Vishay Precision Group Inc Reports Decline in Q4 and Full Year 2023 Earnings
Revenue: Q4 revenue decreased by 7.0% year-over-year to $89.5 million.
Net Earnings: Q4 diluted net earnings per share fell to $0.31 from $0.65 in the prior year.
Gross Profit Margin: Improved to 43.0% in Q4 from 41.2% a year ago.
Operating Margin: Slightly decreased to 13.4% in Q4 from 13.6% in the same period last year.
Adjusted EBITDA: Reached $16.5 million in Q4 with an adjusted EBITDA margin of 18.5%.
Free Cash Flow: Adjusted free cash flow for the year was a record $30.8 million.
Outlook: Q1 2024 revenue expected to be between $80 million and $90 million.
Vishay Precision Group Inc (NYSE:VPG) released its 8-K filing on February 14, 2024, detailing its financial performance for the fourth quarter and full fiscal year ended December 31, 2023. The company, known for its precision measurement technologies, including sensors and sensor-based measurement systems, as well as specialty resistors and strain gages, faced a challenging macro environment in the latter half of the year.
VPG operates in three segments: Sensors, Weighing Solutions, and Measurement Systems, with a significant portion of its revenue generated in the United States. Despite a decrease in revenues, the company reported an improvement in gross profit margins for both the fourth quarter and the full year, attributing this to favorable foreign exchange rates and improved manufacturing efficiencies.
Financial Performance Analysis
The company's fourth-quarter revenue saw a 7.0% decrease compared to the same period last year, settling at $89.5 million. This decline was also reflected in the full-year revenue, which decreased by 2.1% to $355.0 million. However, VPG's gross profit margin improved from 41.2% to 43.0% in the fourth quarter, and from 41.3% to 42.3% for the full year, indicating a more efficient cost management.
Operating margins saw a slight decrease in the fourth quarter, from 13.6% to 13.4%, while the full-year operating margin also dipped from 12.1% to 11.8%. Diluted net earnings per share in the fourth quarter dropped significantly to $0.31 from $0.65 in the previous year, and full-year earnings per share decreased from $2.63 to $1.88.
Despite the revenue and earnings per share decline, VPG achieved a record adjusted free cash flow of $30.8 million for the year. The company's CEO, Ziv Shoshani, commented on the resilience of the financial results and the record cash flow, highlighting the repayment of the revolving credit facility and stock repurchases as measures to create stockholder value.
We achieved solid financial results and record adjusted free cash flow in fiscal 2023, despite a more challenging macro environment in the second half of the year," said Ziv Shoshani, CEO of VPG.
Segment Performance and Future Outlook
The Sensors segment experienced a 5.7% decrease in revenue year-over-year, while the Weighing Solutions segment saw an 8.0% decline. The Measurement Systems segment's revenue decreased by 7.5% compared to the previous year. Despite these decreases, the company's gross profit margins improved across segments, with the Measurement Systems segment achieving a notable 56.0% in the fourth quarter.
Looking ahead, VPG anticipates first-quarter 2024 revenues to be in the range of $80 million to $90 million. This forecast is based on constant exchange rates from the fourth fiscal quarter of 2023.
The company's balance sheet remains strong with $83.9 million in cash and cash equivalents as of December 31, 2023. The reduction in long-term debt from $60.8 million to $31.9 million year-over-year reflects the company's commitment to maintaining a solid financial position.
In conclusion, Vishay Precision Group Inc's financial results for the fourth quarter and full year of 2023 demonstrate the company's ability to navigate a challenging economic landscape while maintaining profitability and generating strong cash flow. Investors and stakeholders will be watching closely to see if the expected improvements in the business environment materialize in the latter half of 2024.
Explore the complete 8-K earnings release (here) from Vishay Precision Group Inc for further details.
This article first appeared on GuruFocus.
