Vishay Precision Group, Inc. [VPG] Filings

10-Q 1 vpg-20230930.htm 10-Q vpg-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 1-34679

VISHAY PRECISION GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

27-0986328

(State or Other Jurisdiction of Incorporation)

(I.R.S. Employer Identification Number)

3 Great Valley Parkway, Suite 150

Malvern, PA, 19355

484-321-5300

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.10 par value	VPG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. ý Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ý No

As of November 7, 2023, the registrant had 12,510,296 shares of its common stock and 1,022,887 shares of its Class B convertible common stock outstanding.

VISHAY PRECISION GROUP, INC.

FORM 10-Q

September 30, 2023

CONTENTS


		Page Number
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Condensed Balance Sheets – September 30, 2023 (Unaudited) and December 31, 2022	3

	Consolidated Condensed Statements of Operations (Unaudited) – Fiscal Quarters Ended September 30, 2023 and October 1, 2022	5

	Consolidated Condensed Statements of Operations (Unaudited) – Nine Fiscal Months Ended September 30, 2023 and October 1, 2022	6

	Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) – Fiscal Quarters Ended September 30, 2023 and October 1, 2022	7

	Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) – Nine Fiscal Months Ended September 30, 2023 and October 1, 2022	8

	Consolidated Condensed Statements of Cash Flows (Unaudited) –Nine Fiscal Months Ended September 30, 2023 and October 1, 2022	9

	Consolidated Condensed Statements of Equity (Unaudited) – Fiscal Quarters Ended September 30, 2023 and October 1, 2022	10

	Consolidated Condensed Statements of Equity (Unaudited) – Nine Fiscal Months Ended September 30, 2023 and October 1, 2022	11

	Notes to Unaudited Consolidated Condensed Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	41

	SIGNATURES	42

-2-

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS


VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)
	September 30, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	94,632	$	88,562
Short term investment	1,000		—
Accounts receivable, net	57,240		60,068
Inventories:
Raw materials	34,952		31,852
Work in process	28,368		26,401
Finished goods	27,088		26,407
Inventories, net	90,408		84,660


Prepaid expenses and other current assets	16,454		18,516

Total current assets	259,734		251,806

Property and equipment:
Land	4,104		4,117
Buildings and improvements	71,379		71,613
Machinery and equipment	126,582		125,301
Software	9,141		9,539
Construction in progress	10,872		10,075
Accumulated depreciation	(135,366)		(133,518)
Property and equipment, net	86,712		87,127

Goodwill	45,579		45,544
Intangible assets, net	45,492		48,217
Operating lease right-of-use assets	27,440		24,342
Other assets	19,349		19,706
Total assets	$	484,306	$	476,742

Continues on the following page.

-3-


VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)
	September 30, 2023		December 31, 2022

Liabilities and equity	(Unaudited)
Current liabilities:
Trade accounts payable	$	11,875	$	13,792
Payroll and related expenses	18,169		21,966
Other accrued expenses	24,077		20,306
Income taxes	1,774		4,064
Current portion of operating lease liabilities	3,814		4,208

Total current liabilities	59,709		64,336

Long-term debt, less current portion	53,827		60,799
Deferred income taxes	4,098		4,212
Operating lease liabilities	22,587		20,043
Other liabilities	12,900		13,053
Accrued pension and other postretirement costs	7,028		7,777
Total liabilities	160,149		170,220



Equity:
Common stock	1,330		1,325
Class B convertible common stock	103		103
Treasury stock	(12,700)		(11,504)
Capital in excess of par value	202,267		201,164
Retained earnings	177,839		156,359
Accumulated other comprehensive loss	(44,729)		(40,900)
Total Vishay Precision Group, Inc. stockholders' equity	324,110		306,547
Noncontrolling interests	47		(25)
Total equity	324,157		306,522
Total liabilities and equity	$	484,306	$	476,742

See accompanying notes.

-4-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)


	Fiscal quarter ended
	September 30, 2023		October 1, 2022
Net revenues	$	85,854	$	90,057
Costs of products sold	49,919		52,737
Gross profit	35,935		37,320

Selling, general, and administrative expenses	26,558		25,271



Restructuring costs	1,153		165
Operating income	8,224		11,884

Other income (expense):
Interest expense	(1,119)		(636)
Other	1,671		1,223
Other income	552		587

Income before taxes	8,776		12,471

Income tax expense	2,419		2,323

Net earnings	6,357		10,148
Less: net earnings attributable to noncontrolling interests	77		30
Net earnings attributable to VPG stockholders	$	6,280	$	10,118

Basic earnings per share attributable to VPG stockholders	$	0.46	$	0.74
Diluted earnings per share attributable to VPG stockholders	$	0.46	$	0.74

Weighted average shares outstanding - basic	13,600		13,649
Weighted average shares outstanding - diluted	13,686		13,708

See accompanying notes.

-5-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)


	Nine fiscal months ended
	September 30, 2023		October 1, 2022
Net revenues	$	265,520	$	266,340
Costs of products sold	153,674		156,436
Gross profit	111,846		109,904

Selling, general, and administrative expenses	80,472		77,824



Restructuring costs	1,431		1,330
Operating income	29,943		30,750
Other income (expense):
Interest expense	(3,195)		(1,393)
Other	2,965		5,006
Other income (expense)	(230)		3,613

Income before taxes	29,713		34,363

Income tax expense	8,023		6,651

Net earnings	21,690		27,712
Less: net earnings attributable to noncontrolling interests	210		483
Net earnings attributable to VPG stockholders	$	21,480	$	27,229

Basic earnings per share attributable to VPG stockholders	$	1.58	$	2.00

Diluted earnings per share attributable to VPG stockholders	$	1.57	$	1.99

Weighted average shares outstanding - basic	13,596		13,645

Weighted average shares outstanding - diluted	13,670		13,692

See accompanying notes.

-6-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)


	Fiscal quarter ended
	September 30, 2023		October 1, 2022
Net earnings	$	6,357	$	10,148

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(3,653)		(8,479)
Pension and other postretirement actuarial items	—		65
Other comprehensive loss	(3,653)		(8,414)

Comprehensive income	2,704		1,734

Less: comprehensive income attributable to noncontrolling interests	77		30

Comprehensive income attributable to VPG stockholders	$	2,627	$	1,704

See accompanying notes.

-7-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)


	Nine fiscal months ended
	September 30, 2023		October 1, 2022
Net earnings	$	21,690	$	27,712

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(3,831)		(18,214)
Pension and other postretirement actuarial items	2		227
Other comprehensive loss	(3,829)		(17,987)

Comprehensive income	17,861		9,725

Less: comprehensive income attributable to noncontrolling interests	210		483

Comprehensive income attributable to VPG stockholders	$	17,651	$	9,242

See accompanying notes.

-8-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Cash Flows

(Unaudited - In thousands)


	Nine fiscal months ended
	September 30, 2023		October 1, 2022
Operating activities
Net earnings	$	21,690	$	27,712
Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization	11,559		11,519

Gain on sale of property and equipment	38		(182)
Reclassification of foreign currency translation adjustment related to disposal of subsidiary	—		191
Share-based compensation expense	1,885		1,583
Inventory write-offs for obsolescence	1,567		1,451
Deferred income taxes	691		(72)
Foreign currency impacts and other items	(2,755)		(3,550)
Net changes in operating assets and liabilities:

Accounts receivable	1,604		(2,077)
Inventories	(7,811)		(14,151)
Prepaid expenses and other current assets	1,990		(984)
Trade accounts payable	(1,151)		(1,459)
Other current liabilities	(1,082)		1,303
Other non current assets and liabilities, net	(170)		(326)
Accrued pension and other postretirement costs, net	(945)		(443)
Net cash provided by operating activities	27,110		20,515

Investing activities
Capital expenditures	(9,848)		(15,545)
Proceeds from sale of property and equipment	50		397
Purchase of short term investment	(1,000)		—

Net cash used in investing activities	(10,798)		(15,148)

Financing activities




Payments on revolving facility	(7,000)		—

Purchase of treasury stock	(1,196)		(1,061)

Distributions to noncontrolling interests	(138)		(366)
Payments of employee taxes on certain share-based arrangements	(825)		(435)
Net cash used in financing activities	(9,159)		(1,862)
Effect of exchange rate changes on cash and cash equivalents	(1,083)		(7,930)
Increase (decrease) in cash and cash equivalents	6,070		(4,425)
Cash and cash equivalents at beginning of period	88,562		84,335
Cash and cash equivalents at end of period	$	94,632	$	79,910

Supplemental disclosure of investing transactions:
Capital expenditures accrued but not yet paid	$	1,204	$	720

See accompanying notes.

-9-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share amounts)


	Fiscal quarter ended September 30, 2023
	Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total VPG Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at July 1, 2023	$	1,330	$	103	$	(11,924)	$	201,611	$	171,559	$	(41,076)	$	321,603	$	62	$	321,665
Net earnings	—		—		—		—		6,280		—		6,280		77		6,357
Other comprehensive loss	—		—		—		—		—		(3,653)		(3,653)		—		(3,653)
Share-based compensation expense	—		—		—		656		—		—		656		—		656



Purchase of treasury stock. (22,894 shares)	—		—		(776)		—		—		—		(776)		—		(776)


Distributions to noncontrolling interests	—		—		—		—		—		—		—		(92)		(92)
Balance at September 30, 2023	$	1,330	$	103	$	(12,700)	$	202,267	$	177,839	$	(44,729)	$	324,110	$	47	$	324,157


	Fiscal quarter ended October 1, 2022
	Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total VPG Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at July 2, 2022	$	1,325	$	103	$	(8,765)	$	199,749	$	137,407	$	(44,581)	$	285,238	$	112	$	285,350
Net earnings	—		—		—		—		10,118		—		10,118		30		10,148
Other comprehensive loss	—		—		—		—		—		(8,414)		(8,414)		—		(8,414)
Share-based compensation expense	—		—		—		559		—		—		559		—		559



Purchase of treasury stock (32,601 shares)	—		—		(1,061)				—		—		(1,061)		—		(1,061)


Distribution to noncontrolling interests	—		—		—		—		—		—		—		(82)		(82)
Balance at October 1, 2022	$	1,325	$	103	$	(9,826)	$	200,308	$	147,525	$	(52,995)	$	286,440	$	60	$	286,500

See accompanying notes.

-10-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share amounts)


	Nine Fiscal Months Ended September 30, 2023
	Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total VPG Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2022	$	1,325	$	103	$	(11,504)	$	201,164	$	156,359	$	(40,900)	$	306,547	$	(25)	$	306,522
Net earnings	—		—		—		—		21,480		—		21,480		210		21,690
Other comprehensive loss	—		—		—		—		—		(3,829)		(3,829)		—		(3,829)
Share-based compensation expense	—		—		—		1,885		—		—		1,885		—		1,885
Restricted stock issuances (47,189 shares)	5		—		—		(782)		—		—		(777)		—		(777)


Purchase of treasury stock (35,206 shares)	—		—		(1,196)		—		—		—		(1,196)		—		(1,196)


Distributions to noncontrolling interests	—		—		—		—		—		—		—		(138)		(138)
Balance at September 30, 2023	$	1,330	$	103	$	(12,700)	$	202,267	$	177,839	$	(44,729)	$	324,110	$	47	$	324,157


	Nine Fiscal Months Ended October 1, 2022
	Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total VPG Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2021	$	1,322	$	103	$	(8,765)	$	199,151	$	120,296	$	(35,008)	$	277,099	$	(57)	$	277,042
Net earnings	—		—		—		—		27,229		—		27,229		483		27,712
Other comprehensive loss	—		—		—		—		—		(17,987)		(17,987)		—		(17,987)
Share-based compensation expense	—		—		—		1,583		—		—		1,583		—		1,583
Restricted stock issuances (28,368 shares)	3		—		—		(426)		—		—		(423)		—		(423)
Purchase of treasury stock (32,601 shares)	—		—		(1,061)		—		—		—		(1,061)		—		(1,061)



Distribution to noncontrolling interests	—		—		—		—		—		—		—		(366)		(366)
Balance at October 1, 2022	$	1,325	$	103	$	(9,826)	$	200,308	$	147,525	$	(52,995)	$	286,440	$	60	$	286,500

See accompanying notes.

-11-

Vishay Precision Group, Inc.

Notes to Unaudited Consolidated Condensed Financial Statements

Note 1 – Basis of Presentation

Background

Vishay Precision Group, Inc. (“VPG” or the “Company”) is a global, diversified company focused on precision measurement and sensing technologies that help power the future by bridging the physical world with the digital one. Many of our specialized sensors, weighing solutions, and measurement systems are “designed-in” by our customers, and address growing applications across a diverse array of industries and markets. Our products are marketed under brand names that we believe are characterized as having a very high level of precision and quality, and we employ an operationally diversified structure to manage our businesses.

Interim Financial Statements

These unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements and therefore do not include all information and footnotes necessary for the presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023. The results of operations for the fiscal quarter ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year. VPG reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first quarter, which always begins on January 1, and the fourth quarter, which always ends on December 31. The four fiscal quarters in 2023 and 2022 end on the following dates:


	2023	2022
Quarter 1	April 1,	April 2,
Quarter 2	July 1,	July 2,
Quarter 3	September 30,	October 1,
Quarter 4	December 31,	December 31,

Reclassifications

Certain prior year amounts have been reclassified to conform to the current financial statement presentation.

Note 2 – Revenues

Revenue Recognition

The following table disaggregates net revenue by geographic region from contracts with customers based on net revenues generated by subsidiaries within that geographic location (in thousands):

-12-

Note 2 – Revenues (continued)


	Fiscal quarter ended September 30, 2023								Fiscal quarter ended October 1, 2022
	Sensors		Weighing Solutions		Measurement Systems		Total		Sensors		Weighing Solutions		Measurement Systems		Total
United States	$	11,860	$	12,622	$	15,520	$	40,002	$	12,992	$	14,671	$	13,065	$	40,728
United Kingdom	1,119		4,128		90		5,337		752		4,090		55		4,897
Other Europe	7,176		9,077		703		16,956		7,740		8,714		986		17,440
Israel	4,773		89		—		4,862		7,447		101		—		7,548
Asia	7,604		3,054		2,899		13,557		8,948		3,815		2,462		15,225
Canada	—		—		5,140		5,140		—		8		4,211		4,219
Total	$	32,532	$	28,970	$	24,352	$	85,854	$	37,879	$	31,399	$	20,779	$	90,057


	Nine Fiscal Months Ended September 30, 2023								Nine Fiscal Months Ended October 1, 2022
	Sensors		Weighing Solutions		Measurement Systems		Total		Sensors		Weighing Solutions		Measurement Systems		Total
United States	$	39,089	$	40,729	$	39,053	$	118,871	$	39,467	$	41,212	$	34,838	$	115,517
United Kingdom	2,845		11,961		261		15,067		2,562		12,283		514		15,359
Other Europe	25,134		29,144		5,109		59,387		23,556		28,065		3,985		55,606
Israel	12,867		215		—		13,082		22,828		401		—		23,229
Asia	25,589		10,041		6,446		42,076		27,496		10,657		4,283		42,436
Canada	—		—		17,037		17,037		—		8		14,185		14,193
Total	$	105,524	$	92,090	$	67,906	$	265,520	$	115,909	$	92,626	$	57,805	$	266,340

The following table disaggregates net revenue from contracts with customers by market sector (in thousands).


	Fiscal quarter ended				Nine fiscal months ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Test & Measurement	$	17,080	$	20,659	$	54,449	$	60,115
Avionics, Military & Space	8,294		6,523		28,285		21,563
Transportation	15,490		13,912		40,993		41,061
Other Markets	16,402		20,110		54,124		59,295
Industrial Weighing	10,533		12,473		33,586		38,626
General Industrial	4,643		4,981		14,858		16,172
Steel	13,412		11,399		39,225		29,508

Total	$	85,854	$	90,057	$	265,520	$	266,340

Contract Assets & Liabilities

Contract assets are established when revenues are recognized prior to a contractual payment due from the customer. When a payment becomes due based on the contract terms, the Company will reduce the contract asset and record a receivable. Contract liabilities are deferred revenues that are recorded when cash payments are received or due in advance of our performance obligations. Our payment terms vary by the type and location of the products offered. The term between invoicing and when payment is due is not significant.

The outstanding contract assets and liability accounts were as follows (in thousands):

-13-

Note 2 – Revenues (continued)


	Contract Asset		Contract Liability
	Unbilled Revenue		Accrued Customer Advances
Balance at December 31, 2022	$	3,990	$	7,983
Balance at September 30, 2023	3,449		8,766
(Decrease) increase	$	(541)	$	783

The amount of revenue recognized during the nine fiscal months ended September 30, 2023 that was included in the contract liability balance at December 31, 2022 was $7.3 million.

Note 3 – Goodwill

The Company tests the goodwill in each of its goodwill reporting units for impairment at least annually, as of the first day of its fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred.

The change in the carrying amount of goodwill by segment is as follows (in thousands):


	Total		Measurement Systems						Weighing Solutions
			KELK Acquisition		DSI Acquisition		DTS Acquisition		Stress-Tek Acquisition
Balance at December 31, 2022	$	45,544	$	6,313	$	16,887	$	16,033	$	6,311


Foreign currency translation adjustment	35		39		(4)		—		—
Balance at September 30, 2023	$	45,579	$	6,352	$	16,883	$	16,033	$	6,311

Note 4 – Leases

The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less than one year to thirteen years. The Company has no finance leases.

Leases recorded on the balance sheet consist of the following (in thousands):


Leases	September 30, 2023		December 31, 2022
Assets
Operating lease right of use asset	$	27,440	$	24,342

Liabilities
Operating lease - current	$	3,814	$	4,208
Operating lease - non-current	$	22,587	$	20,043

Other information related to lease term and discount rate is as follows:


	September 30, 2023
Operating leases weighted average remaining lease term (in years)	8.11 years
Operating leases weighted average discount rate	4.83	%

The components of lease expense are as follows (in thousands):

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Note 4 - Leases (continued)


	Fiscal quarter ended				Nine Fiscal Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Operating lease cost	$	1,331	$	1,267	$	3,822	$	3,876
Short-term lease cost	24		30		115		72
Sublease income	(95)		(104)		(293)		(321)
Total net lease cost	$	1,260	$	1,193	$	3,644	$	3,627

Right of use assets obtained in exchange for new operating lease liability during the nine fiscal months ended September 30, 2023 were $6.4 million. The Company paid $3.8 million and $3.9 million for its operating leases for each of the nine fiscal months ended September 30, 2023 and October 1, 2022, which are included in operating cash flows on the consolidated condensed statements of cash flows.

Undiscounted maturities of operating lease payments as of September 30, 2023 are summarized as follows (in thousands):


2023 (excluding the nine months ended September 30, 2023)	$	1,259
2024	4,586
2025	4,197
2026	3,568
2027	3,363
Thereafter	14,926
Total future minimum lease payments	$	31,899
Less: amount representing interest	(5,498)
Present value of future minimum lease payments	$	26,401

Note 5 – Income Taxes

VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology based on projected full-year pre-tax earnings among the taxing jurisdictions in which we operate with adjustments for discrete items. The effective tax rate was 27.6% and 18.6% for the fiscal quarter ended September 30, 2023, and October 1, 2022, respectively. The effective tax rate for the fiscal quarter ended September 30, 2023 differs from the federal statutory rate of 21% due to foreign income taxed at different tax rates and changes in our valuation allowance on deferred tax assets. The effective tax rate for the fiscal quarter ended October 1, 2022 differs from the federal statutory rate of 21% due to foreign income taxed at different tax rates and changes in our valuation allowance on deferred tax assets.

The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company’s best estimate of the potential tax exposures in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company’s tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties.

Note 6 – Long-Term Debt

Long-term debt consists of the following (in thousands):


	September 30, 2023		December 31, 2022
2020 Credit Agreement - Revolving Facility	$	54,000	$	61,000






Deferred financing costs	(173)		(201)
Total long-term debt	$	53,827	$	60,799

On May 5, 2023, the Company entered into Amendment No. 1 to Third Amended and Restated Credit Agreement (the “Credit Agreement Amendment”), by and among the Company, the lenders named therein, Citizens Bank, National Association and

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Note 6 - Long-Term Debt (continued)

Wells Fargo Bank, National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders. The Credit Agreement Amendment amends the Third Amended and Restated Credit Agreement, dated March 20, 2020, by and among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank, National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders. The primary purpose of the changes made in the Credit Agreement Amendment were to update the interest rate provisions to replace LIBOR with SOFR for U.S. dollar denominated loans as well as update the other applicable reference borrowing rates for foreign currency loans which took effect on June 15, 2023. There was no material impact in interest expense or the loan balance as a result of the rate change.

Note 7 – Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, consist of the following (in thousands):


	Foreign Currency Translation Adjustment		Pension and Other Postretirement Actuarial Items		Total
Balance at January 1, 2023	$	(41,489)	$	589	$	(40,900)
Other comprehensive loss before reclassifications	(3,831)		—		(3,831)
Amounts reclassified from accumulated other comprehensive income	—		2		2
Balance at September 30, 2023	$	(45,320)	$	591	$	(44,729)


	Foreign Currency Translation Adjustment		Pension and Other Postretirement Actuarial Items		Total
Balance at January 1, 2022	$	(30,276)	$	(4,732)	$	(35,008)
Other comprehensive loss before reclassifications	(18,405)		—		(18,405)
Amounts reclassified from accumulated other comprehensive income	191		227		418
Balance at October 1, 2022	$	(48,490)	$	(4,505)	$	(52,995)

Reclassification of foreign currency translation adjustment for the loss on liquidation of subsidiaries is included in other income and expense other (see Note 12). Reclassifications of pension and other postretirement actuarial items out of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost (see Note 8).

Note 8 – Pension and Other Postretirement Benefits

Employees of VPG participate in various defined benefit pension and other postretirement benefit ("OPEB") plans. The following table sets forth the components of the net periodic benefit cost for the Company's defined benefit pension and OPEB plans (in thousands):

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Note 8 - Pension and Other Postretirement Benefits ( continued)


	Fiscal quarter ended September 30, 2023				Fiscal quarter ended October 1, 2022
	Pension Plans		OPEB Plans		Pension Plans		OPEB Plans
Net service cost	$	67	$	4	$	79	$	7
Interest cost	193		28		117		17
Expected return on plan assets	(216)				(116)		—
Amortization of actuarial losses (gains)	7		(6)		69		1
Net periodic benefit cost	$	51	$	26	$	149	$	25


	Nine Fiscal Months Ended September 30, 2023				Nine Fiscal Months Ended October 1, 2022
	Pension Plans		OPEB Plans		Pension Plans		OPEB Plans
Net service cost	$	204	$	12	$	244	$	21
Interest cost	$	575	$	84	$	360	$	51
Expected return on plan assets	$	(642)	$	—	$	(358)	$	—
Amortization of actuarial losses (gains)	$	22	$	(18)	$	215	$	3
Net periodic benefit cost	$	159	$	78	$	461	$	75

Note 9 – Share-Based Compensation

The Vishay Precision Group, Inc. 2022 Stock Incentive Plan (the "2022 plan") permits issuance of up to 608,000 shares of common stock. At September 30, 2023, the Company had reserved 525,239 shares of common stock for future grants of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the 2022 plan. If any outstanding awards are forfeited by the holder or canceled by the Company, the underlying shares would be available for re-grant to others. If shares are withheld for payment of taxes, those shares do not become available for grant under the 2022 plan.

On February 28, 2023 and in accordance with their respective employment agreements, VPG’s three executive officers were granted annual equity awards in the form of RSUs, of which 50% are performance-based. The awards have an aggregate target grant-date fair value of $1.9 million and were comprised of 43,243 RSUs. Fifty percent of these awards will vest on January 1, 2026, subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, 2026, subject to the executives' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative “adjusted free cash flow” and "net earnings goals", each weighted equally.

On March 9, 2023, certain non-executive VPG employees were granted annual equity awards in the form of RSUs. Certain employees received awards, of which 75% are performance-based and certain employees received awards of which 50% are performance-based. The awards have an aggregate grant-date fair value of $0.6 million and were comprised of 14,338 RSUs. The non-performance portion of these awards (twenty-five percent for certain employees and fifty percent for certain employees) will vest on January 1, 2026, subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2026, subject to the employees' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative earnings and cash flow goals, each weighted equally.

On May 24, 2023, and in accordance with the Company's 2017 Non-Employee Director Compensation Plan, the Board of Directors approved the issuance of an aggregate of 13,923 RSUs to the independent board members of the Board of Directors. The awards have an aggregate grant-date fair value of $0.5 million and will vest on the earlier of the 2024 Annual Stockholders Meeting or May 24, 2024, subject to each applicable director's continued service on the Board of Directors. Vesting of equity awards is subject to acceleration under certain circumstances.

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Note 9 - Share-Based Compensation (continued)

The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met. The following table summarizes share-based compensation expense recognized (in thousands):


	Fiscal quarter ended				Nine fiscal months ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Share-based compensation expense	$	656	$	559	$	1,885	$	1,583

During the second quarter of 2023, a net adjustment of $0.1 million decreasing share-based compensation expense was recorded based on the evaluation of performance objectives associated with awards granted in 2021 and 2022. It was determined that certain objectives were not likely to be fully met necessitating a reversal of certain compensation expenses associated with those awards. The result of the evaluation of performance objectives as of the end of the third quarter of 2023 was consistent with the prior quarter's evaluation and therefore there was no further adjustment required during the third quarter of 2023.

Note 10 – Segment Information

VPG reports in three product segments: the Sensors segment, the Weighing Solutions segment, and the Measurement Systems segment. The Sensors reporting segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The Measurement Systems reporting segment is comprised of highly specialized systems for steel production, materials development, and safety testing.

The chief operating decision maker ("CODM") is our chief executive officer. The CODM evaluates each operating segment's performance. The evaluation of the segment's performance is based on multiple performance measures including gross profits, revenues, and operating income, exclusive of certain items. Management believes that evaluating segment performance, excluding items such as restructuring and severance costs, impairment of goodwill and indefinite-lived intangible assets, acquisition costs, and other items is meaningful because they relate to occurrences or events that are outside of our core operations, and management believes that the use of these measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods.

The following table sets forth reporting segment information (in thousands):

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Note 10 - Segment Information (continued)


	Fiscal quarter ended				Nine fiscal months ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Net revenues:
Sensors	$	32,532	$	37,879	$	105,524	$	115,909
Weighing Solutions	28,970		31,399		92,090		92,626
Measurement Systems	24,352		20,779		67,906		57,805
Total	$	85,854	$	90,057	$	265,520	$	266,340

Gross profit:
Sensors	$	11,681	$	15,324	$	41,374	$	47,441
Weighing Solutions	11,207		10,470		34,443		32,134
Measurement Systems	13,047		11,526		36,029		30,329
Total	$	35,935	$	37,320	$	111,846	$	109,904

Reconciliation of segment operating income to consolidated results:
Sensors	$	6,543	$	10,703	$	26,043	$	32,721
Weighing Solutions	5,393		5,392		16,894		15,783
Measurement Systems	5,605		4,876		14,246		10,350
Unallocated G&A expenses	(8,164)		(8,922)		(25,809)