What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-06 compared with 2024-05-07 · 136 added, 91 removed, 330 unchanged (41% of the section changed)

15 unchanged sentences

Such geopolitical and military instabilities, impact of sanctions and trade restrictions imposed as a result thereof, operational disruptions at facilities located in Israel as a result of military call-ups of the Company’s employees in Israel, closure of the offices there, potential impact of litigation and risks related to supply chain disruptions, might affect the Company's business and results from operations.

As of May 7, 2024 (date of filing),our facilities in Israel remain open and operated at normal level.

As of August 6, 2024 (date of filing), our facilities in Israel remain open and operate at normal level.

The extent and duration of the current war, the possibility of further spread of the conflict to other countries in the region as well as involving other political and military entities in the Middle East, poses risks to our operations and may lead to disruptions which could adversely affect our business, prospects, financial condition and results of operations.

While sales to customers in Israel is relatively a small portion of our revenues, our operations in Israel include executive offices, which are the workplace for key executives including our chief executive officer, as well as two manufacturing facilities located in the central part of Israel which source approximately 25 percent of our total worldwide revenues.

While sales to customers in Israel is relatively a small portion of our revenues, our operations in Israel include offices, that are the workplace for key executives including our chief executive officer, as well as two manufacturing facilities located in the central part of Israel which source approximately 25 percent of our total worldwide revenues.

We have implemented a contingency plan that we believe will secure supply of materials and logistics, build safety stock of finished goods and transfer these goods to our distribution centers outside of Israel.

4 unchanged sentences

VPG reports in three product 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.

Sensors, Weighing Solutions, and Measurement Systems.

The Sensors 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.

Net revenues for the fiscal quarter ended March 30, 2024 were $80.8 million versus $88.9 million for the comparable prior year period.

Net earnings attributable to VPG stockholders for the fiscal quarter ended March 30, 2024 were $5.9 million, or $0.44 per diluted share, versus $7.0 million, or $0.51 per diluted share, for the comparable prior year period.

The results of operations for the fiscal quarters ended March 30, 2024 and April 1, 2023 include items affecting comparability as listed in the reconciliations below.

The Measurement Systems segment is comprised of highly specialized systems for steel production, materials development, and safety testing.

Net revenues for the fiscal quarter ended June 29, 2024 were $77.4 million versus $90.8 million for the comparable prior year period.

Net earnings attributable to VPG stockholders for the fiscal quarter ended June 29, 2024 were $4.6 million, or $0.34 per diluted share, versus $8.2 million, or $0.60 per diluted share, for the comparable prior year period.

Net revenues for the six fiscal months ended June 29, 2024 were $158.1 million versus $179.7 million for the comparable prior year period.

Net earnings attributable to VPG stockholders for the six fiscal months ended June 29, 2024 were $10.5 million, or $0.78 per diluted share, versus $15.2 million, or $1.11 per diluted share, for the comparable prior year period.

The results of operations for the fiscal quarters ended June 29, 2024 and July 1, 2023 include items affecting comparability as listed in the reconciliations below.

The reconciliations below include certain financial measures which are not recognized in accordance with U.S.

8 unchanged sentences

Gross Profit Operating Income Net Earnings Attributable to VPG Stockholders Diluted Earnings Per share

Three months ended March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Three months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

As reported - GAAP $ 32,407 $ 38,712 $ 5,906 $ 11,795 $ 4,603 $ 8,236 $ 0.34 $ 0.60

2 unchanged sentences

Restructuring costs — — — 162 — 162 — 0.01

Foreign currency exchange gain (b) — — — — (1,289) (794) (0.10) (0.05)

Tax effect of reconciling items and discrete tax items — — — — (836) (312) (0.06) (0.02)

As Adjusted - Non GAAP $ 32,407 $ 38,753 $ 5,906 $ 11,998 $ 4,150 $ 7,957 $ 0.31 $ 0.58

As Adjusted - Non GAAP Margins 41.9 % 42.7 % 7.6 % 13.2 %

Gross Profit Operating Income Net Earnings Attributable to VPG Stockholders Diluted Earnings Per share

Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

As reported - GAAP $ 67,501 $ 75,911 $ 12,824 $ 21,719 $ 10,494 $ 15,200 $ 0.78 $ 1.11

As reported - GAAP Margins 42.7 % 42.3 % 8.1 % 12.1 %

Acquisition purchase accounting adjustments (a) — 90 — 90 — 90 — 0.01

Restructuring costs — — 782 278 782 278 0.06 0.02

Severance cost 347 347 0.03

Foreign currency exchange gain (b)

— — — — (2,878) (856) (0.21) (0.06)

Tax effect of reconciling items and discrete tax items — — — — (1,074) (280) (0.08) (0.02)

1 unchanged sentence

As Adjusted - Non GAAP Margins 42.7 % 42.3 % 8.8 % 12.3 %

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net earnings attributable to VPG stockholders $ 4,603 $ 8,236 $ 10,494 $ 15,200

21 unchanged sentences

We include in our backlog only open orders that have been released by the customer for shipment in the next twelve months.

If demand falls below customers’ forecasts, or if customers do not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty.

If demand falls below customers’ forecasts, or if customers do

not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty.

Therefore, backlog is not necessarily indicative of the results expected for future periods.

7 unchanged sentences

The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business.

The following tables show net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover for our business as a whole and by segment during the five quarters beginning with the first quarter of 2023 through the first quarter of 2024.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter

The following tables show net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover for our business as a whole and by segment during the five quarters beginning with the second quarter of 2023 through the second quarter of 2024.

2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter

(dollars in thousands)

5 unchanged sentences

Inventory turnover 2.34 2.20 2.27 2.05 1.99

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter

2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter

(dollars in thousands) 2023 2023 2023 2024 2024

16 unchanged sentences

Inventory turnover 1.94 1.94 1.87 1.62 1.65

Net revenues for the first fiscal quarter of 2024 decreased 9.8% from the fourth fiscal quarter of 2023 mainly due to lower revenues in all three reporting segments.

Net revenues decreased 9.1% from the first fiscal quarter of 2023 reflecting lower volume primarily in the Sensors and Weighing Solutions reporting segments, which was partially offset by higher volume in the Measurement Systems reporting segment.

Net revenues in the Sensors reporting segment decreased 14.1% compared to the fourth fiscal quarter of 2023, and decreased 19.9% from the first fiscal quarter of 2023.

Sequentially, the decrease primarily reflected lower revenue of precision resistors in the Test and Measurement and Avionics, Military and Space ("AMS") end markets.

The year-over-year decrease in revenues

was primarily attributable to lower sales of precision resistors in the Test and Measurement market and lower sales of precision resistors and strain gages in the AMS market.

Net revenues in the Weighing Solutions reporting segment decreased 5.2% from the fourth fiscal quarter of 2023, and decreased 9.5% from the first fiscal quarter of 2023.

The sequential and year-over-year decreases in revenues were mainly attributable to lower OEM sales of force sensors in our Other markets for precision agriculture and construction applications and lower sales of force sensors in our Industrial Weighing market, partially offset by increased sales in the Transportation market.

Net revenues in the Measurement Systems reporting segment decreased 9.3% from the fourth fiscal quarter of 2023 and increased 11.1% from the first fiscal quarter of 2023.

Sequentially, the decrease in revenue was primarily due to the lower sales of DTS in the AMS and Transportation markets partially offset by higher sales in the Steel markets.

The year-over-year increase was primarily attributable to increased revenue to the Steel market.

Total Company gross profit margin in the first fiscal quarter of 2024 increased 0.4% as compared to the fourth fiscal quarter of 2023 and increased 1.5% from the first fiscal quarter of 2023.

Sequentially, the decrease in the gross profit margin in the Sensors reporting segment was offset by the increase in the gross profit margin in Weighing Solution and Measurement Systems reporting segments.

In the Sensors reporting segment, the gross profit margin decreased sequentially mainly due to lower volume.

In the Weighing Solutions reporting segment, the gross profit margin increased sequentially despite lower sales volume due to cost reduction programs and positive inventory adjustments in prior quarter.

The sequential increase in the gross profit margin in the Measurement Systems reporting segment was primarily a result of favorable product mix partially offset by lower sales volume.

Compared to the first fiscal quarter of 2023, the Weighing Solutions and Measurement Systems reporting segments had higher gross profit margins, while the gross profit margin for the Sensors reporting segment was lower mainly due to lower sales volume.

The increase in gross profit margin for the Weighing Solutions reporting segment as compared to 2023 was primarily due to favorable product mix, cost reduction programs and favorable foreign currency exchange, offset by lower sales volume.

In the Measurement Systems reporting segment, the higher gross profit margin compared to the first fiscal quarter of 2023 was primarily due to higher sales volume and favorable product mix.

Net revenues for the second fiscal quarter of 2024 decreased 4.2% from the first fiscal quarter of 2024 and decreased 14.8% from the second fiscal quarter of 2023 across all three reporting segments.

Net revenues in the Sensors reporting segment decreased 1.9% compared to the first fiscal quarter of 2024 and decreased 20.4% from the second fiscal quarter of 2023.

The year-over-year decrease in Sensors reporting segment revenues was primarily attributable to lower sales of precision resistors in the Test and Measurement and Avionics, Military and Space (AMS) markets, partially offset by increases in advanced sensors sales in the Other markets, mainly for consumer applications.

Net revenues in the Weighing Solutions reporting segment decreased 4.8% from the first fiscal quarter of 2024 and decreased 12.2% from the second fiscal quarter of 2023.

Sequentially, the decreases in revenues was primarily attributable to lower sales in the Transportation market.

The year-over-year decrease in revenues was mainly attributable to lower sales of load cells in our Other markets, primarily for precision agriculture and medical applications, and in our Industrial Weighing market.

Net revenues in the Measurement Systems reporting segment decreased 6.6% from the first fiscal quarter of 2024 and decreased 9.6% from the second fiscal quarter of 2023.

Sequentially, the decrease in revenue was primarily due to lower sales of Diversified Technical Systems Inc.

("DTS") products in the AMS and Transportation markets.

The year-over-year decrease was primarily attributable to decreased revenue in the Steel and the Transportation markets.

Overall gross profit margin in the second fiscal quarter of 2024 decreased 1.5% as compared to the first fiscal quarter of 2024 and decreased 0.7% from the second fiscal quarter of 2023.

Sequentially, the decrease in the gross profit margin in the Measurements Systems and Weighing Solutions reporting segments was partially offset by an increase in the gross profit margin in the Sensors reporting segment.

In the Sensors reporting segment, sequentially, the higher gross profit margin was primarily due to improved operational efficiencies.

In the Weighing Solutions reporting segment, the sequential decrease in gross profit margin was primarily due to lower volume.

The sequential decrease in the gross profit margins in the Measurement Systems reporting segment was a result of lower volume with an unfavorable product mix.

Compared to the second fiscal quarter of 2023, the Measurement Systems reporting segment had higher gross profit margins, while the Sensors and Weighing Solutions reporting segments had a lower gross profit margin.

The Sensors reporting segment had a lower gross profit margin due to lower volume partially offset by improved efficiencies and cost reduction programs .

The Weighing Solutions reporting segment had a lower gross profit margin as compared to 2023 primarily due to lower volume.

In the Measurement Systems reporting segment, the gross profit margin was slightly higher as compared to the second fiscal quarter of 2023 primarily due to favorable product mix.

Optimize Core Competence

47 unchanged sentences

Our operations in Europe, Canada, and certain locations in Asia primarily generate and expend cash using local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency.

For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated condensed balance sheets have been translated at

the rate of exchange as of the balance sheet date.

For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated condensed balance sheets have been translated at the rate of exchange as of the balance sheet date.

Translation adjustments do not impact the results of operations and are reported as a separate component of equity.

14 unchanged sentences

Effects of Foreign Currency Exchange Rate on Operations

For the fiscal quarter ended March 30, 2024, changes in foreign currency exchange rates decreased net revenues by $0.2 million, and decreased costs of products sold and selling, general, and administrative expenses by $0.8 million, when compared to the comparable prior year period.

For the fiscal quarter ended June 29, 2024, exchange rates decreased net revenues by $0.7 million, and decreased costs of products sold and selling, general, and administrative expenses by $0.7 million, when compared to the comparable prior year period.

For the six fiscal months ended June 29, 2024, exchange rates decreased net revenues by $0.9 million, and decreased costs of products sold and selling, general, and administrative expenses by $1.6 million, when compared to the comparable prior year period.

Results of Operations

Statement of operations’ captions as a percentage of net revenues and the effective tax rates were as follows:

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Costs of products sold 58.1 % 57.4 % 57.3 % 57.7 %

7 unchanged sentences

Net revenues were as follows (dollars in thousands) :

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net revenues $ 77,359 $ 90,802 $ 158,142 $ 179,666

Change versus comparable prior year period

$ (13,443) $ (21,524)

Percentage change versus prior year period

(14.8) % (12.0) %

Changes in net revenues were attributable to the following:

4 unchanged sentences

Net change (14.8) % (12.0) %

During the fiscal quarter ended March 30, 2024, net revenues decreased 9.1%, as compared to the comparable prior year period with decreased volume, primarily from the Sensors and Weighing Solutions reporting segments, was partially offset by higher volume in the Measurement Systems reporting segment.

During the fiscal quarter and six fiscal months ended June 29, 2024, net revenues decreased 14.8% and 12.0%, respectively, as compared to the comparable prior year periods, due to lower volume across all three reporting segments.

Gross Profit Margin

Gross profit as a percentage of net revenues was as follows:

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Gross profit margin 41.9 % 42.6 % 42.7 % 42.3 %

The gross profit margin for the fiscal quarter ended March 30, 2024 increased 1.5%, as compared to the comparable prior year periods.

For the fiscal quarter period 2024, the Weighing Solutions and Measurement Systems reporting segments had higher gross profit margin, while the Sensors reporting segment had lower gross profit margin.

The gross profit margin for the fiscal quarter ended June 29, 2024 decreased 0.7% and for the six fiscal months ended June 29, 2024 increased 0.4% as compared to the comparable prior year periods.

For the fiscal quarter period, the Measurement Systems reporting segment had higher gross profit margins, while the Sensors and Weighing Solutions reporting segments had a lower gross profit margin.

For the six month period ended June 29, 2024, the Measurement Systems and Weighing Solutions reporting segments had higher gross profit margins, while the Sensors reporting segment had a lower gross profit margin.

Analysis of revenues and gross profit margins for each of our reportable segments is provided below.

Net revenues of the Sensors segment were as follows (dollars in thousands) :

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net revenues $ 28,869 $ 36,266 $ 58,283 $ 72,992

Change versus comparable prior year period

$ (7,397) $ (14,709)

Percentage change versus prior year period

(20.4)% (20.2)%

Changes in Sensors segment net revenues were attributable to the following:

4 unchanged sentences

Net change (20.4) % (20.2) %

Net revenues decreased 19.9% for the fiscal quarter ended March 30, 2024, as compared to the comparable prior year period.

The decrease in revenues was primarily attributable to lower sales of precision resistors in the Test and Measurement market and lower sales of precision resistors and strain gages in the AMS market.

The Sensors segment revenue of $28.9 million in the second fiscal quarter of 2024 decreased 20.4% from $36.3 million in the second fiscal quarter of 2023;

sequentially, revenue decreased 1.9% compared to $29.4 million in the first fiscal quarter of 2024.

The year-over-year decrease in revenues was primarily attributable to lower sales of precision resistors in the Test and Measurement and Avionics, Military and Space (AMS) markets, partially offset by increases in advanced sensors sales in the Other markets, mainly for consumer applications.

Sequentially, the decrease primarily reflected lower sales of precision resistors in the Test and Measurement market, partially offset by increases in advanced sensors sales in the Other markets, mainly for consumer applications.Sequentially, the decrease primarily reflected lower sales of precision resistors in the Test and Measurement market, partially offset by increases in advanced sensors sales in the Other markets, mainly for consumer applications.

Gross profit as a percentage of net revenues for the Sensors segment was as follows:

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Gross profit margin 38.3 % 40.1 % 37.4 % 40.7 %

The gross profit margin decreased 4.7% for the fiscal quarter ended March 30, 2024, when compared to the comparable prior year periods due to lower volume.

Gross profit margin for the Sensors segment was 38.3% for the second fiscal quarter of 2024.

Gross profit margin decreased compared to 40.1% in the second fiscal quarter of 2023, and increased compared to 36.5% in the first fiscal quarter of 2024.

The year-over-year decrease in gross profit margin was primarily due to lower volume, partially offset by improved efficiencies and cost reduction programs.

Sequentially, the higher gross profit margin was primarily due to improved efficiencies.

Weighing Solutions

Net revenues of the Weighing Solutions segment were as follows (dollars in thousands) :

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

$ 27,447 $ 31,261 $ 56,292 $ 63,120

Change versus comparable prior year period

$ (3,814) $ (6,828)

Percentage change versus prior year period

(12.2) % (10.8) %

Changes in Weighing Solutions segment net revenues were attributable to the following:

4 unchanged sentences

Net change (12.2) % (10.8) %

Net revenues decreased 9.5% for the fiscal quarter ended March 30, 2024, as compared to the comparable prior year period.

The decrease in revenues were mainly attributable to lower OEM sales of force sensors in our Other markets for precision agriculture and construction applications and lower sales of force sensors in our Industrial Weighing market, partially offset by increased sales in the Transportation market.

The Weighing Solutions segment revenue of $27.4 million in the second fiscal quarter of 2024 decreased 12.2% compared to $31.3 million in the second fiscal quarter of 2023 and was 4.8% lower than $28.8 million in the first fiscal quarter of 2024.

The year-over-year decline in revenues was mainly attributable to lower sales of load cells in our Other markets, primarily for precision agriculture and medical applications, and in our Industrial Weighing market.

Sequentially, the decreases in revenues was primarily attributable to lower sales in the Transportation market.

Gross profit as a percentage of net revenues for the Weighing Solutions segment was as follows:

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Gross profit margin 37.6 % 38.7 % 38.3 % 36.8 %

The gross profit margin for the fiscal quarter ended March 30, 2024 increased by 4.2% compared to the comparable prior year period primarily due to favorable product mix, cost reduction programs and favorable foreign currency exchange, partially offset by lower sales volume.

Gross profit margin for the Weighing Solutions segment was 37.6% for the second fiscal quarter of 2024, which decreased compared to 38.7% in the second fiscal quarter of 2023, and decreased compared to 39.1% in the first fiscal quarter of 2024.

The year-over-year and sequential decrease in gross profit margin were primarily due to lower volume.

Measurement Systems

Net revenues of the Measurement Systems segment were as follows (dollars in thousands) :

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net revenues $ 21,043 $ 23,275 $ 43,567 $ 43,554

Change versus comparable prior year period

$ (2,232) $ 13

Percentage change versus prior year period

(9.6) % 0.0 %

Changes in Measurement Systems segment net revenues were attributable to the following:

4 unchanged sentences

Net change (9.6) % 0.0 %

Net revenues increased 11.1% for the fiscal quarter ended March 30, 2024 as compared to the comparable prior year period.

The increase was primarily attributable to increased revenue in the Steel market as higher sales of KELK products were partially offset by lower sales of DSI systems.

The Measurement Systems segment revenue of $21.0 million in the second fiscal quarter of 2024 decreased 9.6% year-over-year from $23.3 million in the second fiscal quarter of 2023 and was 6.6% lower than $22.5 million in the first fiscal quarter of 2024.

The year-over-year decrease was primarily attributable to decreased revenue in the Steel and the Transportation markets.

Sequentially, the decrease in revenue was primarily due to lower sales of Diversified Technical Systems Inc.

("DTS") products in the AMS and Transportation markets.

Gross profit as a percentage of net revenues for the Measurement Systems segment were as follows:

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Gross profit margin 52.4 % 51.8 % 55.4 % 52.8 %

The gross profit margin for the fiscal quarter ended March 30, 2024 increased by 4.2% as compared to the comparable prior year period due to higher sales volume and favorable product mix.

Gross profit margin for the Measurement Systems segment was 52.4%, compared to 51.8% (or 52.0% adjusted to exclude $41.0 thousand of purchase accounting adjustment related to the DTS and DSI acquisitions), in the second fiscal quarter of 2023, and 58.1% in the first fiscal quarter of 2024.

The year-over-year adjusted gross profit margin* was slightly higher due to product mix.

The sequentially lower adjusted gross profit margin reflected lower volume with an unfavorable product mix.

Selling, General, and Administrative Expenses

Selling, general, and administrative (“SG&A”) expenses are summarized as follows (dollars in thousands) :

Fiscal quarter ended

March 30, 2024 April 1, 2023

Fiscal quarter ended Six fiscal months ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Total SG&A expenses $ 26,501 $ 26,755 $ 53,895 $ 53,914

As a percentage of net revenues 34.3 % 29.5 % 34.1 % 30.0 %

SG&A expenses for the fiscal quarter ended March 30, 2024 increased $0.2 million, compared to the comparable prior year periods due to increases in bonus accruals, and travel costs, partially offset by lower commissions and favorable foreign currency exchange rate impacts.

SG&A expenses for the fiscal quarter and six fiscal months ended June 29, 2024 decreased $0.3 million and $0.0 million, respectively, compared to the comparable prior year periods.

Restructuring Costs

3 unchanged sentences

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.

The Company recorded $0.0 million and $0.2 million of restructuring costs during the fiscal quarter ended June 29, 2024 and July 1, 2023, respectively, and $0.8 million and $0.3 million of restructuring costs during the six fiscal months ended June 29, 2024 and July 1, 2023, respectively.

Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, in connection with various cost reduction programs.

Other Income (Expense)

Interest expense for the fiscal quarter ended March 30, 2024 was lower when compared with the comparable prior year periods mainly due to the lower debt balance outstanding as a result of debt payments made in the second half of 2023.

Interest expense for the fiscal quarter and six fiscal months ended June 29, 2024 was lower when compared with the comparable prior year periods mainly due to lower debt balance outstanding as a result of debt payments made in the second half of 2023.

The following table analyzes the components of the line “Other” on the consolidated condensed statements of operations (in thousands) :

Fiscal quarter ended

March 30, 2024 April 1, 2023 Change

June 29, 2024 July 1, 2023 Change

Foreign currency exchange gain $ 1,287 $ 793 $ 494

3 unchanged sentences

$ 1,701 $ 1,019 $ 682

Six fiscal months ended

June 29, 2024 July 1, 2023 Change

Foreign currency exchange gain $ 2,877 $ 855 $ 2,022

Interest income 822 722 100

Pension expense (20) (145) 125

Other (118) (138) 20

$ 3,561 $ 1,294 $ 2,267

Foreign currency exchange gains represent the impact of changes in foreign currency exchange rates.

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.

For the fiscal quarter and six fiscal months ended June 29, 2024, the change in foreign currency exchange gains and losses during the periods, as compared to the prior year periods, is largely due to exposure to currency fluctuations with the Israeli shekel, the Japanese Yen, the Canadian dollar and the British pound.

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 for the fiscal quarter ended March 30, 2024 was 28.4% compared to 24.1% for the fiscal quarter ended April 1, 2023.

The effective tax rate for the fiscal quarter ended March 30, 2024 was higher than the prior year period primarily due to changes in the mix of worldwide income and an increase in our valuation allowance on deferred tax assets.

The effective tax rate for the fiscal quarter ended June 29, 2024 was 33.3% compared to 28.8% for the fiscal quarter ended July 1, 2023.

The effective tax rate for the fiscal quarter ended June 29, 2024 was higher than the prior year period primarily due to changes in the mix of worldwide income and an increase in our valuation allowance on deferred tax assets.

The effective tax rate for the six fiscal months ended June 29, 2024 was 30.7% compared to 26.8% for the six fiscal months ended July 1, 2023.

The effective tax rate for the six fiscal months ended June 29, 2024 was higher than the prior year period primarily due to changes in the mix of worldwide income and an increase 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.

27 unchanged sentences

The financial maintenance covenants include an interest coverage ratio and a leverage ratio.

The Company was in compliance with its financial maintenance covenants at March 30, 2024.

The Company was in compliance with its financial maintenance covenants at June 29, 2024.

If the Company is not in compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable.

Our business has historically generated significant cash flow.

For the three fiscal months ended March 30, 2024, cash provided by operating activities was $6.4 million compared to $8.4 million in the comparable prior year period.

Our net cash used in investing activities for the three fiscal months ended March 30, 2024 was $2.2 compared to $3.5 million in the comparable to prior year period mainly due to lower capital expenditures.

Our net cash used in financing activities for the three fiscal months ended March 30, 2024 was $3.6 million compared to $0.8 million in the comparable prior year period mainly due to the repurchase of an aggregate of $2.8 million of our common stock.

Approximately 94% and 92% of our cash and cash equivalents balance at March 30, 2024 and December 31, 2023, respectively, was held by our non-U.S.

For the six fiscal months ended June 29, 2024, cash provided by operating activities was $13.9 million compared to $18.2 million in the comparable prior year period.

Our net cash used in investing activities for the six fiscal months ended June 29, 2024 was lower compared to the prior year period mainly due to lower capital spending.

Our net cash used in financing activities for the six fiscal months ended June 29, 2024 was significantly higher when compared with the prior year period due to the stock repurchases made during the period.

Approximately 91% and 92% of our cash and cash equivalents balance at June 29, 2024 and December 31, 2023, respectively, was held by our non-U.S.

subsidiaries.

See the following table for the percentage of cash and cash equivalents, by region, at March 30, 2024 and December 31, 2023:

March 30, 2024 December 31, 2023

See the following table for the percentage of cash and cash equivalents, by region, at June 29, 2024 and December 31, 2023:

June 29, 2024 December 31, 2023

Israel 40 % 36 %

1 unchanged sentence

Europe 13 % 14 %

France 9 % 9 %

United States 9 % 8 %

7 unchanged sentences

These alternatives could result in higher tax expense, increased interest expense, or dilution of our earnings.

We consider the majority of the undistributed earnings of our foreign subsidiaries, as of March 30, 2024, to be indefinitely reinvested.

Adjusted free cash flow generated during the three fiscal months ended March 30, 2024 was $4.2 million.

We consider the majority of the undistributed earnings of our foreign subsidiaries, as of June 29, 2024, to be indefinitely reinvested.

Adjusted free cash flow generated during the six fiscal months ended June 29, 2024, was $9.0 million.

We refer to the amount of cash provided by operating activities ($13.9 million) in excess of our capital expenditures ($5.2 million) and net of proceeds from the sale of assets ($0.8 million) as “adjusted free cash flow.”

The following table summarizes the components of net cash at March 30, 2024 and December 31, 2023 (in thousands) :

March 30, 2024 December 31, 2023

The following table summarizes the components of net cash at June 29, 2024 and December 31, 2023 (in thousands) :

June 29, 2024 December 31, 2023

Cash and cash equivalents $ 84,128 $ 83,965

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These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies.

Our financial condition as of March 30, 2024 remains strong, with a current ratio (current assets to current liabilities) of 2.6 to 1.0, as compared to a ratio of 3.9 to 1.0 at December 31, 2023.

The current ratio was affected in large part due to the reclassification of long-term debt to a current liability.

Cash paid for property and equipment for the three fiscal months ended March 30, 2024 was $2.6 million compared to $3.5 million in the comparable prior year period.

As of March 30, 2024 and December 31, 2023, we did not have any off-balance sheet arrangements.

Our financial condition as of June 29, 2024 remains strong, with a current ratio (current assets to current liabilities) of 2.7 to 1.0, as compared to a ratio of 3.9 to 1.0 at December 31, 2023.

Cash paid for property and equipment for the six fiscal months ended June 29, 2024 was $5.2 million compared to $6.9 million in the comparable prior year period.

As of June 29, 2024 and December 31, 2023, we did not have any off-balance sheet arrangements.

Safe Harbor Statement

27 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis