VPG Q1 Earnings Call: Management Cites Order Recovery Amid Revenue Miss and Cautious Outlook

Precision measurement and sensing technologies provider Vishay Precision (NYSE:VPG) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 11.2% year on year to $71.74 million. Next quarter’s revenue guidance of $73 million underwhelmed, coming in 3.6% below analysts’ estimates. Its non-GAAP profit of $0.04 per share was 42.9% below analysts’ consensus estimates.

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StockStory’s Take

Vishay Precision’s first quarter results reflected continued softness in the company’s end markets, with CEO Ziv Shoshani attributing the revenue decline to delays in KELK product shipments, ongoing weakness in the global steel and automotive sectors, and slower demand from aerospace and defense customers. Shoshani highlighted that Sensors segment orders improved, particularly from the semiconductor and robotics sectors, and emphasized the company’s progress in business development initiatives targeting new applications and customers.

Looking ahead, management described the near-term outlook as uncertain, noting that order patterns show only modest recovery with most demand coming from customers replenishing inventory rather than broad-based market growth. Shoshani stated, “We do expect the demand to continue. Initially, we don't see...a significant upside from real demand,” and reaffirmed cost reduction efforts and ongoing business development as central to their 2025 strategy. CFO Bill Clancy projected most planned capital investment and operational savings would take shape in the second half of the year, with the company maintaining discipline on capital allocation and M&A.

Key Insights from Management’s Remarks

Vishay Precision’s leadership attributed Q1 performance to delayed shipments, market softness, and targeted growth initiatives. Forward guidance remains cautious as management sees only a gradual recovery in order activity, with further improvements hinging on external demand trends and execution of cost-saving measures.

• Shipment Delays Impacted Revenue: Management identified approximately $2 million in delayed KELK product shipments as a key factor reducing Q1 revenue. These delays are expected to resolve in the second half of the year, with no current risk of order cancellations.
• Sensors Orders Rebounded: The Sensors segment saw sequential order growth, driven by demand from semiconductor equipment makers and incremental orders in humanoid robotics applications. Shoshani noted the company’s value per robot could range from $500 to $1,200, with tens of sensors per unit.
• Weighing Solutions Mixed Performance: While transportation-related sales rose, orders for precision agriculture and medical applications weakened. Overall, the segment’s order intake declined following a strong previous quarter.
• Measurement Systems Orders Recovered: Despite a sequential revenue decline, Measurement Systems bookings increased due to auto safety testing demand and a notable prototype order from the University of Alabama for advanced materials testing.
• Cost Reduction and Efficiency Focus: Management reiterated progress toward $5 million in annual operational cost reductions, mainly through product relocation, material cost savings, and process improvements, with most benefits expected by year end.

Drivers of Future Performance

Management expects gradual improvement in order intake but remains cautious about the pace of recovery due to ongoing market uncertainty and reliance on customer inventory normalization. The company’s strategic priorities center on business development, cost control, and targeted capital deployment to support long-term growth.

• Business Development Initiatives: Continued focus on securing new customers and applications, especially in robotics and semiconductor markets, is viewed as essential for returning to growth.
• Operational Efficiency Gains: Execution of cost reduction plans—primarily through process improvements and product relocations—are expected to support margin recovery, with management targeting $5 million in savings by year end.
• CapEx and M&A Discipline: Most capital expenditures are slated for the second half of the year, with management maintaining a disciplined approach to potential acquisitions and capital returns, subject to tax and cash repatriation considerations.

Top Analyst Questions

• John Franzreb (Sidoti): Asked about order book trends and whether Q1 marked a bottom. Management confirmed modest recovery, with current demand mostly from inventory replenishment rather than new projects.
• John Franzreb (Sidoti): Inquired about the timing and distribution of $5 million in annual cost savings. Shoshani said most savings are expected in cost of goods sold from material and process improvements.
• John Franzreb (Sidoti): Sought clarity on KELK shipment delays and cancellation risk. Management explained the $2 million delay was operational, with no cancellations anticipated due to the custom nature of KELK products.
• Griffin Boss (B. Riley Securities): Asked about humanoid robotics opportunity, including sensor content and pricing. Shoshani shared each robot could contain tens of sensors valued at $500–$1,200 per unit.
• Griffin Boss (B. Riley Securities): Questioned CapEx ramp expectations. Management expects higher capital investment in the second half of the year, linked to lead times for sensor equipment.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will be watching (1) shipment timing and successful fulfillment of delayed KELK orders, (2) the scale and consistency of order recovery across both Sensors and Measurement Systems segments, and (3) realization of targeted cost savings and operational efficiencies. Progress in the humanoid robotics and semiconductor markets, along with updates on business development efforts, will also be important indicators of future growth momentum.

Vishay Precision currently trades at a forward P/E ratio of 22.1×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.

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