Earnings call transcript: Vishay Precision Q3 2025 beats forecasts, shares dip

Vishay Precision Group (VPG) reported its Q3 2025 earnings, surpassing both EPS and revenue forecasts. Despite the positive results, the company's stock price saw a decline in pre-market trading. The company's earnings per share (EPS) came in at $0.26, exceeding the forecasted $0.20, while revenue reached $79.7 million, above the expected $76.57 million. However, the stock dropped 2.53% to $37.05 in pre-market trading, reflecting investor concerns over broader market challenges.

Key Takeaways

• EPS of $0.26 beat the forecast by 30%.
• Revenue of $79.7 million exceeded expectations by 4.09%.
• Stock price fell 2.53% in pre-market despite strong earnings.
• Sensors segment revenue increased by 19.1% sequentially.
• Challenges persist in defense and space projects.

Company Performance

Vishay Precision Group demonstrated robust performance in Q3 2025, with revenue increasing by 6.1% from Q2 and 5.3% year-over-year. The company reported a strong adjusted gross margin of 40.5% and an adjusted operating margin of 6.2%. The sensors segment was a standout performer, with a 19.1% sequential revenue increase, highlighting the company's strength in high-performance sensor niches.

Financial Highlights

• Revenue: $79.7 million, up 6.1% from Q2 and 5.3% year-over-year.
• Earnings per share: $0.26, surpassing the forecast of $0.20.
• Adjusted EBITDA: $9.2 million, representing 11.5% of revenue.
• Net cash position: $65.8 million.

Earnings vs. Forecast

Vishay Precision Group's Q3 2025 EPS of $0.26 exceeded the forecast of $0.20 by 30%, marking a significant earnings surprise. The revenue of $79.7 million also surpassed the expected $76.57 million by 4.09%. This performance reflects the company's ability to outperform market expectations consistently.

Market Reaction

Despite the positive earnings surprise, VPG's stock price fell by 2.53% to $37.05 in pre-market trading. This decline may be attributed to broader market concerns and specific challenges in the defense and space sectors. The stock remains near its 52-week high of $38.9, indicating overall investor confidence in the company's long-term prospects.

Outlook & Guidance

Looking ahead, Vishay Precision Group forecasts Q4 2025 revenue between $75 million and $81 million. The company plans to focus on business development initiatives, particularly in humanoid robotics, and aims to achieve $5 million in annualized cost reductions by year-end, with $4 million already realized.

Executive Commentary

CEO Zeev Shashani expressed satisfaction with the quarter's results, stating, "We are pleased with the solid quarter. We see a stable, moderately improved business environment." CFO Bill Clancy highlighted the company's focus on humanoid robotics, noting, "We remain excited about the potential of our business development initiatives."

Risks and Challenges

• Ongoing softness in transportation, construction, and precision agriculture markets.
• Delays in defense and space projects due to the U.S. government shutdown.
• Potential market saturation in existing sensor niches.

Q&A

During the earnings call, analysts inquired about the stability of the weighing solutions market and the potential for additional humanoid robotics customers. Management acknowledged the stable environment for weighing solutions and expressed optimism about expanding their humanoid robotics customer base.

Full transcript - Vishay Precision Group Inc (VPG) Q3 2025:

Claire, Call Coordinator: Welcome, everyone. The VPG Third Quarter twenty twenty five Earnings Call will begin shortly. Hello, everyone, and thank you for joining the VPG Third Quarter twenty twenty five Earnings Call. My name is Claire, and I will be coordinating your call today. I will now hand over to Steve Cantor from VPG to begin.

Please go ahead.

Steve Cantor, Investor Relations, VPG: Thank you, operator, and good morning, everyone. Welcome to VPG's third quarter twenty twenty five earnings conference call. Our Q3 press release and accompanying 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 can also be accessed on the VPG 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 Zeev Shashani, CEO and President and Bill Clancy, CFO. I'll now turn the call to Zeev for some prepared remarks. Please refer to Slide three of the quarterly presentation.

Ziv?

Zeev Shashani, CEO and President, VPG: Thank you, Steve. I will begin with some commentary on our results and trends for the third quarter. Bill will then provide financial details about the quarter and our outlook for the 2025. Moving to slide three, beginning with revenue, third quarter revenue of $79,700,000 grew 6.1% from the second quarter and was up 5.3% from the prior year. Total bookings of $79,700,000 were at similar levels with the second quarter, reflecting mixed but stable global trends.

Strong double digit growth in sensors offset lower orders for weighing solutions and measurement systems sequentially. Our consolidated book to bill was one point zero, marking the fourth sequential quarter with a book to bills of one point zero or higher. Our Sensors and Measurement Systems segment reported a book to bills of one point zero seven and one point zero four respectively. Our adjusted gross margin of 40.5% reflected improved in the Sensors segment and another record quarter for Weighing Solutions segment. However, consolidated gross margin included a significant impact from unfavorable FX and product mix, which offset the effect of the higher sequential revenue.

We achieved an adjusted operating margin of 6.2%, which improved compared to both Q2 and the prior year. We continue to make progress with our long term business development and cost optimization initiatives. This translated into a solid cash generation with $9,200,000 in adjusted EBITDA and $7,400,000 in adjusted free cash flow. We successfully mitigated the impact of tariff cost to a price adjustment to our customers and do not believe tariffs impacted demand. Moving to slide four.

Beginning with our Sensors segment, third quarter revenue increased 19.1% sequentially, reflecting higher sales of precision resistors in the test and measurement and AMS and higher sales of stringages in the general industrial market. Sensor bookings rose 13.5% sequentially, reaching the highest level in 12 quarters and resulted in a book to bill of 1.07. The bookings growth was driven by demand from precision resistors for semiconductor test and AMS applications. We expect this momentum to continue in the fourth quarter as some distributors replenish inventories for AMS applications. Regarding humanoid robots, we are optimistic about the long term potential for VPG in the emerging markets.

While humanoid robots market is still in its infancy and initial real world deployment of this robot is expected in 2026, we believe we are in a good position in high performance niches for our sensor technology. We received $1,800,000 in orders from July to October related to our two current humanoid developer customers. This included prototype orders of approximately 600,000 from our second humanoid customer in October. This brings the total orders year to date to approximately 3,600,000.0 related to humanoid projects. We are also in the initial discussions with additional developers of humanoid.

Moving to slide five. Moving to our Weighing Solutions segment. Third quarter sales decreased 6.4% from the second quarter. The decline reflected lower sales in the transportation market as well as in the construction and precision ag equipment markets. Weighing Solutions orders of $24,500,000 were about 10% lower compared to the second quarter, resulting in a book to bill of 0.89.

Order trends for Weighing Solutions softened, but were at stable levels. Moving to Slide six. Turning to our Measurement Systems segment, revenue in the third quarter of $20,600,000 increased 7.3% sequentially. The increase reflected higher sales to the steel market of our calc and DSI products. Third quarter Measurement Systems orders of $21,400,000 decreased 6.9% sequentially and resulted in a book to bill of 1.04.

The lower sequential bookings reflected ongoing softness in DTS due to delays related to defense and space government projects. We expect delays in some of these defense projects to continue into the fourth quarter due to The U. S. Government shutdown. We were pleased to receive an order from Stony Brook University for the beta of our new UHTC system.

This is the second university which ordered the system. This system designed to perform band testing on nonconductive materials such as ceramics, which are used in critical high performance applications such as hypersonic missiles in aerospace as well as in avionics, energy and industrial applications. Moving to slide seven, I'll now provide an update on our strategic priorities for 2025. First, we generated approximately $26,000,000 in business development orders through the first nine months of this year, which put us on track to achieve our $30,000,000 goal for 2025. Second, regarding our cost efficiency goals for 2025, we expect to have in place $5,000,000 of annualized cost reductions by the end of this year.

We also continue to execute our ongoing operational efficiency plans with the sale of a building in July. Third, we also continued to look for attractive M and A opportunities. Our strategic priorities are designed to increase growth and profitability. They reflect several years of focused investments and have built strong foundation to reach our long term financial goals even on a lower revenue than we originally expected. As VPG enters this next phase, we are expanding our senior leadership team with two new C suites roles.

We have appointed Yairal Kobi to the newly created position of Chief Business and Product Officer responsible for overseeing sales, marketing, product strategy and business development. Yair brings considerable experience in accelerating growth and profitability from his previous executive leadership roles at leading industrial tech companies, including in the semiconductor test market for KLA TENCO among others. We have also appointed Rafael Zan to the newly created role of Chief Operating Officer to lead VPG's manufacturing and our operational excellence initiatives. Rafi has more than thirty years of experience in key executive and operational roles for VPG and Vishay Intertechnology including as Senior Vice President and Head of our Weighing Solutions segment. I want to welcome these two executives to our senior team and look forward to their contributions to delivering business excellence and execution, which are prime strategic trusts for VPG.

Yair and Rafi will help drive our focused mainstream global trends, increase the speed of innovation and R and D and leverage our strong brands. I believe these new positions will enhance and accelerate value to our customers and stockholders and will also allow me to focus on continuing to build a dynamic culture supporting future growth and scalable M and A strategy. In summary, we are pleased with the solid quarter. We see stable, moderately improved business environment. We are making organizational changes that align our reporting segment to accelerate top line growth and strengthen our operational excellence.

We are continuing to make progress with our business development initiatives, including supporting our humanoid customers. I will now turn it over to Bill Clancy. Bill?

Bill Clancy, CFO, VPG: Thank you, Ziv. Referring to Slide eight and the reconciliation tables of the slide deck, our third quarter twenty twenty five revenues were $79,700,000 Adjusted gross margin was 40.5% in the third quarter. Compared to 41% in the second quarter, the third quarter gross margin was impacted by $600,000 of unfavorable foreign exchange and $800,000 from unfavorable product mix, which offset higher volume and tariff related net price adjustments. Sequentially by segment, adjusted gross margin for the Sensors of 33.7% increased primarily from volume and tariff related net price adjustments, partially offset by a decrease in inventories and unfavorable foreign exchange rates. The Weighing Solutions adjusted gross margin of 40.3% increased slightly from the second quarter and reached an all time record, primarily reflecting tariff related net price adjustments and cost reductions, partially offset by lower volume.

The gross margin for the Measurement Systems of 51.1% declined from the second quarter due primarily to unfavorable product mix. Moving to Slide nine. Our adjusted operating margin was 6.2%, which excluded start up costs, restructuring costs and purchase accounting adjustments amounting to $362,000 and the gain on the sale of a building of $5,500,000 This improved from 4.8% in the 2025. Selling, general and administrative expenses for the third quarter was $27,200,000 or 34.2 percent of revenues, which decreased from $27,700,000 or 36.9% of revenues for the 2025. The operational tax rate in the third quarter was 26%.

And for the full year of 2025, we are forecasting an operational tax rate of approximately 28%. We reported net earnings of $7,800,000 or $0.58 per diluted share. Adjusted net earnings for the third quarter was $3,500,000 or $0.26 per diluted share compared to $2,300,000 or $0.17 per diluted share in the 2025. Moving to Slide 10. Adjusted EBITDA was $9,200,000 or 11.5% of revenue compared to $7,900,000 or 10.5% of revenue in the second quarter.

CapEx in the third quarter was $2,200,000 For the full year of 2025, we are forecasting $10,000,000 for capital expenditures. We increased our adjusted free cash flow to 7,400,000 for the third quarter from $4,700,000 in the second quarter. As of the end of the third quarter, our cash position was $86,300,000 and our long term debt was $20,500,000 giving us a net cash position of $65,800,000 This reflects the debt pay down of $11,000,000 from the proceeds of the sale of a building in July. Regarding the outlook, for the 2025 at constant third fiscal quarter twenty twenty five exchange rates, we expect net revenues to be in the range of $75,000,000 to $81,000,000 In summary, we grew sales quarter to quarter and year to date. We continue to improve our operating margin, which reflect our cost reduction and efficiency programs and we remain excited about the potential of our business development initiatives, particularly in humanoid robotics.

With that, let's open the lines for questions. Thank you.

Claire, Call Coordinator: Thank you. Our first question comes from John Franzeb from Sidoti. Your line is now open. Please go ahead.

John Franzeb, Analyst, Sidoti: Morning, everyone, and thanks for taking the questions. Ziv, I guess I'm kind of curious firstly about maybe the disconnect that we're seeing in the Weighing Solutions business. And by that I mean the book to bill has been below one for a couple of quarters, but the revenue has kind of held up relatively well. Is that becoming a shorter cycle business or maybe you could provide some color there?

Zeev Shashani, CEO and President, VPG: Sure, absolutely. Regarding Weighing Solutions, the Weighing Solutions business relies on few pillars. First, we have the OEM business, which is encompass which consists of precision ag and construction. Those large companies, given the interest rates and the environment, do see a significant slowdown. On the other hand, the general industrial or the general sorry, the general weighing business, That's the other piece is very much linked to the industrial sector, which is also fairly stable.

On the regarding the onboard weighing, the main driver there is the European economy, which is improving, but we have to an extent the seasonal effect for Q3. Regarding the overall booking for this segment, we see a fairly stable environment, but still the larger companies do not see a significant upside from demand. And what we mainly see is replenishment of the pipeline of the queue in the And

John Franzeb, Analyst, Sidoti: the record gross margin of 40.3%, is that a sustainable number on an annualized basis? I get there should be some seasonality in Q4. But how should we think about that going forward into 2026?

Zeev Shashani, CEO and President, VPG: There are significant cost reduction initiatives in this segment as we continue to streamline our manufacturing from other parts of the world to India. So given the continuous operational excellence, I would say, initiatives at a similar revenue level, this gross margin is sustainable.

John Franzeb, Analyst, Sidoti: That's excellent to hear. And just sticking on the cost savings topic, do you expect $5,000,000 to be realized by the end of the year? And I assume that's on an annualized basis. But what's the year to date? How much of that $5,000,000 has been realized?

Zeev Shashani, CEO and President, VPG: We do expect to meet the 5,000,000 by the end of the year. And you are correct, this is an annualized number. And by now, we already reached $4,000,000

Josh Nicholas, Analyst, B. Riley: That's great. And you touched on

Zeev Shashani, CEO and President, VPG: the first

John Franzeb, Analyst, Sidoti: go ahead. Yes, sorry. No, I heard you. And on the Humanoids robotics topic, you mentioned that you expect more shipments in 2026. Can you give us a sense of what kind of ramp that you expect to see?

And will you need to add any manufacturing square footage to meet that demand? Absolutely.

Zeev Shashani, CEO and President, VPG: As I indicated, year to date, we have received $3,600,000 of orders from two humanoid suppliers customers. One, we are ahead with the design and the other, we are in the prototype levels. Already now, there are some discussions regarding higher volume production and there are discussions between us and our customers regarding VPG capability to support higher volume manufacturing. At this point in time, and unfortunately, I cannot get to specifics, but there are discussions we don't know what is the ramp up time and how quickly they are going to ramp up. But they are preparing for a higher volume application.

And when time comes, they will we will continue to have this conversation and to be prepared to support our customers.

John Franzeb, Analyst, Sidoti: Okay. With that, actually, I'll get back into queue. Thank you.

Steve Cantor, Investor Relations, VPG: Thank you.

Claire, Call Coordinator: Thank you. Our next question comes from Josh Nicholas from B. Riley. Josh, your line is now open. Please go ahead.

Josh Nicholas, Analyst, B. Riley: Yes, thanks for taking my question. Good to see the orders from the two humanoid customers. You mentioned briefly on the call that you're in discussions with other potential customers as well. Do you think there's opportunities to bring at least one new customer into the fold over the next couple of quarters? Or where are you in those early additional customer discussions today?

Zeev Shashani, CEO and President, VPG: We are in the engineering dialogue providing or discussing a certain solution or a certain sensing solution to their humanoid. I would say that we don't have such a visibility to know exactly when they would approve the design even with some of the earlier discussions. Our customers have continued to change the design. They didn't freeze the design. It took them quite some time.

So it's hard to tell. But I think that the main thing is that our customers do see and believe that VPG can provide value added when it comes to those sensing solutions. And this is why they approach us and this is why they are ready to or they would like to work with us for their application. So those are definitely good sign, but it's very hard to know exactly where we are in the design stage given their, I would say, proprietary process.

Josh Nicholas, Analyst, B. Riley: Fair enough. And again, for these new business development initiatives, 26,000,000 for the first nine months on track to hit 30,000,000 Does that imply some additional expected humanoid orders in the fourth quarter? Is that coming from other new areas of the business like ceramics overall?

Zeev Shashani, CEO and President, VPG: The $26,000,000 are coming from very different applications. Humanoid is part of them. We have also, as you indicated, the ceramics. We have also some other designs for semiconductor back end testing for, I would say, fiber optics. It comes from many, many different new applications across the complete company, across all the divisions.

Josh Nicholas, Analyst, B. Riley: And then last question for me. I think you mentioned there was a little bit of softness related specifically for defense associated with like the U. S. Government shutdown and that likely to continue into 4Q. Could any way you could quantify the impact to 3Q or what type of impact do you expect that to have to Q based on the guidance that you kind of laid out?

Zeev Shashani, CEO and President, VPG: Absolutely. I we believe that given The U. S. Government shutdown, the effect is going to be mainly on our measurement system division. I would say more specifically on the for DTS product line, where we know that we I mean, there is a challenge having discussions or even placing orders or shipping.

So I would say that I would be a little bit more cautious to put a number, but it definitely would be the effect will be at least in the hundreds of thousands of dollars, if not more. That's really the kind of the ballpark.

Josh Nicholas, Analyst, B. Riley: Appreciate it. Thank you.

Claire, Call Coordinator: Thank you. We currently have no further questions. I'll hand back to Steve Cantor for closing remarks.

Steve Cantor, Investor Relations, VPG: Before we conclude, I want to note that VPG will be presenting at the three part Advisors' Ideas Conference later this month and the Sidoti Virtual Conference in December, and you can contact me for more details. And with that, we thank you for joining our call, we look forward to updating you next quarter.

Claire, Call Coordinator: This concludes today's call. Thank you all for joining. You may now disconnect your lines.

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