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DATE
Tuesday, Nov. 4, 2025, at 9 a.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Ziv Shoshani
- Chief Financial Officer — Bill Clancy
- Vice President, Investor Relations — Steve Cantor
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RISKS
- CEO Shoshani said, "We believe, given the US government shutdown, the effect is going to be mainly on our Measurement Systems division. I would say more specifically on the DPS product line, where we know 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 this effect will be at least in the hundreds of thousands of dollars, if not more. But that's really the kind of the bulk part."
- Orders for Weighing Solutions declined approximately 10% sequentially, resulting in a book-to-bill of 0.89, reflecting lower demand from the transportation, construction, and precision agriculture markets.
- Measurement Systems bookings decreased 6.9% sequentially due to delays related to defense and space government projects, with management expecting these delays to continue in the next quarter.
TAKEAWAYS
- Bookings -- Stable sequentially, with the consolidated book-to-bill ratio at 1.0 for the fourth consecutive quarter.
- Sensors Segment Revenue -- Up 19.1% sequentially, driven by higher sales of precision resistors and strain gauges for test and measurement, AMS, and general industrial markets.
- Sensors Segment Bookings -- Rose 13.5% sequentially to the highest level in twelve quarters, resulting in a book-to-bill of 1.07.
- Measurement Systems Revenue -- Attributable to higher sales in the steel market.
- Measurement Systems Book-to-Bill -- 1.04, with segment bookings at $21.4 million.
- Weighing Solutions Sales -- Decreased 6.4% sequentially, with order softness in transportation, construction, and precision agricultural equipment markets.
- Weighing Solutions Book-to-Bill ratio -- 0.89.
- Adjusted Gross Margin -- Adjusted gross margin was 40.5%, reflecting improvements in Sensors and a record for Weighing Solutions, though impacted by $600,000 in unfavorable foreign exchange and $800,000 from unfavorable product mix.
- Sensors Adjusted Gross Margin -- 33.7% adjusted gross margin for the Sensors segment, improved primarily from higher volume and net price adjustments; partially offset by inventory reductions and FX.
- Weighing Solutions Adjusted Gross Margin -- 40.3% adjusted gross margin for the Weighing Solutions segment, a new high, aided by tariff-related price adjustments and cost reductions; offset by lower volume.
- Measurement Systems Adjusted Gross Margin -- 51.1% adjusted gross margin for the Measurement Systems segment, driven mainly by unfavorable product mix.
- Adjusted Operating Margin -- 6.2% and excluded $162,000 in costs and a $5.5 million building sale gain.
- Selling, General, and Administrative Expenses -- $27.2 million or 34.2% of revenues.
- Adjusted Free Cash Flow -- Adjusted free cash flow was $7.4 million.
- Net Cash Position -- $65.8 million at quarter-end, following the $11 million debt paydown from the July building sale.
- Business Development Orders -- $26 million in business development orders for the first nine months of 2025.
- Annualized Cost Reduction -- $4 million realized year-to-date; targeting $5 million by year-end.
- Humanoid Robotics Orders -- $3.6 million in year-to-date orders related to the humanoid project, with $1.8 million received from July to October 2025 from two developers, including $600,000 in October prototype orders for the second customer.
- Revenue Guidance -- Management expects next quarter net revenues between $75 million and $81 million at constant currency.
- Leadership Changes -- Two new roles created: Chief Business and Product Officer (Yair Al-Kobi) and Chief Operating Officer (Rafael Zan) to drive growth and operational excellence.
SUMMARY
Vishay Precision Group (VPG 4.72%) management highlighted continued momentum in the Sensors segment, with strong precision resistor demand for semiconductor testing and AMS, and described stable but mixed global order trends across segments. The call emphasized customer diversification in new applications -- such as ceramics and fiber optics -- supporting business development progress beyond the humanoid robotics opportunity. The company noted enduring cost discipline, further operational streamlining, and reaffirmed strategic M&A as a growth lever.
- CEO Shoshani said, "given the continuous operational excellence initiatives, at a similar revenue level, this gross margin is sustainable," signaling confidence in cost structure durability.
- Current humanoid robotics orders are primarily in the prototype and design-validation phase, while order timing and future scale-up remain uncertain pending customer design finalization.
- The company successfully used price adjustments to offset tariff impacts, stating, "We do not believe tariffs impacted demand."
- Booking softness in select markets is attributed to macroeconomic factors, including higher interest rates affecting large OEM demand and ongoing government shutdown effects on the defense pipeline.
INDUSTRY GLOSSARY
- Book-to-Bill Ratio: The ratio of orders received (bookings) to sales billed in the same period, an indicator of future demand trends for a given segment.
- AMS: Advanced Measurement Systems, referencing end-market applications or internal company product categories related to high-performance electronic testing and measurement.
- DTS: Likely refers to a VPG Measurement Systems product line focused on defense, test, and space applications.
- UHTC system: Ultra-High Temperature Ceramic system, a specialized VPG material testing product for aerospace and industrial markets.
Full Conference Call Transcript
Ziv Shoshani: 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 2025. Moving to Slide three. Beginning with revenue, third quarter revenue of $79.7 million grew 6.1% from the second quarter and was up 5.3% from the prior year. Total bookings of $79.7 million 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 1.0, marking the fourth sequential quarter with a book-to-bill of 1.0 or higher.
Our sensors and measurement system segment reported a book-to-bill of 1.07 and 1.04, respectively. Our adjusted gross margin of 40.5% reflected improvement in the Sensors segment and another record quarter for the 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 solid cash generation with $9.2 million in adjusted EBITDA and $7.4 million in adjusted free cash flow.
We successfully mitigated the impact of tariff costs through 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 strain gauges in the general industrial market. Sensor bookings rose 13.5% sequentially, reaching the highest level in twelve 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 market. While the 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 $1.8 million 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 $3.6 million related to the humanoid project. We are also in initial discussions with additional developers of humanoids. Moving to Slide five, moving to our Weighing Solutions segment.
Third quarter sales decreased 6.4% from the second quarter. The decline reflects lower sales in the transportation market as well as in the construction and precision ag equipment market. Weighing solution orders of $24.5 million 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 remained at a stable level. Moving to Slide six, turning to our Measurement Systems segment, revenue in the third quarter of $20.6 million increased 7.3% sequentially. The increase reflected higher sales to the steel market of our Kelk and DSI product. Third quarter Measurement Systems orders of $21.4 million 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 US 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 is 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 now provide an update on our strategic priorities for 2025.
First, we generated approximately $26 million in business development orders through the first nine months of this year, which puts us on track to achieve our $30 million goal for 2025. Second, regarding our cost efficiency goals for 2025, we expect to have in place $5 million 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 continue to look for attractive M&A opportunities. Our strategic priorities are designed to increase growth and profitability.
They reflect several years of focused investments and have built a strong foundation to reach our long-term financial goals even on lower revenue than we originally expected. As VPG enters this next phase, we are expanding our senior leadership team with two new C-suite roles. We have appointed Yair Al-Kobi to the newly created position of Chief Business and Product Officer, responsible for overseeing sales, market, 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-Tencor 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. 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 to our senior team and look forward to their contributions to delivering business excellence and execution, which are prime strategic thrusts for VPG. Yair and Rafi will help drive our focused mainstream global trends, increase the speed of innovation, and R&D, and leverage our strong brand.
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 of supporting future growth and scalable M&A strategy. In summary, we are pleased with the solid quarter. We see a stable, moderately improved business environment. We are making organizational changes that align our reporting segment to accelerate top-line growth and strengthen our operational. We are continuing to make progress with our business development initiatives, including supporting our humanoid customers. We will now turn it over to Bill Clancy. Bill?
Bill Clancy: Thank you, Ziv. Referring to slide eight and the reconciliation tables of the slide deck. Our third quarter 2025 revenues were $79.7 million. 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 startup costs, restructuring costs, and purchase accounting adjustments amounting to $162,000 and the gain on the sale of a building of $5.5 million. This improved from 4.8% in 2025.
Selling, general, and administrative expenses for the third quarter were $27.2 million or 34.2% of revenues, which decreased from $27.7 million or 36.9% of revenues for 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 $7.8 million or $0.58 per diluted share. Adjusted net earnings for the third quarter were $3.5 million or $0.26 per diluted share compared to $2.3 million or $0.17 per diluted share in 2025. Moving to Slide 10. Adjusted EBITDA was $9.2 million or 11.5% of revenue compared to $7.9 million or 10.5% of revenue in the second quarter.
CapEx in the third quarter was $2.2 million. For the full year of 2025, we are forecasting $10 million for capital expenditure. We increased our adjusted free cash flow to $7.4 million for the third quarter from $4.7 million in the second quarter. As of the end of the third quarter, our cash position was $86.3 million and our long-term debt was $20.5 million, giving us a net cash position of $65.8 million. This reflects the debt paydown of $11 million from the proceeds of the sale of a building in July. Regarding the outlook for 2025, at constant third fiscal quarter 2025 exchange rates, we expect net revenues to be in the range of $75 million to $81 million.
In summary, we grew sales quarter to quarter and year to date. We continued to improve our operating margin, which reflects our cost reduction and efficiency program. 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.
Steve Cantor: Thank you.
Operator: To ask a question, if you change your mind, please press star followed by 2. When preparing to ask a question, please ensure your device is not muted. Our first question comes from John Franzreb from Sidoti. Your line is now open. Please go ahead.
John Franzreb: Good 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 solutions business. And by that, I mean, the book-to-bill has been below one for a couple quarters, but the revenue's kind of held up relatively well. Is that becoming your shorter cycle business or maybe you could provide some color there?
Ziv Shoshani: Sure. Absolutely. Regarding weighing solutions, the weighing solution business relies on a few pillars. First, we have the OEM business, 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 weighing business, that's the other piece, is very much linked to the industrial sector, which is also fairly stable. Regarding the onboard weighing, the main driver there is the European economy, which is improving. But we have to an extent a 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 a replenishment of the pipeline.
John Franzreb: And 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?
Ziv Shoshani: The significant cost reduction initiative in this segment as we continue to streamline our manufacturing from other parts of the world to India. So given the continuous operational excellence initiatives, at a similar revenue level, this gross margin is sustainable.
John Franzreb: That's excellent to hear. And just sticking on the cost savings topic, do you expect $5 million 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 million has been realized?
Ziv Shoshani: We do expect to meet the $5 million by the end of the year, and you are correct. This is an annualized number. And by now, we already reached $4 million.
John Franzreb: That's great. And you touched on the first go ahead. Yeah. Sorry. The No. You got I heard you. And on the humanoid robotics topic, you mentioned that you expect more shipments in 2026. Do you have the manufacturing square footage to meet that demand?
Ziv Shoshani: Absolutely. As I indicated, year to date, we have received $3.6 million 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's capability to support higher volume manufacturing. At this point in time, unfortunately, I cannot get into specifics, but there are discussions. We do not 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 the time comes, we will continue to have this conversation and be prepared to support our customers.
John Franzreb: Okay. With that, actually, I'll get back into the queue. Thank you.
Ziv Shoshani: Thank you.
Operator: Our next question comes from Josh Nicholas from B. Riley.
Josh Nicholas: 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 an opportunity 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?
Ziv Shoshani: 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 do not have such 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 did not 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 signs. But it's very hard to know exactly where we are in the design stage given their proprietary processes.
Josh Nicholas: Fair enough. And, again, these new business development initiatives, $26 million for the first nine months. On track to hit $30 million. 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?
Ziv Shoshani: The $26 million are coming from very different applications, humanoid being 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: And then last question for me. I think you mentioned there's a little bit of softness related to defense associated with, like, the US government shutdown, and that is likely to continue into April. Could you quantify the impact to 3Q? Or what type of impact do you expect that to have based on the guidance you laid out?
Ziv Shoshani: Sure. Absolutely. We believe, given the US government shutdown, the effect is going to be mainly on our Measurement Systems division. I would say more specifically on the DPS product line, where we know 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 this effect will be at least in the hundreds of thousands of dollars, if not more. But that's really the kind of the bulk part.
Josh Nicholas: Appreciate it. Thank you.
Operator: Thank you. To ask a question, we currently have no further questions. So I'll hand back to Steve Cantor for closing remarks.
Steve Cantor: Before we conclude, I want to note that VPG will be presenting at the Three Part Advisers Ideas Conference later this month and the Sidoti Virtual Conference in December. You can contact me for more details. And with that, we thank you for joining our call, and we look forward to updating you next quarter.
Operator: This concludes today's call. Thank you all for joining. You may now disconnect your lines.