Ziv Shashani, CEO and President, VPG: our financial profile is such that for every incremental dollar of revenue, we do expect it to be around about, I would say, $0.03 0 to $0.40 drop to the pretax level. So this model, we do expect to continue once we would see an upturn in revenue. I should say that given all the cost initiatives that the company has taken during the last two years, we should be even in a better cost position to capitalize profitability once the volume rebound. So if there was a certain schedule regarding the profitability improvements. Once the volume increased historically, we should be in a better position, meaning we the profitability level should be accelerated in respect to the past once volume would rebound.

Josh Nichols, Analyst, B. Riley: Appreciate it. Thanks. I’ll hop back in the queue.

Ezra, Call Coordinator: Thank you very much. Our next question comes from John Franzreb with Sidoti and Company. Your line is now open. Please go ahead.

John Franzreb, Analyst, Sidoti and Company: Hello, everybody, and thanks for taking my questions. I’d like to start with the quarter that we just finished. Ziv, it seems like there is a fair amount of variability in the transportation market for you. Weighing Systems had some good revenue numbers flow through. Measurement Systems didn’t.

I wonder if you could just talk about what’s going on, what are seeing in the transportation side of your business?

Ziv Shashani, CEO and President, VPG: Okay. Great. So regarding transportation, let me start with Measurement Systems. On the Measurement Systems, the upside that we have seen this quarter is coming mainly in the steel, mainly the DSI, the project related AMS and to an extent also the DTS automotive business. What we can or what we have identified is kind of a slower demand in weighing solution is due to the fact that in the first quarter, there were very high orders of transportation for our onboard weighing, which did not repeat itself in the second quarter.

So as a matter of fact, it’s not that the business has been slowing down, It’s just that we did not repeat those large orders in Q1.

John Franzreb, Analyst, Sidoti and Company: So do you think that was just catch up from delayed orders from 2024 in Q1 and now they’re at equilibrium? Any kind of greater Okay.

Ziv Shashani, CEO and President, VPG: So I so the Q1 orders were considered to be six to nine months orders that the customer has placed in Q1 is expected to continue sales are expected to continue in the coming months.

John Franzreb, Analyst, Sidoti and Company: Got it. Got it. And can you talk a little bit also about the steel market? It seems like the order bookings in steel were weak, and I was kind of

Josh Nichols, Analyst, B. Riley: hopeful maybe that they’d be a little

John Franzreb, Analyst, Sidoti and Company: bit stronger given what we’re seeing as far as the macro conditions.

Ziv Shashani, CEO and President, VPG: Okay. So regarding steel, as you know, there are a few moving parts in steel. First, the global steel market as a whole continues to be soft, reflecting slow automotive production and demand and push outs for some electric vehicle model production. Secondly, the tariffs, which are very high on steel and steel related products also makes a significant effect. Our the orders that we have received for steel are not have not been necessarily on our kelp, which is in line or in line equipment inspection in steel mills, but it’s more on the R and D for DSI product.

So there is still a lot of tailwind once the steel business would rebound.

John Franzreb, Analyst, Sidoti and Company: Got it. That helps. And in regards to the $5,000,000 in cost savings, would that program be completed by the third quarter? Or is that going to take to the full year end?

Ziv Shashani, CEO and President, VPG: The $5,000,000 are expected to end in Q4. And I believe that for the first six months, we have captured $2,800,000 out of the $5,000,000

Josh Nichols, Analyst, B. Riley: $2,800,000

John Franzreb, Analyst, Sidoti and Company: Got it. And just a little bit of thought about how July looks, the trends for the company overall compared to what you saw the monthly trends in June I mean, I’m sorry, in the second quarter?

Ziv Shashani, CEO and President, VPG: I would regarding July at this point in time, I would say since it’s already providing information regarding the third quarter, at this point, I could say there are no surprises to us.

John Franzreb, Analyst, Sidoti and Company: One last question. One last question. Should the robotics actually begin production in 2026? At what point would you actually have to add capacity to meet some of the projections for 02/1930? Have you I’m sure you thought about that, but can you maybe share with us what that what the ramp would look like as far as you’re concerned?

Ziv Shashani, CEO and President, VPG: As I indicated, the ramp up I mean, the ramp up schedule is very much dependent on our customers. Share with our customers capacity, equipment capacity and our headcount, and we are working hand to hand that our capabilities and capacities would be in line with their demand. So to that extent, I think there is a very good collaboration between the two companies. And they would give us enough heads up and enough information that we would be there with enough capacity to support them. We are not going to be the bottleneck.

Now regarding the timing and the schedule, it’s up to them. We do hope that it would be sooner rather than later. It’s really

Steve Cantor, Senior Director of Investor Relations, VPG: Fair enough.

John Franzreb, Analyst, Sidoti and Company: Guys, finish, Steve. I think I lost you. Sorry? I’m sorry. I’m sorry.

I think I lost you.

Bill Clancy, CFO, VPG: I think was finished, John.

John Franzreb, Analyst, Sidoti and Company: Okay. I’ll get back into queue and somebody else takes questions. Thank you, guys.

Ezra, Call Coordinator: Thank you very much. We currently have no further questions. So I will hand back over to Steve for any closing remarks.

Steve Cantor, Senior Director of Investor Relations, VPG: Thank you. Before concluding our call today, I want to note that we will be participating in two upcoming investor conferences, the three part Advisors’ Ideas Conference in Chicago on August 27 and the Jefferies Industrials Conference in New York on September 3. You can contact us for more information about them. And with that, thank you for joining our call today.

Ezra, Call Coordinator: Thank you very much, Steve, and thank you everyone for joining. That concludes today’s call. You may now disconnect your lines.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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