Vishay Precision Group, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands) March 30, 2024 December 31, 2023 (Unaudited) Assets Current assets: Cash and cash equivalents $ 83,016 $ 83,965 Accounts receivable, net 52,184 56,438 Inventories: Raw materials 35,363 33,973 Work in process 27,638 26,594 Finished goods 26,665 27,572 Inventories, net 89,666 88,139 Prepaid expenses and other current assets 16,098 14,520 Total current assets 240,964 243,062 Property and equipment: Land 4,130 4,154 Buildings and improvements 72,542 72,952 Machinery and equipment 130,071 131,738 Software 9,696 9,619 Construction in progress 11,737 11,379 Accumulated depreciation ( 139,645 ) ( 139,206 ) Property and equipment, net 88,531 90,636 Goodwill 45,553 45,734 Intangible assets, net 43,602 44,634 Operating lease right-of-use assets 26,927 26,953 Other assets 20,624 20,547 Total assets $ 466,201 $ 471,566 Continues on the following page. -3- VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands) March 30, 2024 December 31, 2023 Liabilities and equity (Unaudited) Current liabilities: Trade accounts payable $ 10,792 $ 11,698 Payroll and related expenses 19,171 18,971 Other accrued expenses 21,807 22,427 Income taxes 3,713 4,524 Current portion of operating lease liabilities 4,090 4,004 Current portion of long-term debt 31,885 — Total current liabilities 91,458 61,624 Long-term debt — 31,856 Deferred income taxes 3,478 3,490 Operating lease liabilities 22,353 22,625 Other liabilities 14,048 14,770 Accrued pension and other postretirement costs 6,996 7,276 Total liabilities 138,333 141,641 Equity: Common stock 1,334 1,330 Class B convertible common stock 103 103 Treasury stock ( 20,230 ) ( 17,460 ) Capital in excess of par value 202,475 202,672 Retained earnings 187,957 182,066 Accumulated other comprehensive loss ( 43,763 ) ( 38,869 ) Total Vishay Precision Group, Inc. stockholders' equity 327,876 329,842 Noncontrolling interests ( 8 ) 83 Total equity 327,868 329,925 Total liabilities and equity $ 466,201 $ 471,566 See accompanying notes. -4- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts) Fiscal quarter ended March 30, 2024 April 1, 2023 Net revenues $ 80,783 $ 88,864 Costs of products sold 45,689 51,665 Gross profit 35,094 37,199 Selling, general, and administrative expenses 27,394 27,159 Restructuring costs 782 116 Operating income 6,918 9,924 Other income (expense): Interest expense ( 628 ) ( 997 ) Other 1,860 275 Other income (expense) 1,232 ( 722 ) Income before taxes 8,150 9,202 Income tax expense 2,318 2,220 Net earnings 5,832 6,982 Less: net (loss) earnings attributable to noncontrolling interests ( 59 ) 18 Net earnings attributable to VPG stockholders $ 5,891 $ 6,964 Basic earnings per share attributable to VPG stockholders $ 0.44 $ 0.51 Diluted earnings per share attributable to VPG stockholders $ 0.44 $ 0.51 Weighted average shares outstanding - basic 13,405 13,586 Weighted average shares outstanding - diluted 13,468 13,652 See accompanying notes. -5- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited - In thousands) Fiscal quarter ended March 30, 2024 April 1, 2023 Net earnings $ 5,832 $ 6,982 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment ( 4,892 ) 1,502 Pension and other postretirement actuarial items ( 2 ) 3 Other comprehensive (loss) income ( 4,894 ) 1,505 Comprehensive income 938 8,487 Less: comprehensive (loss) income attributable to noncontrolling interests ( 59 ) 18 Comprehensive income attributable to VPG stockholders $ 997 $ 8,469 See accompanying notes. -6- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Cash Flows (Unaudited - In thousands) Three fiscal months ended March 30, 2024 April 1, 2023 Operating activities Net earnings $ 5,832 $ 6,982 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,943 3,858 Gain on sale of property and equipment ( 149 ) — Share-based compensation expense 661 681 Inventory write-offs for obsolescence 582 425 Deferred income taxes 44 383 Foreign currency impacts and other items ( 2,253 ) ( 1,022 ) Net changes in operating assets and liabilities: Accounts receivable 3,086 1,201 Inventories ( 2,887 ) ( 2,854 ) Prepaid expenses and other current assets ( 1,766 ) 1,260 Trade accounts payable 67 ( 1,713 ) Other current liabilities 242 ( 695 ) Other non current assets and liabilities, net ( 792 ) ( 201 ) Accrued pension and other postretirement costs, net ( 205 ) 138 Net cash provided by operating activities 6,405 8,443 Investing activities Capital expenditures ( 2,573 ) ( 3,501 ) Proceeds from sale of property and equipment 341 — Net cash used in investing activities ( 2,232 ) ( 3,501 ) Financing activities Purchase of treasury stock ( 2,755 ) — Distributions to noncontrolling interests ( 32 ) ( 20 ) Payments of employee taxes on certain share-based arrangements ( 858 ) ( 825 ) Net cash used in financing activities ( 3,645 ) ( 845 ) Effect of exchange rate changes on cash and cash equivalents ( 1,477 ) 622 (Decrease) increase in cash and cash equivalents ( 949 ) 4,719 Cash and cash equivalents at beginning of period 83,965 88,562 Cash and cash equivalents at end of period $ 83,016 $ 93,281 Supplemental disclosure of investing transactions: Capital expenditures accrued but not yet paid $ 1,480 $ 806 Supplemental disclosure of financing transactions: Excise tax on net share repurchases accrued but not yet paid $ 15 — See accompanying notes. -7- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Equity (Unaudited - In thousands, except share amounts) Fiscal quarter ended March 30, 2024 Common Stock Class B Convertible Common Stock Treasury Stock Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Income (Loss) Total VPG Inc. Stockholders' Equity Noncontrolling Interests Total Equity Balance at December 31, 2023 $ 1,330 $ 103 $ ( 17,460 ) $ 202,672 $ 182,066 $ ( 38,869 ) $ 329,842 $ 83 $ 329,925 Net earnings — — — — 5,891 — 5,891 ( 59 ) 5,832 Other comprehensive loss — — — — — ( 4,894 ) ( 4,894 ) — ( 4,894 ) Share-based compensation expense — — — 661 — — 661 — 661 Restricted stock issuances ( 38,607 shares) 4 — — ( 858 ) — — ( 854 ) — ( 854 ) Purchase of treasury stock ( 84,765 shares) — — ( 2,755 ) — — — ( 2,755 ) — ( 2,755 ) Excise tax on net share repurchases — — ( 15 ) — — — ( 15 ) — ( 15 ) Distributions to noncontrolling interests — — — — — — — ( 32 ) ( 32 ) Balance at March 30, 2024 $ 1,334 $ 103 $ ( 20,230 ) $ 202,475 $ 187,957 $ ( 43,763 ) $ 327,876 $ ( 8 ) $ 327,868 Fiscal quarter ended April 1, 2023 Common Stock Class B Convertible Common Stock Treasury Stock Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Income (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 — — — — 6,964 — 6,964 18 6,982 Other comprehensive income — — — — — 1,505 1,505 — 1,505 Share-based compensation expense — — — 681 — — 681 — 681 Restricted stock issuances ( 29,803 shares) 3 — — ( 780 ) — — ( 777 ) — ( 777 ) Distribution to noncontrolling interests — — — — — — — ( 20 ) ( 20 ) Balance at April 1, 2023 $ 1,328 $ 103 $ ( 11,504 ) $ 201,065 $ 163,323 $ ( 39,395 ) $ 314,920 $ ( 27 ) $ 314,893 See accompanying notes. -8- 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 leader in 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, 2023 and 2022 and for each of the three years in the period ended December 31, 2023, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024. The results of operations for the fiscal quarter ended March 30, 2024 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 2024 and 2023 end on the following dates: 2024 2023 Quarter 1 March 30, April 1, Quarter 2 June 29, July 1, Quarter 3 September 28, September 30, Quarter 4 December 31, December 31, Recent Accounting Pronouncements The Company evaluates the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). Recent accounting pronouncements not yet adopted: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU also allows, in addition to the measure that is most consistent with U.S. GAAP, the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendment also includes other changes to improve the effectiveness of income tax disclosures, including further disaggregation of income taxes paid for individually significant jurisdictions. This ASU is effective for annual periods beginning after December 15, 2024. Adoption of this ASU should be applied on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures. -9- 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) : Fiscal quarter ended March 30, 2024 Fiscal quarter ended April 1, 2023 Sensors Weighing Solutions Measurement Systems Total Sensors Weighing Solutions Measurement Systems Total United States $ 9,879 $ 11,328 $ 11,443 $ 32,650 $ 12,674 $ 14,879 $ 10,661 $ 38,214 Germany 7,539 2,251 2,282 12,072 9,488 2,834 3,137 15,459 Other Europe 1,536 11,979 144 13,659 1,333 10,993 129 12,455 Israel 4,188 77 — 4,265 3,963 76 — 4,039 Asia 6,273 3,175 3,446 12,894 9,267 3,078 2,053 14,398 Canada — 34 5,209 5,243 — — 4,299 4,299 Total $ 29,415 $ 28,844 $ 22,524 $ 80,783 $ 36,725 $ 31,860 $ 20,279 $ 88,864 The following table disaggregates net revenue from contracts with customers by market sector (in thousands) . Fiscal quarter ended March 30, 2024 April 1, 2023 Test & Measurement $ 15,650 $ 18,664 Avionics, Military & Space 6,989 11,707 Transportation 14,370 12,472 Other Markets 15,971 19,305 Industrial Weighing 9,814 11,026 General Industrial 5,319 4,798 Steel 12,670 10,892 Total $ 80,783 $ 88,864 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) : Contract Asset Contract Liability Unbilled Revenue Accrued Customer Advances Balance at December 31, 2023 $ 2,989 $ 8,712 Balance at March 30, 2024 4,614 7,984 Increase (decrease) $ 1,625 $ ( 728 ) The amount of revenue recognized during the three fiscal months ended March 30, 2024 that was included in the contract liability balance at December 31, 2023 was $ 3.7 million. -10- Note 3 – Goodwill The Company's required goodwill and indefinite-lived asset annual impairment test is completed as of the first day of the fourth fiscal quarter each year. In 2023, the results of the quantitative impairment test for the Dynamic Systems Inc. ("DSI") and Diversified Technical Systems Inc. (“DTS”) reporting units indicated that the fair value of both reporting units exceeded their carrying values, and therefore no impairment was recognized. 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, 2023 $ 45,734 $ 6,488 $ 16,902 $ 16,033 $ 6,311 Foreign currency translation adjustment $ ( 181 ) $ ( 171 ) $ ( 10 ) $ — $ — Balance at March 30, 2024 $ 45,553 $ 6,317 $ 16,892 $ 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 twelve years, seven months . The Company has no finance leases. Leases recorded on the balance sheet consist of the following (in thousands) : Leases March 30, 2024 December 31, 2023 Assets Operating lease right of use asset $ 26,927 $ 26,953 Liabilities Operating lease - current $ 4,090 $ 4,004 Operating lease - non-current $ 22,353 $ 22,625 Other information related to lease term and discount rate is as follows: March 30, 2024 Operating leases weighted average remaining lease term (in years) 7.61 years Operating leases weighted average discount rate 4.99 % The components of lease expense are as follows (in thousands) : Fiscal quarter ended March 30, 2024 April 1, 2023 Operating lease cost $ 1,383 $ 1,244 Short-term lease cost 18 46 Sublease income ( 113 ) ( 100 ) Total net lease cost $ 1,288 $ 1,190 Right of use assets obtained in exchange for new operating lease liability during the three fiscal months ended March 30, 2024 were $ 1.2 million. The Company paid $ 1.4 million and $ 1.2 million for its operating leases for each of the three fiscal months ended March 30, 2024 and April 1, 2023, which are included in operating cash flows on the consolidated condensed statements of cash flows. -11- Note 4 - Leases (continued) Undiscounted maturities of operating lease payments as of March 30, 2024 are summarized as follows (in thousands) : 2024 (excluding the three months ended March 30, 2024) $ 3,821 2025 4,693 2026 4,020 2027 3,662 2028 3,459 Thereafter 11,986 Total future minimum lease payments $ 31,640 Less: amount representing interest ( 5,197 ) Present value of future minimum lease payments $ 26,443 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 28.4 % and 24.1 % for the fiscal quarter ended March 30, 2024, and April 1, 2023, respectively. The effective tax rate for the fiscal quarter ended March 30, 2024 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 April 1, 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 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) : March 30, 2024 December 31, 2023 2020 Credit Agreement - Revolving Facility $ 32,000 $ 32,000 Deferred financing costs ( 115 ) ( 144 ) Total long-term debt $ 31,885 $ 31,856 Less: current portion 31,885 — Long-term debt, less: current portion $ — $ 31,856 2020 Credit Agreement On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit Agreement”) 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 “Agent”), pursuant to which the terms of the Company’s multi-currency, secured credit facility were revised to provide a secured revolving facility (the “2020 Revolving Facility”) in an aggregate principal amount of $ 75.0 million, with a sublimit of $ 10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the Credit Agreement. The proceeds of the 2020 Revolving Facility may be used on an ongoing basis for working capital and general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of -12- Note 6 - Long-Term Debt (continued) $ 25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement terminates on March 20, 2025. Because the Credit Agreement expires less than one year from the end of the first fiscal quarter of 2024, the outstanding balance of long-term debt in the amount of $ 31.885 million has been reclassified as a current liability. On May 5, 2023, the Company entered into Amendment No. 1 to Third Amended and Restated Credit Agreement (the “Credit Agreement Amendment”) amending the Third Amended and Restated Credit Agreement, dated March 20, 2020. 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. Interest payable on amounts borrowed under the 2020 Revolving Facility, taking into account the effect of the Credit Agreement Amendment, is based upon the following: (a) for revolving credit loans denominated in US Dollars, the SOFR rate plus applicable credit spread; and (b) for revolving credit loans denominated in foreign currencies, at other applicable local reference rates plus an interest margin. Depending upon the Company’s leverage ratio, an interest rate margin ranging from 1.50 % to 2.75 % per annum is added to the applicable SOFR rate to determine the interest payable on the SOFR loans. The Company is required to pay a quarterly fee of 0.25 % per annum to 0.40 % per annum on the unused portion of the 2020 Revolving Facility, which is determined based on the Company’s leverage ratio each quarter. Additional customary fees apply with respect to letters of credit. 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, 2024 $ ( 39,262 ) $ 393 $ ( 38,869 ) Other comprehensive loss before reclassifications ( 4,892 ) — ( 4,892 ) Amounts reclassified from accumulated other comprehensive income — ( 2 ) ( 2 ) Balance at March 30, 2024 $ ( 44,154 ) $ 391 $ ( 43,763 ) 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 1,502 — 1,502 Amounts reclassified from accumulated other comprehensive income — 3 3 Balance at April 1, 2023 $ ( 39,987 ) $ 592 $ ( 39,395 ) 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). -13- 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) : Fiscal quarter ended March 30, 2024 Fiscal quarter ended April 1, 2023 Pension Plans OPEB Plans Pension Plans OPEB Plans Net service cost $ 67 $ 4 $ 69 $ 4 Interest cost 191 27 190 28 Expected return on plan assets ( 210 ) — ( 212 ) — Amortization of actuarial losses (gains) 5 ( 3 ) 8 ( 6 ) Net periodic benefit cost $ 53 $ 28 $ 55 $ 26 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 March 30, 2024, the Company had reserved 486,632 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 March 7, 2024 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 $ 1.7 million and were comprised of 49,190 RSUs. Fifty percent of these awards will vest on January 1, 2027, subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, 2027, 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 7, 2024, 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 16,821 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, 2027, subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2027, 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. 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) : Three fiscal months ended March 30, 2024 April 1, 2023 Share-based compensation expense $ 661 $ 681 -14- Note 10 – Segment Information VPG reports in three reportable segments: Sensors segment, Weighing Solutions segment, and 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 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) : Fiscal quarter ended March 30, 2024 April 1, 2023 Net revenues: Sensors $ 29,414 $ 36,726 Weighing Solutions 28,845 31,859 Measurement Systems 22,524 20,279 Total $ 80,783 $ 88,864 Gross profit: Sensors $ 10,732 $ 15,144 Weighing Solutions 11,266 11,129 Measurement Systems 13,094 10,926 Total $ 35,092 $ 37,199 Reconciliation of segment operating income to consolidated results: Sensors $ 5,497 $ 9,933 Weighing Solutions 4,797 5,340 Measurement Systems 6,385 3,872 Unallocated G&A expenses ( 8,979 ) ( 9,105 ) Restructuring costs ( 782 ) ( 116 ) Operating income $ 6,918 $ 9,924 Restructuring costs: Sensors $ ( 542 ) $ — Weighing Solutions — ( 34 ) Measurement Systems — ( 32 ) Corporate/Other ( 240 ) ( 50 ) $ ( 782 ) $ ( 116 ) -15- Note 10 - Segment Information (continued) Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. The table below summarizes intersegment sales (in thousands) : Fiscal quarter ended March 30, 2024 April 1, 2023 Sensors to Weighing Solutions $ 469 $ 328 Sensors to Measurement Systems 10 36 Note 11 – Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share attributable to VPG stockholders (in thousands, except earnings per share) : Fiscal quarter ended March 30, 2024 April 1, 2023 Numerator: Numerator for basic earnings per share: Net earnings attributable to VPG stockholders $ 5,891 $ 6,964 Denominator: Denominator for basic earnings per share: Weighted average shares 13,405 13,586 Effect of dilutive securities: Restricted stock units 63 66 Dilutive potential common shares 63 66 Denominator for diluted earnings per share: Adjusted weighted average shares 13,468 13,652 Basic earnings per share attributable to VPG stockholders $ 0.44 $ 0.51 Diluted earnings per share attributable to VPG stockholders $ 0.44 $ 0.51 Note 12 – Additional Financial Statement Information Other Income (Expense) Other The caption “Other” on the consolidated condensed statements of operations consists of the following (in thousands) : Fiscal quarter ended March 30, 2024 April 1, 2023 Foreign currency exchange gain $ 1,589 $ 62 Interest income 323 366 Pension expense ( 10 ) ( 74 ) Other ( 42 ) ( 79 ) $ 1,860 $ 275 -16- Note 12 – Additional Financial Statement Information ( continued) Foreign currency exchange gains represent the impact of changes in foreign currency exchange rates. The change in foreign currency exchange gains and losses for the fiscal quarter ended March 30, 2024, as compared to the prior year period, was largely due to exposure to currency fluctuations with the Japanese yen, the Canadian dollar, and the British pound. Pension expense represents the net periodic benefit cost excluding the service cost. Other Accrued Expenses Other accrued expenses consist of the following (in thousands) : March 30, 2024 December 31, 2023 Customer advance payments $ 7,984 $ 8,712 Accrued restructuring 290 249 Goods received, not yet invoiced 2,700 2,837 Accrued taxes, other than income taxes 1,793 1,370 Accrued commissions 3,580 4,077 Accrued professional fees 1,642 1,343 Accrued technical warranty 778 770 Current accrued pensions and other post retirement costs 511 511 Other 2,529 2,558 $ 21,807 $ 22,427 Note 13 – Fair Value Measurements ASC Topic 820, Fair Value Measurement, establishes a valuation hierarchy of the inputs used to measure fair value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that reflect the Company’s own assumptions. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands) : Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs March 30, 2024 Assets Assets held in rabbi trusts $ 6,148 $ 122 $ 6,026 $ — December 31, 2023 Assets Assets held in rabbi trusts $ 5,841 $ 59 $ 5,782 $ — -17- Note 13 – Fair Value Measurements (continued) The Company maintains non-qualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at March 30, 2024 and December 31, 2023, and company-owned life insurance assets. The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the cash equivalents held in the rabbi trust are considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy. The fair value of the long-term debt, excluding capitalized deferred financing costs, at March 30, 2024 and December 31, 2023 approximates its carrying value as the revolving debt is reset on a monthly basis based on current market rates, plus a base rate as specified in the debt agreement. The fair value of long-term debt is considered a Level 2 measurement within the fair value hierarchy. The Company’s financial instruments include cash and cash equivalents, accounts receivable and accounts payable. The carrying amounts for these financial instruments reported in the consolidated condensed balance sheets approximate their fair values. Note 14 – Restructuring Costs Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required either to record additional expense in future periods or to reverse part of the previously recorded charges. The Company recorded $ 0.8 million and $ 0.1 million of restructuring costs during the fiscal quarter ended March 30, 2024 and April 1, 2023, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs. The following table summarizes recent activity related to all restructuring programs. The accrued restructuring liability balance as of March 30, 2024 and December 31, 2023, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands) : Balance at December 31, 2023 $ 249 Restructuring charges in 2024 782 Cash payments ( 706 ) Foreign currency exchange translation ( 35 ) Balance at March 30, 2024 $ 290 Note 15 – Stockholder's Equity On August 8, 2022, the Board of Directors (the “Board”) of the Company authorized the repurchase of up to 600,000 shares of the Company’s outstanding common stock (the “Stock Repurchase Plan”). The Stock Repurchase Plan was originally set to expire on August 11, 2023. On August 8, 2023, the Company announced that its Board of Directors extended the term of the previously approved stock repurchase plan to August 9, 2024. From August 8, 202 2 to March 30, 2024 , the Company had repurchased an aggregate of 358,391 shares of its common stock under the stock repurchase plan for consideration o f $ 11.4 million . -18-