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What changed in Vishay Precision Group, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Vishay Precision Group, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+208 added−207 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Vishay Precision Group, Inc.'s 2023 10-K

208 paragraphs added · 207 removed · 178 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

36 edited+7 added−5 removed95 unchanged
Biggest changeTo view the reports, access http://ir.vpgsensors.com and click on “Financials”/ “SEC Filings.” The following corporate governance related documents are also available on our website: • Compensation Committee Charter • Nominating and Corporate Governance Committee Charter • Audit Committee Charter • Code of Business Conduct and Ethics • Code of Ethics Applicable to the Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer or Controller • Corporate Governance Principles • Policy Regarding Qualifications of Directors To view these documents, access http://ir.vpgsensors.com and click on “Sustainability-Governance” and then on “Governance” and then on "Governance Documents." To view our Ethics Program Reporting Procedures, access http:/www.vpgsensors.com/Ethics We are not incorporating by reference into this Annual Report on Form 10-K any material from our website. - 11 - Any of the above documents can also be obtained in print by any stockholder, upon written request to our Investor Relations Department at the following address: Corporate Investor Relations Vishay Precision Group, Inc. 3 Great Valley Parkway, Suite 150 Malvern, PA 19355 - 12 -
Biggest changeTo view the reports, access http://ir.vpgsensors.com and click on “Financials”/ “SEC Filings.” The following corporate governance related documents are also available on our website: • Compensation Committee Charter • Nominating and Corporate Governance Committee Charter • Audit Committee Charter • Code of Business Conduct and Ethics • Code of Ethics Applicable to the Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer or Controller • Corporate Governance Principles • Policy Regarding Qualifications of Directors • Anti-Bribery and Anti-Corruption Policy • Supplier Code of Conduct • Information Security Report • By-Laws of Vishay Precision Group To view these documents, access http://ir.vpgsensors.com and click on “Sustainability-Governance” and then on “Governance” and then on "Governance Documents." To view our Ethics Program Reporting Procedures, access http:/www.vpgsensors.com/Ethics - 11 - We are not incorporating by reference into this Annual Report on Form 10-K any material from our website.
A transducer is mounted on a structure that is subjected to weight or other forces, such as the platform of an industrial scale. The term “load cell” is primarily used to describe transducers used in weighing applications. Strain-gage based transducers consist of one or more strain gages bonded to a metallic support.
A transducer is mounted on a structure that is subjected to weight or other forces, such as the platform of an industrial scale. The term “load cell” is primarily used to describe transducers used in weighing applications. Strain-gage based transducers consist of one or more strain gages bonded to a metallic structure.
Our sales teams act as direct sales channels (field application engineers (“FAEs”)) utilizing the primary customer interface relating to initial design specifications, development of prototypes, and pricing/delivery of this segment’s products. Distributors are also used for those customers that desire standard products.
Our sales teams act as direct sales channels (field application engineers or “FAEs”) utilizing the primary customer interface relating to initial design specifications, development of prototypes, and pricing/delivery of this segment’s products. Distributors are also used for those customers that desire standard products.
In the past several years, we incurred restructuring expense related to closing and downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India and China, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.
In the past several years, we incurred restructuring expense related to closing and downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.
As the functionality of customers products continues to increase, and they integrate more precision measurement sensors and related systems into their solutions, we believe this will offer substantial growth opportunities for our products and expertise. Our History On July 6, 2010, our company was spun off by Vishay Intertechnology, Inc.
As the functionality of customers' products continues to increase, and they integrate more precision measurement sensors and related systems into their solutions, we believe this will offer substantial growth opportunities for our products and expertise. Our History On July 6, 2010, our company was spun off by Vishay Intertechnology, Inc.
Modules are transducers combined with a mounting and with external features, such as instruments and cables, and are used for weighing and control applications. We sell our load cells and modules under the overall VPG Transducers name as we continue to transition from the previously used Celtron, Revere, Sensortronics, and Tedea-Huntleigh brands.
We produce both analog and digital transducers. Modules are transducers combined with a mounting and with external features, such as instruments and cables, and are used for weighing and control applications. We sell our load cells and modules under the overall VPG Transducers name as we continue to transition from the previously used Celtron, Revere, Sensortronics, and Tedea-Huntleigh brands.
Clancy 60 Executive Vice President and Chief Financial Officer Amir Tal 53 Senior Vice President and Chief Accounting Officer Ziv Shoshani is our Chief Executive Officer and President, and also serves on the Board of Directors. Mr. Shoshani was Chief Operating Officer of Vishay Intertechnology from January 1, 2007 to November 1, 2009.
Clancy 61 Executive Vice President and Chief Financial Officer Amir Tal 54 Senior Vice President and Chief Accounting Officer Ziv Shoshani is our Chief Executive Officer and President, and also serves on the Board of Directors. Mr. Shoshani was Chief Operating Officer of Vishay Intertechnology from January 1, 2007 to November 1, 2009.
Optimize Core Competence The Company’s core competencies include our innovative deep technical and applications-specific expertise to add value to our customers' products, our strong brands and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and our proven M&A strategy.
Optimize Core Competence The Company’s core competencies include our innovative deep technical and applications-specific expertise, our strong brands and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and our proven M&A strategy.
Human Capital As of December 31, 2022, we employed approximately 2,700 total employees, substantially all of which were full-time employees. Approximately 84% of our employees were located outside the United States. Our future success is substantially dependent on our ability to attract and retain highly qualified technical and administrative personnel.
Human Capital As of December 31, 2023, we employed approximately 2,300 total employees, substantially all of which were full-time employees. Approximately 82% of our employees were located outside the United States. Our future success is substantially dependent on our ability to attract and retain highly qualified technical and administrative personnel.
Our multi-year ESG plan continues to be built on four pillars: Our People, Our Environment, Our Governance and Our Products, and serves as a guiding framework that will be added to as new trends, requests from stakeholders and internal business strategies require.
Our multi-year ESG plan is reviewed yearly and remains built on four pillars: Our People, Our Environment, Our Governance and Our Products, and continues to serve as a guiding framework that will be added to as new trends, requests from stakeholders and internal business strategies require.
We continue to support employee’s rights to collective bargaining and other recognized employee interests to organize. - 10 - Information about our Executive Officers The following table sets forth certain information regarding our executive officers as of March 1, 2023: Name Age Positions Ziv Shoshani 56 Chief Executive Officer, President, and Director William M.
We continue to support employee’s rights to collective bargaining and other recognized employee interests to organize. - 10 - Information about our Executive Officers The following table sets forth certain information regarding our executive officers as of February 29, 2024: Name Age Positions Ziv Shoshani 57 Chief Executive Officer, President, and Director William M.
DSI expands our position in the steel market and offers opportunities for growth by leveraging our sales capabilities and market presence, and by expanding DSI’s product line to address new opportunities. On June 1, 2021, we completed the acquisition of California-based Diversified Technical Systems, Inc. (“DTS”), a leading manufacturer of data acquisition systems and sensors for product and safety testing.
DSI expands our position in the steel market and offers opportunities for growth by leveraging our sales capabilities and market presence, and by expanding DSI’s product line to address new opportunities. • On June 1, 2021, we completed the acquisition of California-based Diversified Technical Systems, Inc.
Our load cell manufacturing sites undergo periodic audits by regulatory authorities in order to verify compliance with standard requirements and to extend product approvals. Manufacturing Operations Our principal manufacturing facilities are located in Israel, the United States, Canada, India, the People’s Republic of China, Germany, and Japan.
Our load cell manufacturing sites undergo periodic audits by regulatory authorities in order to verify compliance with standard requirements and to extend product approvals. Manufacturing Operations Our principal manufacturing facilities are located in Israel, the United States, Canada, India, Germany, and Japan. We also have manufacturing facilities in Sweden, the United Kingdom, the Republic of China (Taiwan), and France.
Our precision measurement solutions are used across a wide variety of end markets upon which we focus, including industrial, test and measurement, transportation, steel, medical, agriculture, avionics, military and space, and consumer product applications.
Our precision measurement solutions are used across a wide variety of end markets upon which we focus, including test and measurement, industrial, transportation, steel, avionics, military and space, as well as other markets such as agriculture, consumer, and medical.
The change in resistance of the strain gages in response to deformation of the transducer by the applied load is detected by electronic instrumentation. Transducers are manufactured with different designs and configurations depending on their application and the type of stress or strain to be measured; for example, weight or tension. We produce both analog and digital transducers.
The change in resistance of the strain gages in response to strain of the transducer by the applied load is detected by electronic instrumentation calculating the force detected or weight. Transducers are manufactured with different designs and configurations depending on their application and the type of stress or strain to be measured; for example, weight or tension.
KELK engineers, designs and manufactures highly accurate optical and electronic roll force measurement and control equipment primarily used by metals rolling mills and mining applications throughout the world. On December 30, 2015, we completed the acquisition of Stress-Tek, Inc. ("Stress-Tek") based in Kent, Washington. Stress-Tek designs and manufactures state-of-the-art, rugged and reliable strain gage-based load cells and force measurement systems.
KELK engineers, designs and manufactures highly accurate optical and electronic roll force measurement and control equipment primarily used by metals rolling mills and mining applications throughout the world. - 4 - • On December 30, 2015, we completed the acquisition of Stress-Tek, Inc. ("Stress-Tek") based in Kent, Washington.
We have quality management systems at all of our major manufacturing facilities approved under the ISO 9001 Quality Management Systems Standard. ISO 9001 is a comprehensive set of quality program standards developed by the International Organization for Standardization ("ISO"). The quality management system in our major foil resistors manufacturing site is certified against Aerospace Standard AS9100.
ISO 9001 is a comprehensive set of quality program standards developed by the International Organization for Standardization ("ISO"). The quality management system in our major foil resistors manufacturing site is certified against Aerospace Standard AS9100.
VPG Onboard Weighing products, sold under the brand names TruckWeigh and VanWeigh, are used by drivers and fleet operators to monitor vehicle loads within legally permitted limits and regulations. Our Stress-Tek, Vulcan, and BLH Nobel businesses mainly provide load cells and instrumentation for weighing and force control/measurement for a variety of uses.
VPG Onboard Weighing products, sold under the brand names TruckWeigh, VanWeigh, and Load Pro in the United States, are used by drivers and fleet operators to monitor vehicle loads within legally permitted limits and regulations. The BLH Nobel business mainly provides load cells and instrumentation for weighing and force control/measurement for a variety of uses.
Competitors in our Weighing Solutions segment include HBK, Zemic, Utilcell, Flintec, Hardy Instruments and Mettler-Toledo for load cell products, and Air-Weigh, Vehicle Weighing Systems, MOBA, and AMCS for onboard weighing products. In the Measurement Systems segment, we compete with ABB, Siemens, Haehne, Dalian, IMS and Fuji in the steel market and Kistler for data acquisition systems.
Competitors in our Weighing Solutions segment include HBK, Zemic, and Utilcell for load cell products, and Air-Weigh and Vehicle Weighing Systems for onboard weighing products. In the Measurement Systems segment, we compete with ABB, IMS and Fuji in the steel market and Kistler for data acquisition systems.
Further integration of our load cell technology is also - 6 - offered as part of our weighing module products, which provide customers with a complete sensor assembly that may be used within a wide variety of digital transducers.
In some cases, these products use our strain gage products, which serve as sensing elements and components within each unit. Further integration of our load cell technology is also - 6 - offered as part of our weighing module products, which provide customers with a complete sensor assembly that may be used within a wide variety of digital transducers.
Our strain gage products, which include our advanced sensors, are resistive sensors that are attached to the surface of an object to determine the surface strain caused by an applied force.
We have a road map of new technology products to meet the required needs of our customers. Our strain gage products, which include our advanced sensors, are resistive sensors that are attached to the surface of an object to determine the surface strain caused by an applied force.
Specifically, we are focused on the following strategic initiatives: - 3 - Operationally Diversified In the fourth quarter of fiscal 2021, we formally adopted an operationally diversified structure and strategy, through which each of VPG's business segments maintains and deploys distinct go-to-market strategies, technical expertise, capital requirements, and acquisition opportunities.
Specifically, we are focused on the following strategies: - 3 - Operationally Diversified Each of VPG's business segments maintains and deploys distinct go-to-market strategies, technical expertise, capital requirements, and acquisition opportunities.
This segment is comprised of our KELK, DSI, Pacific Instruments, and our DTS businesses. Our KELK business provides high accuracy and performance sensors and systems for the steel and aluminum industries — and within those industries, mainly for rolling mills.
Our KELK business provides high accuracy and performance sensors and systems for the steel and aluminum industries — and within those industries, mainly for rolling mills.
Our VPG Onboard Weighing business specializes in high-quality, high-accuracy vehicle weighing and load monitoring systems for all commercial vehicle types, including trucks, vans and specialty vehicles. Many of these products use solid-state sensors.
Our VPG Onboard Weighing, Stress-Tek, and Vulcan businesses specialize in high-quality, high-accuracy vehicle weighing and over-load monitoring systems for all commercial vehicle types, including trucks, vans, specialty vehicles, and special scale systems used for aircraft weighing and portable truck weighing. Onboard weighing systems are installed in logging and waste handling trucks. Many of these products use solid-state sensors.
We also have manufacturing facilities in Sweden, the United Kingdom, the Republic of China (Taiwan), and France. Over the past several years, we have invested substantial resources to increase capacity and to enhance automation in our plants, which we believe will further reduce production costs.
Over the past several years, we have invested substantial resources to increase capacity and to enhance automation in our plants, which we believe will further reduce production costs. We have quality management systems at all of our major manufacturing facilities approved under the ISO 9001 Quality Management Systems Standard.
Our strategy is to leverage our core technologies and competitive positions in our home markets, establishing an accelerated organic growth, as well as by acquiring complementary precision measurement sensing products.
Our strategy is to leverage our core technologies and competitive position in both existing and new markets to accelerate our organic growth, as well as to augment that growth by acquiring complementary precision measurement and sensing businesses.
FAEs are utilized as the primary customer interface relating to initial design specifications, development of prototypes, and pricing/delivery of this segment's products. We also use distributors and sales agents, as appropriate, to market, sell, and support certain products in this segment. Measurement Systems The Measurement Systems segment includes highly specialized systems for steel production, materials development, and safety testing.
We also use distributors and sales agents, as appropriate, to market, sell, and support certain products in this segment. Measurement Systems The Measurement Systems segment includes highly specialized systems for steel production, materials development, and safety testing. This segment is comprised of our KELK, DSI, Pacific Instruments, and our DTS businesses.
VPG Transducers offers a broad line of load cells and force measurement transducers, which also known as force sensors, that are offered as precision sensors for industrial and commercial use. Typical applications for force sensors are in construction machinery (for stability control, overload protection), agricultural equipment (for precision force measurement), and medical devices (such as hospital beds and medication dosing).
VPG Transducers offers a broad line of load cells and force measurement transducers, which also known as force sensors, that are offered as precision sensors for industrial and commercial use.
To complement our extensive portfolio of high-performance precision resistors, we also offer decade boxes, standard resistors, exceptional precision thin film and power resistors including special construction configurations to meet the requirements of high temperature applications. We have a road map of new technology products to meet the required needs of our customers.
APR is our off-the-shelf commercial product line based on AEC-Q200 standardization. To complement our extensive portfolio of high-performance precision resistors, we also offer decade boxes, standard resistors, exceptional precision thin film and power resistors including special construction configurations to meet the requirements of high temperature applications.
The implementation of our multi-year ESG plan is on track as evidenced by our actions over the past year, which include revising our Board Committee charters and other applicable governance documents to include ESG-related topics and oversight, launching a sustainability website, sharing key ESG performance indicators with our stockholders, key stakeholders and the general public and adding ESG policies on Human Rights and Solid and Hazardous Waste.
The implementation of our multi-year ESG plan continues to be on track as evidenced by our actions over the past year, which include updating applicable governance documents to include ESG-related topics on Information Security, sharing further key ESG performance indicators for environment, health and safety with our stockholders, key stakeholders and the general public, adopting ESG policies on Climate Related Risk-Greenhouse Gas and a Supplier Code of Conduct and updating our Anti-Bribery and Anti-Corruption policies.
DTS's embedded data acquisition and data logging products expands our offerings to the automotive and avionics, military, and space markets. We believe DTS will continue to benefit from the global need for specialized safety testing that is expanding from the automotive and avionics sectors to sports applications.
We believe DTS will continue to benefit from the global need for specialized safety testing that is expanding from the automotive and avionics sectors to sports applications. As a result of our acquisition, we acquired a leased manufacturing, engineering, sales and administrative facilities in Seal Beach, California and Novi, Michigan.
We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing and distribution footprint.
We expect to expand our expertise and our acquisition focus to other precision measurement solutions, including in the fields of measurement of force, weight, pressure, torque, tilt, motion, and acceleration. We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing and distribution footprint.
Our precision resistors are based on Bulk Metal Foil® technology and are used in diverse applications, which require a high degree of precision and stability. The main market segments for our precision resistors are as follows: Avionics & Military, Space Communications, Fiber Optics, Industrial Automation, EV Battery Management Infrastructure, and Precision Weighing, Test & Measurements / Semiconductors and others.
Our precision resistors are based on Bulk Metal Foil® technology and are used in diverse applications, which require a high degree of precision and stability.
Major components that comprise our Weighing Solutions products include: load cells, electronic displays, signal processors, MEMS sensors, cabling, system software, and communications software/hardware. The end use for the majority of these products is the precision measurement of force, weight, pressure, torque, tilt, motion, and acceleration.
These include systems to control process weighing in food, chemical, and pharmaceutical plants; force measurement systems used to control web tension in paper mills, cable tension in winch controls. Major components that comprise our Weighing Solutions products include: load cells, electronic displays, signal processors, MEMS sensors, cabling, system software, and communications software/hardware.
In recent years, we widened our acquisition strategy to include a broader set of precision measurement systems and product companies. - 4 - In 2013, we completed our first acquisition as an independent public company when we acquired substantially all of the assets of the George Kelk Corporation ("KELK").
Growth from Acquisitions Since becoming a public company, we have acquired five businesses utilizing stringent financial, market, operational, and valuation criteria: • In 2013, we completed our first acquisition as an independent public company when we acquired substantially all of the assets of the George Kelk Corporation ("KELK").
The heavy equipment market has begun to adopt load cell technology as process control and equipment control features for their products. In some cases, these products use our strain gage products, which serve as sensing elements and components within each unit.
Typical applications for force sensors are in construction machinery for stability control or overload protection, agricultural equipment for precision force measurement, and medical devices such as hospital beds and medication dosing. The heavy equipment market has begun to adopt load cell technology as process control and equipment control features for their products.
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Growth from Acquisitions We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments. Historically, our growth and acquisition strategy had been largely focused on vertical product integration, using our foil strain gages in our load cell products, and incorporating those products into our weighing solutions.
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Stress-Tek designs and manufactures state-of-the-art, rugged and reliable strain gage-based load cells and force measurement systems.
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As a result of our acquisition, we acquired a leased manufacturing, engineering, sales and administrative facility in Seal Beach, California. We expect to expand our expertise, and our acquisition focus, outside our traditional vertical approach to other precision measurement solutions, including in the fields of measurement of force, weight, pressure, torque, tilt, motion, and acceleration.
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(“DTS”), a leading manufacturer of data acquisition systems and sensors for product and safety testing. DTS's embedded data acquisition and data logging products expands our offerings to the automotive and avionics, military, and space markets.
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Foil resistors are marketed under four different brands: VFR, Alpha Electronics, Powertron and APR. APR is our off the shelf commercial product line based on AEC-Q200 standardization.
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We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments. Our acquisition strategy is focused on identifying and acquiring high-value, growing technology-driven businesses that augment, expand and/or leverage our current offering in precision measurement and sensor markets.
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These include systems to control process weighing in food, chemical, and pharmaceutical plants; force measurement systems used to control web tension in paper mills, cable tension in winch controls; onboard weighing systems installed in logging and waste-handling trucks; and special scale systems used for aircraft weighing and portable truck weighing.
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The main market segments for our precision resistors are as follows: avionics & military, space communications, fiber optics, industrial automation, EV battery management infrastructure, precision weighing, and test & measurement including semiconductor test and production, among others. Foil resistors are marketed under four different brands: VFR, Alpha Electronics, Powertron and APR.
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The impact of COVID-19 on our operations has been mitigated through the issuance of Guidelines for Manufacturing Safety, Travel Safety and Personal Protective Equipment sourcing to ensure employee and visitor, contractor safety and continuity of operations.
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The end use for the majority of these products is the precision measurement of force, weight, pressure, torque, tilt, motion, and acceleration. FAEs are utilized as the primary customer interface relating to initial design specifications, development of prototypes, and pricing/delivery of this segment's products.
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Internally, we are also capturing baseline data to identify opportunities for reducing energy consumption that contribute to Scope 1 and Scope 2 emissions using the latest Greenhouse Gas Protocol.
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Any of the above documents can also be obtained in print by any stockholder, upon written request to our Investor Relations Department at the following address: Corporate Investor Relations Vishay Precision Group, Inc. 3 Great Valley Parkway, Suite 150 Malvern, PA 19355 - 12 -

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

38 edited+8 added−12 removed152 unchanged
Biggest changeThese losses could have an adverse effect on our operations, financial condition, and results of operations. - 14 - We may encounter difficulties in the implementation or operation of new enterprise resource planning systems. We have implemented, and continue to implement, new enterprise resource planning (“ERP”) systems in different parts of our business.
Biggest changeWe may encounter difficulties in the implementation or operation of new enterprise resource planning systems. We have implemented, and continue to implement, new enterprise resource planning (“ERP”) systems in different parts of our business. ERP systems are integral to our ability to accurately and efficiently manage our manufacturing and sales activities, and provide critical business information to management.
For example: • Although we believe we have sufficient liquidity to run our business, under extreme market conditions, there can be no assurance that financing, if needed, would be available or sufficient, and, in such a case, we may not be able to successfully obtain financing on favorable terms, or at all. • Continuing market volatility can exert downward pressure on our stock price, which could make it more difficult or unfavorable for us to raise additional capital in the future. • Economic conditions could result in customers in our markets experiencing financial difficulties, including limited liquidity and their inability to obtain financing or electing to limit spending because of the economy which may result, for example, in customers’ inability to pay us at all or on a timely basis.
For example: • Although we believe we have sufficient liquidity to run our business, under extreme market conditions, there can be no assurance that financing, if needed, would be available or sufficient, and, in such a case, we may not be able to successfully obtain financing on favorable terms, or at all. - 21 - • Continuing market volatility can exert downward pressure on our stock price, which could make it more difficult or unfavorable for us to raise additional capital in the future. • Economic conditions could result in customers in our markets experiencing financial difficulties, including limited liquidity and their inability to obtain financing or electing to limit spending because of the economy which may result, for example, in customers’ inability to pay us at all or on a timely basis.
In China, for instance, the USTR is concerned about the urgent need to remediate a range of IP-related concerns, including trade secret theft, online piracy and counterfeiting, the high-volume manufacture and export of counterfeit goods, technology transfer requirements imposed as a condition to access the Chinese market, the mandatory application of adverse terms to foreign IP licensors, and IP ownership and research and development localization requirements.
In China, for instance, the USTR is concerned about the urgent need to remediate a range of IP-related concerns, including trade secret theft, online piracy and counterfeiting, the high-volume manufacture and export of counterfeit - 14 - goods, technology transfer requirements imposed as a condition to access the Chinese market, the mandatory application of adverse terms to foreign IP licensors, and IP ownership and research and development localization requirements.
Although we have never been involved in any environmental matter that has had a material adverse impact on our overall operations, there can be no assurance that in connection with any past or future operation, acquisition or otherwise, we will not be obligated to address environmental matters that could have a material adverse impact on our business, financial condition, and results of operations.
Although we have never been involved in any environmental matter that has had a material adverse impact on our overall operations, there can be no assurance that in connection with any past or future operation, acquisition or - 17 - otherwise, we will not be obligated to address environmental matters that could have a material adverse impact on our business, financial condition, and results of operations.
Competition for modules and systems is most often based on customer relationships, product reliability, technical performance, and the ability to anticipate and satisfy customer needs for specific design configurations. Many other manufacturers have more experience in particular geographic - 13 - markets and specific applications than we do, and may be better positioned to compete in these areas.
Competition for modules and systems is most often based on customer relationships, product reliability, technical performance, and the ability to anticipate and satisfy customer needs for specific design configurations. Many other manufacturers have more experience in particular geographic markets and specific applications than we do, and may be better positioned to compete in these areas.
Significant tariffs or other restrictions which are placed on Chinese, European, Canadian or Israeli imports to the United States, or any related counter-measures which are taken by the countries involved, may materially harm our revenues and results of operations. Tariffs, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries.
Significant tariffs or other restrictions which are placed on Indian, Chinese, European, Canadian or Israeli imports to the United States, or any related counter-measures which are taken by the countries involved, may materially harm our revenues and results of operations. Tariffs, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries.
Our backlog is subject to customer cancellation. Many of the orders that comprise our backlog may be canceled by our customers without penalty. Our customers, particularly for our sensors segment products, often cancel orders when business is weak and inventories are excessive, a situation that we - 16 - have previously experienced during periods of economic slowdown.
Our backlog is subject to customer cancellation. Many of the orders that comprise our backlog may be canceled by our customers without penalty. Our customers, particularly for our sensors segment products, often cancel orders when business is weak and inventories are excessive, a situation that we have previously experienced during periods of economic slowdown.
The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental actions related to tariffs, quotas, duties, taxes or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, and our suppliers, which in turn could adversely impact our business, financial condition and results of operations.
The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental actions related to tariffs, quotas, duties, taxes or trade - 19 - agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, and our suppliers, which in turn could adversely impact our business, financial condition and results of operations.
We have implemented protective measures to prevent against and limit the effects of system or network disruptions, but there can be no assurance that such measures will be sufficient to prevent or limit the damage from any future disruptions and any such disruption could have a material adverse impact on our business and results of operations.
We have implemented protective measures to prevent against and limit the - 22 - effects of system or network disruptions, but there can be no assurance that such measures will be sufficient to prevent or limit the damage from any future disruptions and any such disruption could have a material adverse impact on our business and results of operations.
As a result, the trading market for our shares may be less liquid, making it more difficult for investors to dispose of their shares at favorable prices, and investors may have less independent information and analysis available to them concerning our company. - 23 - Your percentage ownership of our common stock may be diluted in the future.
As a result, the trading market for our shares may be less liquid, making it more difficult for investors to dispose of their shares at favorable prices, and investors may have less independent information and analysis available to them concerning our company. Your percentage ownership of our common stock may be diluted in the future.
Moreover, defending a suit, regardless of its merits, could entail substantial expense, and require the - 15 - time and attention of key management personnel. If product liability claims are brought against us, the costs associated with defending such claims may adversely affect our results of operations and future cash flows.
Moreover, defending a suit, regardless of its merits, could entail substantial expense, and require the time and attention of key management personnel. If product liability claims are brought against us, the costs associated with defending such claims may adversely affect our results of operations and future cash flows.
To the extent that any tax authority disagrees with our transfer pricing practices, we could incur significant costs to defend our position and could be subject to significant additional tax liabilities, interest, and penalties. We may not be able to realize our deferred tax assets which would adversely impact tax expense in future periods.
To the extent that any tax authority disagrees with our transfer pricing practices, we could incur significant costs to defend our position and could be subject to significant additional tax liabilities, interest, and penalties. - 18 - We may not be able to realize our deferred tax assets which would adversely impact tax expense in future periods.
The Vishay Precision Group, Inc. 2022 Stock Incentive Program, as may be amended from time to time, provides for the grant of equity-based awards, including restricted stock, restricted stock units, stock options, and other equity-based awards to our directors, officers, and other employees, advisors and consultants. Item 1B. UNRESOLVED STAFF COMMENTS None.
The Vishay Precision Group, Inc. 2022 Stock Incentive Program, as may be amended from time to time, provides for the grant of equity-based awards, including restricted stock, restricted stock units, stock options, and other equity-based awards to our directors, officers, and other employees, advisors and consultants. - 23 - Item 1B. UNRESOLVED STAFF COMMENTS None.
The nature of our measurement systems business segments, and in particular, the products and systems manufactured for the steel industry, may therefore result in substantial fluctuations in our operating results, including revenues and profitability, from period to period, even though there has been no fundamental change in our business or its prospects.
The nature of our measurement systems business segments, and in particular, the products and systems manufactured for the steel - 15 - industry, may therefore result in substantial fluctuations in our operating results, including revenues and profitability, from period to period, even though there has been no fundamental change in our business or its prospects.
These amounts could also be subject to certain U.S. state taxes. - 18 - Changes in our tax rate or exposure to additional income tax liabilities could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods. We are subject to income taxes in the U.S. and in various foreign jurisdictions.
These amounts could also be subject to certain U.S. state taxes. Changes in our tax rate or exposure to additional income tax liabilities could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods. We are subject to income taxes in the U.S. and in various foreign jurisdictions.
During this process, we may experience under-utilization of certain plants and factories in higher-cost regions, and capacity constraints in plants and factories located in lower-cost regions. Also, we may experience delays in the expected transition from a higher-cost location to a lower-cost one that results in greater than expected use of the higher-cost - 19 - facility.
During this process, we may experience under-utilization of certain plants and factories in higher-cost regions, and capacity constraints in plants and factories located in lower-cost regions. Also, we may experience delays in the expected transition from a higher-cost location to a lower-cost one that results in greater than expected use of the higher-cost facility.
Therefore, even effective internal control over financial reporting can provide only reasonable assurance with - 17 - respect to the preparation and fair presentation of financial statements. If we cannot provide reasonable assurance with respect to our financial reports and effectively prevent fraud, our operating results could be harmed.
Therefore, even effective internal control over financial reporting can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we cannot provide reasonable assurance with respect to our financial reports and effectively prevent fraud, our operating results could be harmed.
Current and future tariffs, trade regulation or other restrictions may adversely impact our business, financial condition and results of operations. We have manufacturing operations in China, Europe, Canada, Israel and the United States, as well as in other countries.
Current and future tariffs, trade regulation or other restrictions may adversely impact our business, financial condition and results of operations. We have manufacturing operations in India, China, Europe, Canada, Israel and the United States, as well as in other countries.
In addition, failure to comply with any of these regulations could result in substantial civil and criminal, monetary and non-monetary penalties, disruptions to our business, limitations on our ability to import and export products and services and damage to our reputation.
In addition, failure to comply with any of these regulations could result in substantial civil and criminal, monetary and non-monetary penalties, - 20 - disruptions to our business, limitations on our ability to import and export products and services and damage to our reputation.
For periods in which the prices are declining, we may be required to write down our inventory carrying cost of these raw materials, since we record our inventory at the lower of cost or market.
For periods in which the prices are declining, we may be required to write down our - 16 - inventory carrying cost of these raw materials, since we record our inventory at the lower of cost or market.
Such transactions involve a number of risks, including the following: • we may incur substantial costs, including advisory fees and diversion of management attention, in evaluating a potential transaction; • we may be unable to achieve the anticipated benefits from the transaction; • we may have difficulty integrating the operations, personnel and culture of an acquired business, and may have difficulty retaining the key personnel of the acquired business; • we may have difficulty enforcing restrictive covenants against the seller of the acquired business or former employees or other personnel of the acquired business; • we may have difficulty incorporating acquired technologies or products into our existing solutions; • our ongoing business and management's attention may be disrupted or diverted by transition or integration issues, and the complexity of managing geographically and culturally diverse locations; and • we may lose customers of those companies, or may lose our customers due to the change in control or for other reasons.
Such transactions involve a number of risks, including the following: • we may incur substantial costs, including advisory fees and diversion of management attention, in evaluating a potential transaction, whether or not the transaction is consummated; • we may be unable to achieve the anticipated benefits from the transaction; • we may have difficulty integrating the operations, personnel and culture of an acquired business, and may have difficulty retaining the key personnel of the acquired business; • we may have difficulty enforcing restrictive covenants against the seller of the acquired business or former employees or other personnel of the acquired business; - 13 - • we may have difficulty incorporating acquired technologies or products into our existing solutions; • our ongoing business and management's attention may be disrupted or diverted by transition or integration issues, and the complexity of managing geographically and culturally diverse locations; and • we may lose customers of those companies, or may lose our customers due to the change in control or for other reasons.
Historically, we expanded our business in part by completing acquisitions, and an important element of our business strategy continues to be expansion through acquisition. We cannot assure that we will identify, have the financial capabilities to execute, and/or successfully complete strategic transactions with suitable partners in the future.
Historically, we expanded our business in part by completing acquisitions, and we expect that an important element of our business strategy will continue to be expansion through acquisition. We cannot assure that we will identify, have the financial capabilities to execute, and/or successfully complete strategic transactions with suitable partners in the future.
As of December 31, 2022, we did not have in place any arrangements to mitigate or hedge against exposures relating to fluctuations in foreign currency exchange rate. - 20 - A change in the mix of the currencies in which we transact our business could have a material effect on results of operations.
As of December 31, 2023, we did not have in place any arrangements to mitigate or hedge against exposures relating to fluctuations in foreign currency exchange rate. A change in the mix of the currencies in which we transact our business could have a material effect on results of operations.
We generate a significant amount of cash and profits from our non-U.S. subsidiaries. As of December 31, 2022, 83% of our cash and cash equivalents and short-term investments were held by subsidiaries outside of the United States. Any repatriation of such funds could incur local withholding tax in the source and intervening foreign jurisdictions.
We generate a significant amount of cash and profits from our non-U.S. subsidiaries. As of December 31, 2023, 92% of our cash and cash equivalents and short-term investments were held by subsidiaries outside of the United States. Any repatriation of such funds could incur local withholding tax in the source and intervening foreign jurisdictions.
Ruta Zandman’s nephew and our Chief Executive Officer and a member of our Board of Directors), approximately 76.9% of our Class B convertible common stock, representing 34.5% of the total voting power of our capital stock as of December 31, 2022.
Ruta Zandman’s nephew and our Chief Executive Officer and a member of our Board of Directors), approximately 76.9% of our Class B convertible common stock, representing 34.9% of the total voting power of our capital stock as of December 31, 2023.
Unexpected events, including fires or explosions at facilities; natural disasters, such as flooding, hurricanes, and earthquakes; war or terrorist activities; civil unrest; unplanned outages; supply or labor disruptions; and failures of equipment or systems at any of our facilities could adversely affect our results of operation.
Unexpected events, including fires or explosions at facilities; natural disasters, such as flooding, hurricanes, and earthquakes; pandemics; outbreaks of disease or illness; war or terrorist activities; civil unrest; unplanned outages; supply or labor disruptions; and failures of equipment or systems at any of our facilities could adversely affect our results of operation.
In particular, our Measurement Systems business segment which produces highly specialized systems, can be priced for several hundred thousand dollars per unit, so that a contract to acquire one or more units can materially contribute to our revenues during the period or periods that we are permitted to recognize the contract revenues for accounting purposes.
In particular, our Measurement Systems business segment which produces highly specialized systems, can be priced for ten thousand dollars to $1 million or more per unit, so that a contract to acquire one or more units can materially contribute to our revenues during the period or periods that we are permitted to recognize the contract revenues for accounting purposes.
A number of factors may adversely affect the labor force available to us or increase labor costs, including general macroeconomic conditions, high employment levels, federal unemployment subsidies, increased wages offered by other employers, vaccine mandates and other government regulations and our responses thereto.
A number of factors may adversely affect the labor force available to us or increase labor costs, including general macroeconomic conditions, high employment levels, federal unemployment subsidies, increased wages offered by other employers, vaccine mandates and other government regulations, and our responses thereto. Outside suppliers that we rely on have also experienced shortages of qualified labor.
If our cost reduction programs and related restructuring result in us not being able to satisfy our customer’s demand for products during a rising economy, and our competitors sufficiently expand production, we could lose customers and/or market share.
If our cost reduction programs and related restructuring result in us not being able to satisfy our customer’s demand for products during a rising economy, and our competitors sufficiently expand production, we could lose customers and/or market share. These losses could have an adverse effect on our operations, financial condition, and results of operations.
Under these by-law provisions: • stockholders may not change the size of the board of directors or, except in limited circumstances, fill vacancies on the board of directors; • stockholders may not call special meetings of stockholders; • stockholders must comply with advance notice provisions for nominating directors or presenting other proposals at stockholder meetings; and • our Board of Directors, may without stockholder approval, issue preferred shares and determine their rights and terms, including voting rights, or adopt a stockholder rights plan. - 21 - These provisions could have the effect of discouraging an unsolicited acquisition proposal or delaying, deferring, or preventing a change of control transaction that might involve a premium price or otherwise be considered favorable by our stockholders.
Under these by-law provisions: • stockholders may not change the size of the board of directors or, except in limited circumstances, fill vacancies on the board of directors; • stockholders may not call special meetings of stockholders; • stockholders must comply with advance notice provisions for nominating directors or presenting other proposals at stockholder meetings; and • our Board of Directors, may without stockholder approval, issue preferred shares and determine their rights and terms, including voting rights, or adopt a stockholder rights plan.
Any cyber incidents could materially disrupt operational systems; result in - 22 - loss of trade secrets or other proprietary or competitively sensitive information; compromise personally identifiable information regarding customers or employees; and jeopardize the security of our facilities.
Our operations routinely involve receiving, storing, processing, and transmitting sensitive information pertaining to our business, customers, suppliers, employees, and other sensitive matters. Any cyber incidents could materially disrupt operational systems; result in loss of trade secrets or other proprietary or competitively sensitive information; compromise personally identifiable information regarding customers, employees or other persons; and jeopardize the security of our facilities.
Information technology security threats, including security breaches, computer malware, and other cyber-attacks are increasing in both frequency and sophistication, and could create financial liability, subject us to legal or regulatory sanctions, or damage our reputation with customers, suppliers, and other stakeholders.
Information technology security threats, including security breaches, computer malware, and other cyber-attacks are increasing in both frequency and sophistication, including as a result of ongoing military conflicts, certain U.S. foreign relations, and increased remote work arrangements, and could create financial liability, subject us to legal or regulatory sanctions, or damage our reputation with customers, suppliers, and other stakeholders.
ERP systems are integral to our ability to accurately and efficiently manage our manufacturing and sales activities, and provide critical business information to management. The implementation of an ERP system may cause us to incur additional costs, shipment delays, and related customer dissatisfaction; expend employee (including Company management) time and attention; and otherwise burden our internal resources.
The implementation of an ERP system may cause us to incur additional costs, shipment delays, and related customer dissatisfaction; expend employee (including Company management) time and attention; and otherwise burden our internal resources.
These potential impacts, while uncertain, could adversely affect our operating results. A shortage of qualified labor could have a material adverse effect on our business and results of operations. Labor is a significant component of operating our business.
Risks Related to Our Business A shortage of qualified labor could have a material adverse effect on our business and results of operations. Labor is a significant component of operating our business.
Any such loss of data by our third-party service providers could have a material adverse impact on our business and results of operations. Unexpected events, such as a natural disaster, could disrupt our operations and adversely affect our results of operations. We have manufacturing and other facilities in countries around the world.
Unexpected events, such as a natural disaster, could disrupt our operations and adversely affect our results of operations. We have manufacturing and other facilities in countries around the world.
We have principal manufacturing facilities and operations located in Israel. Accordingly, our business will be directly influenced by the political, economic and military conditions affecting Israel at any given time. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries.
We have principal manufacturing facilities and operations located in Israel. Accordingly, our business is directly influenced by the political, economic and military conditions affecting Israel at any given time.
Our financial position, results of operations and cash flows could be adversely affected by difficult conditions and significant volatility in the capital, credit and commodities markets and in the overall worldwide economy. Disruptions in supply chains, inflation, and rising interest rates have a negative effect on economies and the performance of stock markets.
Our financial position, results of operations and cash flows could be adversely affected by difficult conditions and significant volatility in the capital, credit and commodities markets and in the overall worldwide economy. Recent global events have adversely affected and are continuing to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflation, and increased market volatility.
We have never experienced any material interruption in our operations attributable to these factors, in spite of several Middle East crises, including wars. A change in the security and political situation in Israel and in the economy could have a material adverse effect on our business, operating results and financial condition.
The intensity and duration of Israel’s current war against Hamas are difficult to predict as are such war’s implications on our operations and on the global economy. A change in the security and political situation in Israel and in the economy could have a material adverse effect on our business, operating results and financial condition.
Removed
Risks Related to Our Business The COVID-19 outbreak has adversely impacted and could continue to adversely impact our results of operations.
Added
Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries, terrorist organizations and other militant groups, including the current war between Israel and Hamas.
Removed
The impact of the COVID-19 outbreak on a global basis has adversely affected and is likely to continue to adversely affect our business in a number of respects, although the further extent, nature and timing of such impact cannot be predicted at this time.
Added
We have never experienced any material interruption in our operations attributable to these factors, in spite of several Middle East crises, including the current war. In response to conflict in or around Israel, we could in the future temporarily discontinue production in Israel for the safety of our employees.
Removed
The COVID-19 outbreak has led countries around the world, as well as most states in the U.S., to from time-to-time implement restrictions relating to the operation of almost all types of businesses. The closure standards vary from jurisdiction to jurisdiction, but they typically require all but “critical”, “essential” or “life-sustaining” businesses to close all offices and facilities.
Added
We could also face future production slowdowns or interruptions at either of our manufacturing locations in Israel due to the impacts of conflicts, such as the war between Israel and Hamas, including personnel absences as a number of our employees have been called to active military duty, or due to other resource constraints such as the inability to source materials for production.
Removed
We believe, based on the various standards published to date, that our businesses meet or will meet the requisite standards to remain open, at least partially, in all jurisdictions in which we operate, although there is no assurance that our decision to remain open will not be challenged.
Added
These provisions could have the effect of discouraging an unsolicited acquisition proposal or delaying, deferring, or preventing a change of control transaction that might involve a premium price or otherwise be considered favorable by our stockholders.
Removed
To date, our supply chain has not experienced significant disruptions as a result of the COVID-19 pandemic.
Added
The ongoing wars between Israel and Hamas and between Russia and Ukraine, escalating tensions in the South China Sea, Red Sea and Yemen, high inflation, increasing interest rates, bank failures and associated financial instability and crises, and supply chain issues have added to global economic and market volatility.
Removed
However, our suppliers could be required by government authorities to temporarily cease operations in accordance with the various restrictions discussed above, might be limited in their production capacity due to complying with restrictions relating to the operation of businesses during the COVID-19 pandemic, or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us.
Added
Any such loss of data by our third-party service providers could have a material adverse impact on our business and results of operations. We may use artificial intelligence in our business, and challenges with properly managing its use could adversely affect our business .
Removed
If as a result of the COVID-19 outbreak governments take additional protective actions, or extend the time period for existing protective actions, or the distribution and administration of the vaccines for COVID-19 are delayed, disrupted, or prolonged, such actions or events may have a material adverse impact on our business and operating results.
Added
We may incorporate artificial intelligence (“AI”) solutions into our business, processes, or products, and applications of AI may become important in our operations over time. Our competitors or other third parties may incorporate AI into their businesses more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Removed
This could include closures of our facilities or the closure of the facilities of our customers, suppliers, or other vendors in our supply chain. Any disruption of our supply chain or the businesses of our customers could adversely impact our business and results of operations.
Added
Additionally, if the types of information that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected. The rapid evolution of AI, including potential government regulation of AI, may require significant resources to develop, test and maintain our implementations of AI.
Removed
The extent and duration of the impact on the global economy and financial markets from COVID-19 is difficult to predict, and the extent to which COVID-19 will negatively affect us and the duration of any potential business disruption is uncertain.
Removed
The impact to our business and results of operation will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of the COVID-19 outbreak and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, and the impact of such actions, all of which are beyond our control.
Removed
We are currently experiencing a shortage of qualified labor in certain geographies, particularly with manufacturing plant production workers in the United States, Israel and Japan. Outside suppliers that we rely on have also experienced shortages of qualified labor.
Removed
Our operations routinely involve receiving, storing, processing, and transmitting sensitive information pertaining to our business, customers, suppliers, employees, and other sensitive matters.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES As of December 31, 2022, our major facilities consisted of: Approx. Available Space (square feet) United States Other Countries Total Owned facilities 226,000 369,000 595,000 Leased facilities 73,000 272,400 345,400 Total facilities 299,000 641,400 940,400 Our leased facility in Modi'in Israel represents approximately 45% of the total leased square footage in Other Countries.
Biggest changeAvailable Space (square feet) United States Other Countries Total Owned facilities 226,000 471,150 697,150 Leased facilities 73,000 272,400 345,400 Total facilities 299,000 743,550 1,042,550 Our leased facility in Modi'in Israel represents approximately 45% of the total leased square footage in Other Countries. - 25 - Our corporate headquarters are located at 3 Great Valley Parkway, Suite 150, Malvern, PA 19355.
Our corporate headquarters are located at 3 Great Valley Parkway, Suite 150, Malvern, PA 19355. In the opinion of management, our properties and equipment generally are in good operating condition and are adequate for our present needs. We do not anticipate difficulty in renewing leases as they expire, or in finding alternative facilities.
In the opinion of management, our properties and equipment generally are in good operating condition and are adequate for our present needs. We do not anticipate difficulty in renewing leases as they expire, or in finding alternative facilities.
Added
Item 2. PROPERTIES As of December 31, 2023, our major facilities consisted of: Approx.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not applicable. - 24 - PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. - 26 - PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 24 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securiti es 25 Item 6. [Reserved] 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42
Biggest changeItem 4. Mine Safety Disclosures 26 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 27 Item 6. [Reserved] 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 44

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table provides information about repurchases of the Company's common stock during the three-month period ended December 31, 2022 Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans (a) October 2, 2022 to November 2, 2022 43,949 $ 31.67 43,949 523,450 November 3, 2022 to December 3, 2022 8,663 $ 33.08 8,663 514,787 December 4, 2022 to December 31, 2022 — $ — — — Total 52,612 52,612 514,787 (a) On August 8, 2022, the Board of Directors of the Company authorized the repurchase of up to 600,000 shares of the Company’s outstanding common stock (the “Stock Repurchase Plan”).
Biggest changeThe following table provides information about repurchases of the Company's common stock during the three-month period ended December 31, 2023 Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans (a) October 1, 2023 to November 1, 2023 37,562 $ 31.93 37,562 442,019 November 2, 2023 to December 2, 2023 68,073 $ 29.91 68,073 373,946 December 3, 2023 to December 31, 2023 47,572 $ 31.19 47,572 326,374 Total 153,207 153,207 326,374 (a) 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 return of each new peer issuer has been weighted according to the respective issuer’s stock market capitalization. The graph and table assume that $100 had been invested at December 31, 2017, and that all dividends were reinvested. The graph and table are not necessarily indicative of future investment performance. 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Vishay Precision Group, Inc.
The return of each new peer issuer has been weighted according to the respective issuer’s stock market capitalization. The graph and table assume that $100 had been invested at December 31, 2018, and that all dividends were reinvested. The graph and table are not necessarily indicative of future investment performance. 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Vishay Precision Group, Inc.
Ruta Zandman's nephew, our Chief Executive Officer and a member of our Board of Directors), approximately 76.9% of our Class B convertible common stock, representing 34.5% of the total voting power of our capital stock as of December 31, 2022.
Ruta Zandman's nephew, our Chief Executive Officer and a member of our Board of Directors), approximately 76.9% of our Class B convertible common stock, representing 34.9% of the total voting power of our capital stock as of December 31, 2023.
At March 1, 2023 we had outstanding 1,022,887 shares of Class B convertible common stock, par value $0.10 per share. Currently, the holders of VPG’s Class B convertible common stock hold approximately 45.0% of the voting power of our Company. Mrs. Ruta Zandman, the widow of the late founder of our technology, Dr.
At February 29, 2024, we had outstanding 1,022,887 shares of Class B convertible common stock, par value $0.10 per share. Currently, the holders of VPG’s Class B convertible common stock hold approximately 45.3% of the voting power of our Company. Mrs. Ruta Zandman, the widow of the late founder of our technology, Dr.
Stock dividends or distributions, on any class of stock, are payable only in shares of stock of that class. Shares of either common stock or Class B convertible common stock cannot be split, divided, or combined unless the other is also split, divided, or combined equally. Holders of record of our common stock totaled approximately 676 at March 1, 2023.
Stock dividends or distributions, on any class of stock, are payable only in shares of stock of that class. Shares of either common stock or Class B convertible common stock cannot be split, divided, or combined unless the other is also split, divided, or combined equally. Holders of record of our common stock totaled approximately 676 at February 29, 2024.
The Stock Repurchase Plan will expire on August 11, 2023, and the Board of Directors authorized purchases thereunder to be made through an issuer repurchase plan adopted under Rule 10b5-1 of the Exchange Act, open market purchases or private transactions, in accordance with the applicable federal securities laws, including Rule 10b-18 under the Exchange Act.
The Stock Repurchase Plan was originally set to expire on August 11, 2023, and the Board authorized purchases thereunder to be made through an issuer repurchase plan adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), open market purchases or private transactions, in accordance with the applicable federal securities laws, including Rule 10b-18 under the Exchange Act.
As of December 31, 2022, the Company had repurchased 85,213 shares under the Stock Repurchase Plan. - 25 - Stock Performance Graph The graph and table below compare the cumulative total stockholder return on the Company’s common stock over a sixty month period, with the returns on the Russell 2000 Stock Index, and a peer group of companies selected by our management.
From August 8, 2022 to December 31, 2023, the Company had repurchased an aggregate of 273,626 shares under the Stock Repurchase Plan. - 27 - Stock Performance Graph The graph and table below compare the cumulative total stockholder return on the Company’s common stock over a five year period, with the returns on the Russell 2000 Stock Index, and a peer group of companies selected by our management.
Cumulative $ 100.00 120.20 135.19 125.17 147.60 153.66 Russell 2000 Index Cumulative $ 100.00 88.99 111.70 134.00 153.85 122.41 Peer Group Cumulative $ 100.00 93.68 125.94 134.35 150.74 120.02 *The management selected peer group includes: CTS Corp., Luna Innovations Inc., inTEST Corporation, Kyowa, Spectris plc, TT Electronics, FARO Technologies Inc., ESCO Technologies Inc.
Cumulative $ 100.00 112.47 104.13 122.79 127.84 112.67 Russell 2000 Index Cumulative $ 100.00 125.52 150.57 172.89 137.55 160.84 Peer Group Cumulative $ 100.00 134.43 143.41 160.90 128.11 158.93 *The management selected peer group includes: CTS Corp., Luna Innovations Inc., inTEST Corporation, Kyowa, Spectris plc, TT Electronics plc, FARO Technologies Inc., ESCO Technologies Inc.
Added
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+13 added−12 removed74 unchanged
Biggest changeManagement believes that the Company’s non-GAAP measures are regarded as supplemental to its GAAP financial results. - 27 - The items affecting comparability are (dollars in thousands, except per share amounts) : Gross Profit Operating Income Net Earnings Attributable to VPG Stockholders Diluted Earnings Per share Fiscal Year Ended December 31, 2022 2021 2022 2021 2022 2021 2022 2021 As reported - GAAP 149,602 125,142 43,799 27,372 $ 36,063 $ 20,221 $ 2.63 $ 1.48 As reported - GAAP Margins 41.3 % 39.4 % 12.1 % 8.6 % — — — — Acquisition purchase accounting adjustments (a) 1,550 2,775 1,550 2,775 1,550 2,775 0.11 0.20 Acquisition costs (b) — — — 1,198 — 1,198 — 0.09 COVID-19 impact (c) 138 (66) 138 (574) 138 (574) 0.01 (0.04) Start-up costs (d) 150 3,174 150 3,174 150 3,174 0.01 0.23 Impairment of goodwill and indefinite-lived intangibles — — — 1,223 — 1,223 — 0.09 Restructuring costs — — 1,518 76 1,518 76 0.11 0.01 Foreign exchange (gain)/loss (e) — — — — (3,579) 109 (0.26) 0.01 Less: Tax effect of reconciling items and discrete tax items (f) — — — — (44) 2,596 (0.01) 0.20 As Adjusted - Non GAAP $ 151,440 $ 131,025 $ 47,155 $ 35,244 $ 35,884 $ 25,606 $ 2.62 $ 1.87 As Adjusted - Non GAAP Margins 41.8 % 41.2 % 13.0 % 11.1 % Year ended December 31, 2022 December 31, 2021 Net earnings attributable to VPG stockholders $ 36,063 $ 20,221 Interest Expense 2,269 1,230 Income tax expense 8,535 5,469 Depreciation 11,504 11,684 Amortization 3,849 3,312 EBITDA $ 62,220 $ 41,916 EBITDA MARGIN 17.2 % 13.2 % Impairment of goodwill and indefinite-lived intangibles — 1,223 Acquisition purchase accounting adjustments (a) 1,550 2,775 Acquisition costs (b) — 1,198 Restructuring costs 1,518 76 COVID-19 impact (c) 138 (574) Start-up costs (d) 150 3,174 Foreign exchange (gain) loss (e) (3,579) 109 ADJUSTED EBITDA 61,997 49,897 ADJUSTED EBITDA MARGIN 17.1 % 15.7 % (a) Acquisition purchase accounting adjustments include fair market value adjustments associated with inventory recorded as a component of costs of products sold.
Biggest changeThe items affecting comparability are (dollars in thousands, except per share amounts) : Gross Profit Operating Income Net Earnings Attributable to VPG Stockholders Diluted Earnings Per share Fiscal Year Ended December 31, 2023 2022 2023 2022 2023 2022 2023 2022 As reported - GAAP 150,342 149,602 41,954 43,799 $ 25,707 $ 36,063 $ 1.88 $ 2.63 As reported - GAAP Margins 42.3 % 41.3 % 11.8 % 12.1 % — — — — Acquisition purchase accounting adjustments (a) 335 1,550 335 1,550 335 1,550 0.02 0.11 COVID-19 impact (c) — 138 — 138 — 138 — 0.01 Start-up costs (d) — 150 — 150 — 150 — 0.01 Restructuring costs — — 1,560 1,518 1,560 1,518 0.11 0.11 Foreign exchange (gain)/loss (e) — — — — 822 (3,579) 0.06 (0.26) Less: Tax effect of reconciling items and discrete tax items (f) — — — — (1,245) (44) (0.10) (0.01) As Adjusted - Non GAAP $ 150,677 $ 151,440 $ 43,849 $ 47,155 $ 29,669 $ 35,884 $ 2.17 $ 2.62 As Adjusted - Non GAAP Margins 42.4 % 41.8 % 12.4 % 13.0 % Year ended December 31, 2023 December 31, 2022 Net earnings attributable to VPG stockholders $ 25,707 $ 36,063 Interest Expense 3,974 2,269 Income tax expense 12,426 8,535 Depreciation 11,798 11,504 Amortization 3,752 3,849 EBITDA $ 57,657 $ 62,220 EBITDA MARGIN 16.2 % 17.2 % Acquisition purchase accounting adjustments (a) 335 1,550 Restructuring costs 1,560 1,518 COVID-19 impact (b) — 138 Start-up costs (c) — 150 Foreign exchange (gain) loss (d) 822 (3,579) ADJUSTED EBITDA 60,374 61,997 ADJUSTED EBITDA MARGIN 17.0 % 17.1 % (a) Acquisition purchase accounting adjustments include fair market value adjustments associated with inventory recorded as a component of costs of products sold.
Other important assumptions include the anticipated rate of future increases in compensation levels, estimated mortality, and for postretirement medical plans, increases or trends in health care costs. Management reviews these assumptions at least annually. We use independent actuaries to assist us in formulating assumptions and making estimates.
Other important assumptions include the anticipated rate of future increases in compensation levels, estimated mortality, and for - 35 - postretirement medical plans, increases or trends in health care costs. Management reviews these assumptions at least annually. We use independent actuaries to assist us in formulating assumptions and making estimates.
However, if we conclude otherwise, then we are required to perform the quantitative impairment test by calculating the fair value of the reporting unit and comparing it against its carrying amount. We have four reporting units to which goodwill was allocated: steel, on-board weighing, DSI, and DTS.
However, if we conclude otherwise, then we are required to perform the quantitative impairment test by calculating the fair value of the reporting unit and comparing it against its carrying value. We have four reporting units to which goodwill was allocated: steel, on-board weighing, DSI, and DTS.
We have the option to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining if it is necessary to perform the quantitative goodwill impairment test.
We have the option to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying value as a basis for determining if it is necessary to perform the quantitative goodwill impairment test.
Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting units. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. An impairment charge would be recognized to the extent the carrying amount of goodwill exceeds the reporting unit fair value.
Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting units. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. An impairment charge would be recognized to the extent the carrying value of goodwill exceeds the reporting unit fair value.
In the past several years, we incurred restructuring expense related to closing and downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India and China, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.
In the past several years, we incurred restructuring expense related to closing and downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.
The discount rate at which obligations could effectively be settled and the expected long-term rate of return on plan assets are two - 33 - critical assumptions in measuring the cost and benefit obligations of our pension and other postretirement benefit plans.
The discount rate at which obligations could effectively be settled and the expected long-term rate of return on plan assets are two critical assumptions in measuring the cost and benefit obligations of our pension and other postretirement benefit plans.
Forward-Looking Statements From time to time, information provided by us, including, but not limited to, statements in this Annual Report on Form 10-K for the fiscal year ended December 31, 2022 or other statements made by or on our behalf, may contain or constitute "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-Looking Statements From time to time, information provided by us, including, but not limited to, statements in this Annual Report on Form 10-K for the fiscal year ended December 31, 2023 or other statements made by or on our behalf, may contain or constitute "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995.
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. Acquisition Costs There were no acquisition costs recorded in our consolidated statements of operations for the year ended December 31, 2022.
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. Acquisition Costs There were no acquisition costs recorded in our consolidated statements of operations for the year ended December 31, 2023 or December 31, 2022.
Among the factors that could cause actual results to materially differ include: general business and economic conditions; impact of inflation, issues respecting the United States federal government debt ceiling, global labor and supply chain challenges; difficulties or delays in identifying, negotiating and completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; political, economic, health (including the COVID-19 pandemic) and military instability in the countries in which we operate; difficulties in implementing our cost reduction strategies, such as underutilization of production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to difficulties in transferring production to achieve efficiencies; compliance issues under applicable laws, such as export control laws, including the outcome of our voluntary self-disclosure of export control non-compliance; significant developments from the recent and potential changes in tariffs and trade regulation; our efforts and efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter-in-place orders and business closures and the related impact on resource allocations, manufacturing and supply chains; our - 41 - status as a “critical”, “essential” or “life-sustaining” business in light of COVID-19 business closure laws, orders and guidance being challenged by a governmental body or other applicable authority; our ability to execute our new corporate strategy and business continuity, operational and budget plans; and other factors affecting our operations, markets, products, services, and prices that are set forth in this Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Among the factors that could cause actual results to materially differ include: general business and economic conditions; impact of inflation; potential issues respecting the United States federal government debt ceiling; global labor and supply chain challenges; difficulties or delays in identifying, negotiating and completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; political, economic, and health (including pandemics) instabilities; instability caused by military hostilities in the regions or countries in which we operate (including Israel); difficulties in implementing our cost reduction strategies, such as underutilization of production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to difficulties in transferring production to achieve efficiencies; compliance issues under applicable laws, such as export control laws, including the outcome of our voluntary self-disclosure of export control non-compliance ; significant developments from the recent and potential changes in tariffs and trade regulation; our efforts and efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter-in-place orders and business closures and the related impact on resource - 43 - allocations, manufacturing and supply chains; our status as a “critical”, “essential” or “life-sustaining” business in light of COVID-19 business closure laws, orders and guidance being challenged by a governmental body or other applicable authority; our ability to execute our new corporate strategy and business continuity, operational and budget plans; and other factors affecting our operations, markets, products, services, and prices that are set forth in this Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Additional customary fees apply with respect to letters of credit. - 39 - The obligations of the Company under the 2020 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company’s domestic subsidiaries.
Additional customary fees apply with respect to letters of credit. - 41 - The obligations of the Company under the 2020 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company’s domestic subsidiaries.
The sequential increase in revenues was primarily attributable to increased revenues from OEM customers for precision agriculture and construction applications in our Other market segment and higher revenue in our Industrial Weighing market, partially offset by lower sales in the Transportation market.
The sequential increase in revenues was primarily attributable to increased revenues from OEM customers for precision agriculture and construction applications in our Other market segment and higher revenue in our General Industrial market, partially offset by lower sales in the Transportation market.
Financial Condition, Liquidity, and Capital Resources Refer to Item 7. “Financial Condition, Liquidity, and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, 2021 for a comparison of the year ended December 31, 2021 to the year ended December 31, 2020.
Financial Condition, Liquidity, and Capital Resources Refer to Item 7. “Financial Condition, Liquidity, and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, 2022 for a comparison of the year ended December 31, 2022 to the year ended December 31, 2021.
These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies. Our financial condition as of December 31, 2022 is strong, with a current ratio (current assets to current liabilities) of 3.9 to 1.0, as compared to a current ratio of 3.6 to 1.0 at December 31, 2021.
These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies. Our financial condition as of December 31, 2023 is strong, with a current ratio (current assets to current liabilities) of 3.9 to 1.0, as compared to a current ratio of 3.9 to 1.0 at December 31, 2022.
The Company recorded restructuring costs of $1.5 million, $0.1 million, and $0.9 million during the years ended December 31, 2022, 2021, and 2020, respectively, which were comprised primarily of employee termination costs, including severance and statutory retirement allowances. We are evaluating plans to further reduce our costs by consolidating additional manufacturing operations.
The Company recorded restructuring costs of $1.6 million, $1.5 million, and $0.1 million during the years ended December 31, 2023, 2022, and 2021, respectively, which were comprised primarily of employee termination costs, including severance and statutory retirement allowances. We are evaluating plans to further reduce our costs by consolidating additional manufacturing operations.
The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The Company was in compliance with its financial maintenance covenants at December 31, 2022.
The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The Company was in compliance with its financial maintenance covenants at December 31, 2023.
If the initial estimates are too low or too high, the Company could be required to either record additional expense in future periods, or to reverse part of the previously recorded charges. The Company recorded restructuring costs of $1.5 million and $0.1 million during the years ended December 31, 2022 and 2021, respectively.
If the initial estimates are too low or too high, the Company could be required to either record additional expense in future periods, or to reverse part of the previously recorded charges. The Company recorded restructuring costs of $1.6 million and $1.5 million during the years ended December 31, 2023 and 2022, respectively.
These assumptions are updated periodically to reflect the actual experience and expectations on a plan-specific basis, as appropriate. Our defined benefit plans are concentrated in the United States, Japan and the United Kingdom. Plans in these countries comprise approximately 88% of our retirement obligations at December 31, 2022.
These assumptions are updated periodically to reflect the actual experience and expectations on a plan-specific basis, as appropriate. Our defined benefit plans are concentrated in the United States, Japan and the United Kingdom. Plans in these countries comprise approximately 87% of our retirement obligations at December 31, 2023.
Optimize Core Competence The Company’s core competencies include our innovative deep technical and applications-specific expertise to add value to our customers' products, our strong brands and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and our proven M&A strategy.
Optimize Core Competence The Company’s core competencies include our innovative deep technical and applications-specific expertise, our strong brands and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and our proven M&A strategy.
The increase in gross profit margin was primarily due to improved gross profit margins in the Sensors and Measurement Systems reporting segments, partially offset by decreased gross profit margins in the Weighing Solution reporting segment. - 35 - Segments Analysis of revenues and gross profit margins for our reportable segments is provided below.
The increase in gross profit margin was primarily due to improved gross profit margins in the Weighing Solutions and Measurement Systems reporting segments partially offset by decreased gross profit margin in the Sensors reporting segment. - 37 - Segments Analysis of revenues and gross profit margins for our reportable segments is provided below.
Additional information about income taxes is included in Note 6 to our consolidated financial statements. - 34 - Results of Operations – Years Ended December 31, 2022 and 2021 Refer to Item 7, "Results of Operations - Years Ended December 2021, 2020, and 2019 in our Annual Report on Form 10-K for the year ended December 31, 2021 for a comparison of the year ended December 31, 2021 to the year ended December 31, 2020.
Additional information about income taxes is included in Note 6 to our consolidated financial statements. - 36 - Results of Operations – Years Ended December 31, 2023 and 2022 Refer to Item 7, "Results of Operations - Years Ended December 2022 and 2021 in our Annual Report on Form 10-K for the year ended December 31, 2022 for a comparison of the year ended December 31, 2022 to the year ended December 31, 2021.
See the following table for the percentage of cash and cash equivalents, by region, at December 31, 2022 and December 31, 2021: December 31, 2022 2021 Asia 27 % 24 % United States 17 % 13 % Israel 28 % 25 % Europe 13 % 18 % United Kingdom 10 % 12 % Canada 5 % 8 % Total 100 % 100 % We earn a significant amount of our operating income outside the United States, the majority of which is deemed to be indefinitely reinvested in the foreign jurisdictions.
See the following table for the percentage of cash and cash equivalents, by region, at December 31, 2023 and December 31, 2022: December 31, 2023 2022 Asia 22 % 27 % United States 8 % 17 % Israel 36 % 28 % Europe 18 % 13 % United Kingdom 5 % 10 % Canada 11 % 5 % Total 100 % 100 % We earn a significant amount of our operating income outside the United States, the majority of which is deemed to be indefinitely reinvested in the foreign jurisdictions.
The following items had the most significant impact on the difference between the statutory U.S. federal income tax rate and our effective tax rate: 2022 • 2.8% increase related to the effects of foreign operations primarily related to the difference between the U.S. statutory rate and foreign tax rates • 1.5% increase related to foreign currency primarily attributable to our operations in India, Israel and Taiwan • 1.4% decrease related to specialty tax credits, such as research credits • 2.2% decrease related to changes in reserves for uncertain tax positions • 3.6% decrease related to changes in valuation allowances 2021 • 8.1% increase related to the effects of foreign operations primarily related to the difference between the U.S. statutory rate and foreign tax rates. • 4.6% decrease related to a decrease in valuation allowance, primarily as a result of the acquisition of DTS • 1.5% decrease related to state income taxes • 1.3% decrease related to specialty tax credits Additional information about income taxes is included in Note 6 to our consolidated financial statements.
The following items had the most significant impact on the difference between the statutory U.S. federal income tax rate and our effective tax rate: 2023 • 6.2% increase related to the effects of foreign operations primarily related to the difference between the U.S. statutory rate and foreign tax rates • 3.3% increase related to changes in valuation allowances • 2.3% increase related to residual U.S. tax on foreign earnings • 1.2% increase related to changes in reserves for uncertain tax positions • 1.4% decrease related to specialty tax credits, such as research credits 2022 • 2.8% increase related to the effects of foreign operations primarily related to the difference between the U.S. statutory rate and foreign tax rates • 1.5% increase related to foreign currency primarily attributable to our operations in India, Israel and Taiwan • 1.4% decrease related to specialty tax credits, such as research credits • 2.2% decrease related to changes in reserves for uncertain tax positions • 3.6% decrease related to changes in valuation allowances Additional information about income taxes is included in Note 6 to our consolidated financial statements.
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 December 31, 2022, to be indefinitely reinvested. For the year ended December 31, 2022, we generated adjusted free cash flow of $12.2 million.
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 December 31, 2023, to be indefinitely reinvested. For the year ended December 31, 2023, we generated adjusted free cash flow of $30.8 million.
As of December 31, 2022, the Company had provided for a deferred tax liability of $2.1 million of withholding tax associated with unremitted, non-permanently reinvested earnings, including planned cash distributions of $19.6 million. Additional withholding taxes of approximately $24.7 million are estimated to be payable upon the distribution of the remaining unremitted earnings at December 31, 2022.
As of December 31, 2023, the Company had provided for a deferred tax liability of $2.1 million of withholding tax associated with unremitted, non-permanently reinvested earnings, including planned cash distributions of $16.6 million. Additional withholding taxes of approximately $29.2 million are estimated to be payable upon the distribution of the remaining unremitted earnings at December 31, 2023.
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.
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.
Cash paid for property and equipment for the year ended December 31, 2022 and December 31, 2021 was $21.3 million and $17.1 million, respectively. Capital spending for 2022 was comprised of building projects related to capacity expansion in Israel and Asia, and other projects related to the normal maintenance of business.
Cash paid for property and equipment for the year ended December 31, 2023 and December 31, 2022 was $15.2 million and $21.3 million, respectively. Capital spending for 2023 was comprised of building projects related to capacity expansion in Israel and Asia, and other projects related to the normal maintenance of business.
The amount charged to expense for research and development aggregated $19.8 million, $17.2 million, and $12.6 million for the years ended December 31, 2022, 2021, and 2020, respectively. Cost Management To be successful, we believe we must seek new strategies for controlling operating costs.
The amount charged to expense for research and development aggregated $20.4 million, $19.8 million, and $17.2 million for the years ended December 31, 2023, 2022, and 2021, respectively. - 33 - Cost Management To be successful, we believe we must seek new strategies for controlling operating costs.
Approximately 83% and 87% of our cash and cash equivalents balance at December 31, 2022 and 2021, respectively, was held by our non-U.S. subsidiaries.
Approximately 92% and 83% of our cash and cash equivalents balance at December 31, 2023 and 2022, respectively, was held by our non-U.S. subsidiaries.
In addition, the Company has historically provided these or similar non-GAAP measures and understands that some investors and financial analysts find this information helpful in analyzing the Company’s performance and in comparing the Company’s financial performance to that of its peer companies and competitors.
In addition, the Company has historically provided these or similar non-GAAP measures and understands that some investors and financial analysts find this information helpful in analyzing the Company’s performance and in comparing the Company’s financial performance to that of its peer companies and competitors. Management believes that the Company’s non-GAAP measures are regarded as supplemental to its GAAP financial results.
Our precision measurement solutions are used across a wide variety of end markets upon which we focus, including industrial, test and measurement, transportation, steel, medical, agriculture, avionics, military and space, and consumer product applications.
Our precision measurement solutions are used across a wide variety of end markets upon which we focus, including test and measurement, industrial, transportation, steel, avionics, military and space, as well as other markets such as agriculture, consumer, and medical.
Net earnings attributable to VPG stockholders for the year ended December 31, 2022 were $36.1 million, or $2.63 per diluted share, compared to $20.2 million, or $1.48 per diluted share, for the year ended December 31, 2021. The results of operations for the years ended December 31, 2022 and 2021 include items affecting comparability as listed in the reconciliations below.
Net earnings attributable to VPG stockholders for the year ended December 31, 2023 were $25.7 million, or $1.88 per diluted share, compared to $36.1 million, or $2.63 per diluted share, for the year ended December 31, 2022. - 29 - The results of operations for the years ended December 31, 2023 and 2022 include items affecting comparability as listed in the reconciliations below.
The change in foreign exchange gains / (losses) for the year ended December 31, 2022, as compared to the prior year period, is primarily due to fluctuations in the Israeli shekel, the Japanese yen and the British pound.
The change in foreign exchange gains / (losses) for the year ended December 31, 2023, as compared to the prior year period, is primarily due to fluctuations in the Israeli shekel, the Canadian dollar and the British pound.
Gross profit as a percentage of net revenues for the Measurement Systems segment was as follows: Years ended December 31, 2022 2021 Gross profit margin 53.6 % 52.2 % For the year ended December 31, 2022, the gross profit margin increased 1.4% from the prior year.
Gross profit as a percentage of net revenues for the Measurement Systems segment was as follows: Years ended December 31, 2023 2022 Gross profit margin 53.8 % 53.6 % For the year ended December 31, 2023, the gross profit margin increased 0.2% from the prior year.
The change in the dollar-shekel exchange rate resulted in a favorable currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors facility in Israel. - 38 - Income Taxes Our effective tax rate for the year ended December 31, 2022 was 18.9%, as compared to 21.1% for the year ended December 31, 2021.
The change in the dollar-shekel exchange rate resulted in a unfavorable currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors facility in Israel. Income Taxes Our effective tax rate for the year ended December 31, 2023 was 32.3%, as compared to 18.9% for the year ended December 31, 2022.
Gross Profit Margin Gross profit as a percentage of net revenues was as follows: Years ended December 31, 2022 2021 Gross profit margin 41.3 % 39.4 % The gross profit margin for the year ended December 31, 2022 increased 1.9% over the prior year.
Gross Profit Margin Gross profit as a percentage of net revenues was as follows: Years ended December 31, 2023 2022 Gross profit margin 42.3 % 41.3 % The gross profit margin for the year ended December 31, 2023 increased 1.0% over the prior year.
Effects of Foreign Exchange Rate on Operations For the year ended December 31, 2022, exchange rate impacts decreased net revenues by $16.1 million and decreased costs of products sold and selling, general, and administrative expenses by $13.3 million.
Effects of Foreign Exchange Rate on Operations For the year ended December 31, 2023, exchange rate impacts decreased net revenues by $2.2 million and decrease costs of products sold and selling, general, and administrative expenses by $9.1 million.
For the year ended December 31, 2021, - 32 - exchange rate impacts increased net revenues by $5.3 million and increased costs of products sold and selling, general, and administrative expenses by $8.7 million. Critical Accounting Policies and Estimates Our significant accounting policies are summarized in Note 1 to our consolidated financial statements.
For the year ended December 31, 2022, exchange rate impacts decreased net revenues by $16.1 million and decreased costs of products sold and selling, general, and administrative expenses by $13.3 million. - 34 - Critical Accounting Policies and Estimates Our significant accounting policies are summarized in Note 1 to our consolidated financial statements.
Statement of operations’ captions as a percentage of net revenues and the effective tax rates were as follows: Years ended December 31, 2022 2021 Costs of products sold 58.7 % 60.6 % Gross profit 41.3 % 39.4 % Selling, general, and administrative expenses 28.8 % 30.0 % Operating income 12.1 % 8.6 % Income before taxes 12.4 % 8.2 % Net earnings 10.1 % 6.4 % Net earnings attributable to VPG stockholders 9.9 % 6.4 % Effective tax rate 18.9 % 21.1 % Net Revenues Net revenues were as follows (dollars in thousands) : Years ended December 31, 2022 2021 Net revenues $ 362,580 $ 317,919 Change versus prior year $ 44,661 Percentage change versus prior year 14.0 % Changes in net revenues were attributable to the following: 2022 vs. 2021 Change attributable to: Change in volume 13.1 % Change in average selling prices 2.6 % Foreign currency effects (5.3) % Acquisitions 3.6 % Net change 14.0 % During the year ended December 31, 2022, net revenues increased 14.0% over the prior year.
Statement of operations’ captions as a percentage of net revenues and the effective tax rates were as follows: Years ended December 31, 2023 2022 Costs of products sold 57.7 % 58.7 % Gross profit 42.3 % 41.3 % Selling, general, and administrative expenses 30.1 % 28.8 % Operating income 11.8 % 12.1 % Income before taxes 10.8 % 12.4 % Net earnings 7.3 % 10.1 % Net earnings attributable to VPG stockholders 7.2 % 9.9 % Effective tax rate 32.3 % 18.9 % Net Revenues Net revenues were as follows (dollars in thousands) : Years ended December 31, 2023 2022 Net revenues $ 355,048 $ 362,580 Change versus prior year $ (7,532) Percentage change versus prior year (2.1) % Changes in net revenues were attributable to the following: 2023 vs. 2022 Change attributable to: Change in volume (3.0) % Change in average selling prices 1.6 % Foreign currency effects (0.7) % Net change (2.1) % During the year ended December 31, 2023, net revenues decreased 2.1% over the prior year.
Weighing Solutions Net revenues of the Weighing Solutions segment were as follows (dollars in thousands) : Years ended December 31, 2022 2021 Net revenues $ 125,715 $ 125,390 Change versus prior year $ 325 Percentage change versus prior year 0.3 % Changes in Weighing Solutions segment net revenues were attributable to the following: 2022 vs. 2021 Change attributable to: Change in volume 1.6 % Change in average selling prices 4.1 % Foreign currency effects (5.4) % Net change 0.3 % For the year ended December 31, 2022, net revenues increased 0.3% from the prior year.
Weighing Solutions Net revenues of the Weighing Solutions segment were as follows (dollars in thousands) : Years ended December 31, 2023 2022 Net revenues $ 122,528 $ 125,715 Change versus prior year $ (3,187) Percentage change versus prior year (2.5) % Changes in Weighing Solutions segment net revenues were attributable to the following: 2023 vs. 2022 Change attributable to: Change in volume (4.7) % Change in average selling prices 2.4 % Foreign currency effects (0.2) % Net change (2.5) % For the year ended December 31, 2023, net revenues decreased 2.5% from the prior year.
An interest margin of 0.25% is added to Base Rate loans. 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 LIBOR or CDOR rate to determine the interest payable on the LIBOR or CDOR loans.
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.
We define “adjusted free cash flow,” a measure which management uses to evaluate our ability to fund acquisitions, as the amount of cash provided by operating activities ($33.0 million) in excess of our capital expenditures ($21.3 million) and net of proceeds from the sale of assets ($0.5 million). - 40 - The following table summarizes the components of net cash at December 31, 2022 and at December 31, 2021 (in thousands) : December 31, 2022 2021 Cash and cash equivalents $ 88,562 $ 84,335 Third-party debt, including current and long-term Revolving debt 61,000 61,000 Deferred financing costs (201) (286) Total third-party debt 60,799 60,714 Net cash $ 27,763 $ 23,621 Measurements such as “adjusted free cash flow” and “net cash" do not have uniform definitions and are not recognized in accordance with U.S.
We define “adjusted free cash flow,” a measure which management uses to evaluate our ability to fund acquisitions, as the amount of cash provided by operating activities ($45.9 million) in excess of our capital expenditures ($15.2 million) and net of proceeds from the sale of assets ($0.1 million). - 42 - The following table summarizes the components of net cash at December 31, 2023 and at December 31, 2022 (in thousands) : December 31, 2023 2022 Cash and cash equivalents $ 83,965 $ 88,562 Third-party debt, including current and long-term Revolving debt 32,000 61,000 Deferred financing costs (144) (201) Total third-party debt 31,856 60,799 Net cash $ 52,109 $ 27,763 Measurements such as “adjusted free cash flow” and “net cash" do not have uniform definitions and are not recognized in accordance with U.S.
(b) Acquisition costs associated with the acquisition of DTS in 2021. (c) COVID-19 impact is the net impact to the Company of costs incurred as a result of the COVID-19 pandemic, net of government subsidies received. (d) Start-up costs in 2022 and 2021 are associated with the ramp up of our new manufacturing facility in Israel.
(b) COVID-19 impact is the net impact to the Company of costs incurred as a result of the COVID-19 pandemic, net of government subsidies received. (c) Start-up costs in 2022 are associated with the ramp up of our new manufacturing facility in Israel. - 30 - (d) Impact of foreign currency exchange rates on assets and liabilities.
Gross profit as a percentage of net revenues for the Weighing Solutions segment was as follows: Years ended December 31, 2022 2021 Gross profit margin 34.3 % 36.6 % For the year ended December 31, 2022, the gross profit margin decreased 2.3% as compared to the prior year.
Gross profit as a percentage of net revenues for the Weighing Solutions segment was as follows: Years ended December 31, 2023 2022 Gross profit margin 37.0 % 34.3 % For the year ended December 31, 2023, the gross profit margin increased 2.7% as compared to the prior year.
The gross profit margin for the fourth quarter of 2022 decreased 0.2% compared to the third quarter of 2022, and increased 2.5% from the fourth quarter of 2021. Sequentially, gross profit margins decreased in the Sensors segment, were flat in the Weighing Solutions segment, and improved in the Measurement Systems segments.
The gross profit margin for the fourth quarter of 2023 increased 1.1% compared to the third quarter of 2023, and increased 1.8% from the fourth quarter of 2022. Sequentially, gross profit margins improved in the Sensors segment, decreased in the Weighing Solutions segment, and improved in the Measurement Systems segments.
We expect to continue to expand our position as a leading supplier of precision foil technology - 31 - products. We believe our R&D efforts should provide us with a variety of opportunities to leverage technology, products, and our manufacturing base in order to ultimately improve our financial performance.
We believe our R&D efforts should provide us with a variety of opportunities to leverage technology, products, and our manufacturing base in order to ultimately improve our financial performance.
Net revenues in the Measurement Systems segment of $26.8 million in the fourth quarter of 2022 increased 29.2% from $20.8 million in the third quarter of 2022 and increased 12.8% from $23.8 million in the fourth quarter of 2021. The sequential increase in revenue was primarily attributable to higher sales of Diversified Technical Systems, Inc.
Net revenues in the Measurement Systems segment of $24.8 million in the fourth quarter of 2023 increased 2.0% from $24.4 million in the third quarter of 2023 and decreased 7.5% from $26.8 million in the fourth quarter of 2022. The sequential increase in revenue was primarily attributable to higher sales of Diversified Technical Systems, Inc.
Net revenues in the Weighing Solutions segment of $33.1 million in the fourth quarter of 2022 increased 5.4% compared to revenues of $31.4 million in the third quarter of 2022.
Net revenues in the Weighing Solutions segment of $30.4 million in the fourth quarter of 2023 increased 5.1% compared to revenues of $29.0 million in the third quarter of 2023.
As the functionality of customers products continues to increase, and they integrate more precision measurement sensors and related systems into their solutions, we believe this will offer substantial growth opportunities for our products and expertise. Overview of Financial Results VPG reports in three product segments: Sensors segment, Weighing Solutions segment, and Measurement Systems segment.
As the functionality of customers' products continues to increase, and they integrate more precision measurement sensors and related systems into their solutions, we believe this will offer substantial growth opportunities for our products and expertise.
Another important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the amount of product ordered during a period compared with the product that we ship during that period.
Therefore, the backlog is not necessarily indicative of the results to be expected for future periods. Another important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the amount of product ordered during a period compared with the product that we ship during that period.
Inflation Normally, inflation does not have a significant impact on our operations as our products are not generally sold on long-term contracts. Consequently, we can adjust our selling prices, to the extent permitted by competition, to reflect cost increases caused by inflation. Recent Accounting Pronouncements See Note 1 to our consolidated financial statements for a discussion of recent accounting pronouncements.
Consequently, we can adjust our selling prices, to the extent permitted by competition, to reflect cost increases caused by inflation. Recent Accounting Pronouncements See Note 1 to our consolidated financial statements for a discussion of recent accounting pronouncements.
Other The following table analyzes the components of the line “Other” on the consolidated statements of operations (in thousands) : Years ended December 31, 2022 2021 Change Foreign exchange gain/(loss) $ 3,579 $ (110) $ 3,689 Interest income 401 252 149 Pension expense (241) (468) 227 Other (181) 96 (277) $ 3,558 $ (230) $ 3,788 Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates.
Other The following table analyzes the components of the line “Other” on the consolidated statements of operations (in thousands) : Years ended December 31, 2023 2022 Change Foreign exchange gain/(loss) $ (822) $ 3,579 $ (4,401) Interest income 1,651 401 1,250 Pension expense (52) (241) 189 Other (321) (181) (140) $ 456 $ 3,558 $ (3,102) Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates.
Sensors Net revenues of the Sensors segment were as follows (dollars in thousands) : Years ended December 31, 2022 2021 Net revenues $ 152,221 $ 127,861 Change versus prior year $ 24,360 Percentage change versus prior year 19.1 % Changes in Sensors segment net revenues were attributable to the following: 2022 vs. 2021 Change attributable to: Change in volume 23.9 % Change in average selling prices 2.0 % Foreign currency effects (6.8) % Net change 19.1 % For the year ended December 31, 2022, net revenues increased 19.1% as compared to the prior year, due to higher sales of precision resistors in the Test and Measurements market and higher revenue of our advanced sectors products, primarily in Other markets (mainly for consumer applications) and in the General Industrial market.
Sensors Net revenues of the Sensors segment were as follows (dollars in thousands) : Years ended December 31, 2023 2022 Net revenues $ 139,783 $ 152,221 Change versus prior year $ (12,438) Percentage change versus prior year (8.2) % Changes in Sensors segment net revenues were attributable to the following: 2023 vs. 2022 Change attributable to: Change in volume (8.4) % Change in average selling prices 0.9 % Foreign currency effects (0.7) % Net change (8.2) % For the year ended December 31, 2023, net revenues decreased 8.2% as compared to the prior year, due to lower sales of precision resistors in the Test and Measurement market, and lower sales of advanced sensors products primarily in our Other markets (mainly for consumer applications), partially offset by increases in precision resistor sales in the AMS market.
Net revenues in the fourth quarter of 2022 increased 3.2% compared to $32.1 million in the fourth quarter of 2021 mainly due to increased revenues from OEM customers for precision agriculture applications in our Other market segment.
Net revenues in the fourth quarter of 2023 decreased 8.0% compared to $33.1 million in the fourth quarter of 2022 mainly due to lower revenues in our Industrial Weighing market and lower revenues from OEM customers for precision agriculture applications in our Other market 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.
Overview of Financial Results 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. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure.
We use an operationally diversified strategy and structure to be close to our customers and to leverage our high-level engineering expertise to optimize and enhance the performance of our customers' solutions.
Operationally Diversified Each of VPG's business segments maintains and deploys distinct go-to-market strategies, technical expertise, capital requirements, and acquisition opportunities. We use an operationally diversified strategy and structure to be close to our customers and to leverage our high-level engineering expertise to optimize and enhance the performance of our customers' solutions.
Our net cash provided by financing activities for the year ended December 31, 2022 was $3.6 million, as compared to net cash used for financing activities of $18.8 million for the year ended December 31, 2021, which included the borrowing on the 2020 credit facility for the acquisition of DTS.
Our net cash used in financing activities for the year ended December 31, 2023 was $35.9 million, which included a pay down on the 2020 credit facility of $29.0 million, as compared to $3.6 million for the year ended December 31, 2022.
("DTS") products to the Transportation and AMS markets and higher sales of KELK and Dynamic Systems Inc. ("DSI") to Steel markets. The year-over-year increase in revenues was primarily attributable to higher sales of DTS products to the AMS and Transportation markets, and higher KELK and DSI steel-related sales.
The year-over-year decline in revenues was primarily attributable to lower sales of DSI and KELK products to the steel market and lower sales of DTS products to the Transportation market, which was partially offset by higher sales of DTS products to the AMS market.
Our cash provided by operating activities for the year ended December 31, 2022 was $33.0 million as compared to $33.5 million for the year ended December 31, 2021.
Our cash provided by operating activities for the year ended December 31, 2023 was $45.9 million as compared to $33.0 million for the year ended December 31, 2022. Our net cash used in investing activities for the year ended December 31, 2023 was $15.1 million, compared to $20.8 million for the year ended December 31, 2022.
Measurement Systems Net revenues of the Measurement Systems segment were as follows (dollars in thousands) : Years ended December 31, 2022 2021 Net revenues $ 84,644 $ 64,668 Change versus prior year $ 19,976 Percentage change versus prior year 30.9 % Changes in Measurement Systems segment net revenues were attributable to the following: 2022 vs. 2021 Change attributable to: Change in volume 14.6 % Change in average selling prices 1.3 % Foreign currency effects (2.7) % Acquisitions 17.7 % Net change 30.9 % For the year ended December 31, 2022, net revenues increased 30.9% as compared to the prior year, primarily due to the addition of revenue from DTS, which was acquired on June 1, 2021, in our AMS and Transportation markets and higher revenue of our KELK and DSI steel-related businesses.
Measurement Systems Net revenues of the Measurement Systems segment were as follows (dollars in thousands) : Years ended December 31, 2023 2022 Net revenues $ 92,737 $ 84,644 Change versus prior year $ 8,093 Percentage change versus prior year 9.6 % Changes in Measurement Systems segment net revenues were attributable to the following: 2023 vs. 2022 Change attributable to: Change in volume 9.2 % Change in average selling prices 1.8 % Foreign currency effects (1.4) % Net change 9.6 % For the year ended December 31, 2023, net revenues increased 9.6% as compared to the prior year, primarily due to increased revenue in the Steel market and higher sales of DTS products in the AMS market.
The year-over-year increase in revenues was primarily attributable to an increase in sales of precision resistors in the Test and Measurement market, and higher sales of our advance sensors products primarily in the AMS market and General Industrial markets.
The year-over-year decrease in revenues was primarily attributable to lower sales of advanced sensors in our Other markets for consumer applications, and in our Avionics, Military and Space ("AMS") market, and in our General Industrial market, which offset higher sales of precision resistors in the Test and Measurement market.
The following table shows net revenues, gross profit margin, the end-of-period backlog, the book-to-bill ratio, and the inventory turnover for our business as a whole during the five quarters beginning with the fourth quarter of 2021 and through the fourth quarter of 2022 (dollars in thousands) : 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 2022 2022 2022 2022 Net revenues $ 90,017 $ 87,665 $ 88,618 $ 90,057 $ 96,240 Gross profit margin 38.7 % 40.2 % 42.1 % 41.4 % 41.2 % End-of-period backlog $ 150,500 $ 170,600 $ 171,400 $ 171,700 $ 155,000 Book-to-bill ratio 1.06 1.25 1.08 1.08 0.76 Inventory turnover 2.82 2.69 2.52 2.47 2.63 - 29 - 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 2022 2022 2022 2022 Sensors Net revenues $ 34,149 $ 37,750 $ 40,280 $ 37,879 $ 36,312 Gross profit margin 32.1 % 37.8 % 44.3 % 40.5 % 37.6 % End-of-period backlog $ 72,900 $ 81,300 $ 84,200 $ 80,600 $ 75,900 Book-to-bill ratio 1.11 1.27 1.17 0.99 0.76 Inventory turnover 3.53 3.54 3.20 3.04 2.91 Weighing Solutions Net revenues $ 32,071 $ 32,768 $ 28,459 $ 31,399 $ 33,089 Gross profit margin 34.0 % 36.9 % 33.7 % 33.3 % 33.4 % End-of-period backlog $ 41,800 $ 43,600 $ 43,000 $ 43,000 $ 38,300 Book-to-bill ratio 0.98 1.06 1.03 1.05 0.82 Inventory turnover 2.63 2.61 2.33 2.48 2.72 Measurement Systems Net revenues $ 23,797 $ 17,147 $ 19,879 $ 20,779 $ 26,839 Gross profit margin 54.7 % 51.8 % 49.9 % 55.5 % 55.9 % End-of-period backlog $ 35,800 $ 45,700 $ 44,200 $ 48,100 $ 40,800 Book-to-bill ratio 1.08 1.56 0.98 1.27 0.70 Inventory turnover 2.18 1.68 1.90 1.68 2.11 Net revenues for the fourth quarter of 2022 increased 6.9% from the net revenues of $90.1 million reported in the third quarter of 2022, and increased 6.9% from $90.0 million for the comparable prior year period.
The following table shows net revenues, gross profit margin, the end-of-period backlog, the book-to-bill ratio, and the inventory turnover for our business as a whole during the five quarters beginning with the fourth quarter of 2022 and through the fourth quarter of 2023 (dollars in thousands) : 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2022 2023 2023 2023 2023 Net revenues $ 96,240 $ 88,864 $ 90,802 $ 85,854 $ 89,528 Gross profit margin 41.2 % 41.9 % 42.6 % 41.9 % 43.0 % End-of-period backlog $ 151,400 $ 146,800 $ 139,700 $ 128,800 $ 117,300 Book-to-bill ratio 0.76 0.94 0.94 0.90 0.84 Inventory turnover 2.63 2.39 2.34 2.20 2.27 - 31 - 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2022 2023 2023 2023 2023 Sensors Net revenues $ 36,312 $ 36,726 $ 36,266 $ 32,532 $ 34,259 Gross profit margin 37.6 % 41.2 % 40.1 % 35.9 % 40.2 % End-of-period backlog $ 72,300 $ 66,200 $ 58,900 $ 52,400 $ 49,000 Book-to-bill ratio 0.76 0.82 0.84 0.83 0.85 Inventory turnover 2.91 2.62 2.55 2.38 2.36 Weighing Solutions Net revenues $ 33,089 $ 31,859 $ 31,261 $ 28,970 $ 30,438 Gross profit margin 33.4 % 34.9 % 38.7 % 38.7 % 35.6 % End-of-period backlog $ 38,300 $ 35,400 $ 34,300 $ 30,800 $ 28,800 Book-to-bill ratio 0.82 0.90 0.97 0.89 0.91 Inventory turnover 2.72 2.63 2.41 2.18 2.46 Measurement Systems Net revenues $ 26,839 $ 20,279 $ 23,275 $ 24,352 $ 24,831 Gross profit margin 55.9 % 53.9 % 51.8 % 53.6 % 56.0 % End-of-period backlog $ 40,800 $ 45,200 $ 46,500 $ 45,600 $ 39,500 Book-to-bill ratio 0.70 1.21 1.06 0.98 0.73 Inventory turnover 2.11 1.70 1.94 1.94 1.87 Net revenues for the fourth quarter of 2023 increased 4.3% from the net revenues of $85.9 million reported in the third quarter of 2023, and decreased 7.0% from $96.2 million for the comparable prior year period.
Gross profit as a percentage of net revenues for the Sensors segment was as follows: Years ended December 31, 2022 2021 Gross profit margin 40.1 % 35.6 % For the year ended December 31, 2022, the gross profit margin increased 4.5% as compared to the prior year. Volume increases were partially offset by wage increases, and labor inefficiencies.
Gross profit as a percentage of net revenues for the Sensors segment was as follows: Years ended December 31, 2023 2022 Gross profit margin 39.4 % 40.1 % For the year ended December 31, 2023, the gross profit margin decreased 0.7% as compared to the prior year primarily due to volume decreases and manufacturing inefficiencies, which were partially offset by favorable foreign currency exchange rates.
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, the backlog is not necessarily indicative of the results to be expected for future periods.
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.
Gross profit margin is clearly a function of net revenues, but also reflects our cost-cutting programs and our ability to contain fixed costs. End-of-period backlog is one indicator of potential future sales. We include in our backlog only open orders that have been released by the customer for shipment in the next twelve months.
Gross profit is generally net revenues less costs of products sold, but could also include certain other period costs. Gross profit margin is clearly a function of net revenues, but also reflects our cost-cutting programs and our ability to contain fixed costs. End-of-period backlog is one indicator of potential future sales.
In the Weighing Solutions segment, the decrease in g ross profit margin was primarily due to higher material costs and unfavorable foreign currency exchange rates, partially offset by higher volume and selling price increases.
In the Weighing Solutions segment, the increase in g ross profit margin was primarily due to increased selling prices, favorable foreign currency exchange rates, and manufacturing efficiencies, partially offset by lower volume. In the Measurement Systems segment, gross profit margin increased reflecting higher volume and favorable product mix.
We reassessed our ability to realize our U.S. deferred tax assets during 2022 and have concluded that realization of those deferred tax assets is still not "more likely than not".
Our effective tax rate was higher in 2023 compared to 2022 primarily due to increases in valuation allowances, increases in reserves for uncertain tax positions and changes in our geographical mix of income. - 40 - We reassessed our ability to realize our U.S. deferred tax assets during 2023 and have concluded that realization of those deferred tax assets is still not "more likely than not".
These key financial measures and metrics include net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover. - 28 - Gross profit margin is gross profit shown as a percentage of net revenues. Gross profit is generally net revenues less costs of products sold, but could also include certain other period costs.
Financial Metrics We utilize several financial measures and metrics to evaluate the performance and assess the future direction of our business. These key financial measures and metrics include net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover. Gross profit margin is gross profit shown as a percentage of net revenues.
The decrease in the Sensors segment gross profit margin was primarily due to a decrease in volume and temporary manufacturing inefficiencies. In the Weighing Solutions segment, gross profit margin was flat as higher volume was offset by unfavorable foreign currency exchange rates.
The increase in the Sensors segment gross profit margin was primarily due to higher volume and improved manufacturing efficiencies. In the Weighing Solutions segment, gross profit margin decreased due to a reduction in inventory and unfavorable product mix, partially offset by higher volume.
In the Measurement Systems segment, gross profit margin increased slightly reflecting higher volume which was partially offset by unfavorable product mix and foreign exchange rates. - 30 - Compared to the fourth quarter of 2021, gross profit margins increased in the Sensors and Measurement Systems segments and decreased in the Weighing Solutions segment.
In the Measurement Systems segment, gross profit margin increased reflecting higher volume and favorable product mix. - 32 - Compared to the fourth quarter of 2022, gross profit margins increased in all of the reporting segments.
Higher revenue coming from DTS and our KELK and DSI steel-related businesses coupled with lower purchase accounting adjustments related to the DTS acquisition were partially offset by an unfavorable product mix, higher material costs and unfavorable foreign currency exchange rate impacts.
Higher revenues coupled with lower purchase accounting adjustments related to the DTS acquisition were partially offset by higher material costs and higher manufacturing costs.
Additionally, COVID-19 subsidies were received in 2021 that did not continue in 2022. - 37 - Selling, General, and Administrative Expenses Selling, general, and administrative (“SG&A”) expenses were as follows (dollars in thousands) : Years ended December 31, 2022 2021 Total SG&A expenses $ 104,285 $ 95,273 as a percentage of net revenues 28.8 % 30.0 % SG&A expenses for the year ended December 31, 2022 increased $9.0 million as compared to the prior year due to SG&A expenses related to the acquisition of DTS, higher personnel costs including wage increases and travel costs, and other fees.
Selling, General, and Administrative Expenses Selling, general, and administrative (“SG&A”) expenses were as follows (dollars in thousands) : Years ended December 31, 2023 2022 Total SG&A expenses $ 106,828 $ 104,285 as a percentage of net revenues 30.1 % 28.8 % SG&A expenses for the year ended December 31, 2023 increased $2.5 million as compared to the prior year due to higher personnel costs, including increases in headcount, wages and travel costs, higher IT costs and higher commissions. - 39 - Impairment of Goodwill and Indefinite-lived Intangible Assets For the years ended December 31, 2023 and December 31, 2022, as a result of our annual impairment tests performed on goodwill and indefinite-lived intangible assets there was no impairment on goodwill and indefinite-lived intangible assets.
The volume increase was mainly from sales of products into Other Markets, for precision agriculture and construction applications, and sales of products into the General Industrial market, partially offset by lower sales of products in the Transportation market.
Increased sales of load cells in our Other markets for precision agriculture and construction applications and transducer systems in our Industrial Weighing market, - 38 - were offset by lower sales of our load cell products in our Industrial weighing market. The overall volume decline was only partially offset by higher average selling prices.
Net revenues in the Sensors segment of $36.3 million in the fourth quarter of 2022 decreased 4.1% from $37.9 million in the third quarter of 2022, and increased 6.3% from $34.1 million in the fourth quarter of 2021.
Net revenues in the Sensors segment of $34.3 million in the fourth quarter of 2023 increased 5.3% from $32.5 million in the third quarter of 2023, and decreased 5.7% from $36.3 million in the fourth quarter of 2022. Sequentially, the increase in revenues primarily reflected higher precision resistor sales in the Test and Measurement market.
We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing and distribution footprint. Research and Development Research and development will continue to play a key role in our efforts to introduce innovative products to generate new sales and to improve profitability.
Research and Development Research and development will continue to play a key role in our efforts to introduce innovative products to generate new sales and to improve profitability. We expect to continue to expand our position as a leading supplier of precision foil technology products.
In the Sensors segment, the increase in gross profit margin was primarily due to an increase in volume and average selling prices.
In the Sensors segment, the increase in gross profit margin was primarily due to favorable foreign exchange rates and improved manufacturing efficiencies, which offset the impact of lower volume.
In recent years, we widened our acquisition strategy to include a broader set of precision measurement systems and product companies. We expect to expand our expertise, and our acquisition focus, outside our traditional vertical approach to other precision measurement solutions, including in the fields of measurement of force, weight, pressure, torque, tilt, motion, and acceleration.
We expect to expand our expertise and our acquisition focus to other precision measurement solutions, including in the fields of measurement of force, weight, pressure, torque, tilt, motion, and acceleration. We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing and distribution footprint.
For the year ended December 31, 2021, we recorded acquisition costs in our consolidated statements of operations of $1.2 million in connection with the acquisition of DTS. Other Income (Expense) Interest Expense The Company recorded interest expense of $2.3 million, and $1.2 million for the years ended December 31, 2022 and 2021, respectively.
Other Income (Expense) Interest Expense The Company recorded interest expense of $4.0 million, and $2.3 million for the years ended December 31, 2023 and 2022, respectively. Interest expense was higher in 2023 compared to 2022 mainly due to higher borrowing rates during 2023.
Net revenues for the year ended December 31, 2022 were $362.6 million compared to net revenues of $317.9 million for the year ended December 31, 2021.
The Measurement Systems reporting segment is comprised of highly specialized systems for steel production, materials development, and safety testing. Net revenues for the year ended December 31, 2023 were $355.0 million compared to net revenues of $362.6 million for the year ended December 31, 2022.
Capital expenditures for 2023 are expected to be approximately $18.5 million, which includes approximately $10.4 million in capital equipment for capacity expansion in the Sensors reporting segment and expected building projects of approximately $5.9 million for capacity expansion, mainly in Asia. As of December 31, 2022 and 2021, we did not have any off-balance sheet arrangements.
Capital expenditures for 2024 are expected to be approximately $15.0 million. As of December 31, 2023 and 2022, we did not have any off-balance sheet arrangements. Inflation Normally, inflation does not have a significant impact on our operations as our products are not generally sold on long-term contracts.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSome of the most highly specialized materials for our sensors are sourced from a single vendor. We maintain a safety stock inventory of certain critical materials at our facilities. Certain metals used in the manufacture of our products are traded on active markets, and can be subject to significant price volatility.
Biggest changeCommodity Price Risk Although most materials incorporated in our products are available from a number of sources, certain materials are available only from a relatively limited number of suppliers. Some of the most highly specialized materials for our sensors are sourced from a single vendor. We maintain a safety stock inventory of certain critical materials at our facilities.
We have performed a sensitivity analysis as of December 31, 2022 and 2021, respectively, using a model that measures the change in the values arising from a hypothetical 10% adverse movement in foreign currency exchange rates relative to the U.S. dollar, with all other variables held constant.
We have performed a sensitivity analysis as of December 31, 2023 and 2022, respectively, using a model that measures the change in the values arising from a hypothetical 10% adverse movement in foreign currency exchange rates relative to the U.S. dollar, with all other variables held constant.
We estimate that a 10% increase or decrease in the costs of raw materials subject to commodity price risk would decrease or increase our net earnings by $2.5 million and $1.9 million for the years ended December 31, 2022 and December 31, 2021, respectively, assuming that such changes in our costs have no impact on the selling prices of our products, and that we have no pending commitments to purchase metals at fixed prices.
We estimate that a 10% increase or decrease in the costs of raw materials subject to commodity price risk would decrease or increase our net earnings by $1.2 million and $2.5 million for the years ended December 31, 2023 and December 31, 2022, respectively, assuming that such changes in our costs have no impact on the selling prices of our products, and that we have no pending commitments to purchase metals at fixed prices.
Based on the debt and cash positions at December 31, 2022 and 2021, we would expect a 50 basis point increase or decrease in interest rates to increase or decrease our annualized net earnings by $0.1 million and $0.1 million in 2022 and 2021, respectively. See Note 7 to our consolidated financial statements for additional information about our long-term debt.
Based on the debt and cash positions at December 31, 2023 and 2022, we would expect a 50 basis point increase or decrease in interest rates to increase or decrease our annualized net earnings by $0.2 million and $0.1 million in 2023 and 2022, respectively. See Note 7 to our consolidated financial statements for additional information about our long-term debt.
The sensitivity analysis indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would impact our net earnings by approximately $3.6 million and $3.0 million for the years ended December 31, 2022 and December 31, 2021, respectively, although individual line items in our consolidated statements of operations could be materially affected.
The sensitivity analysis indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would impact our net earnings by approximately $3.7 million and $3.6 million for the years ended December 31, 2023 and December 31, 2022, respectively, although individual line items in our consolidated statements of operations could be materially affected.
The foreign currency exchange rates we used were based on market rates in effect at December 31, 2022 and 2021, respectively.
The foreign currency exchange rates we used were based on market rates in effect at December 31, 2023 and 2022, respectively.
The Company entered into a third amended and restated revolving credit facility on March 20, 2020. Interest payable on the facility is based upon the Agent’s prime rate, the Federal Funds rate or LIBOR, plus a spread. At December 31, 2022, the Company had $61.0 million of borrowings outstanding under the revolving credit facility.
The Company entered into a third amended and restated revolving credit facility on March 20, 2020. Interest payable on the facility is based upon the Agent’s prime rate, the Federal Funds rate or SOFR, plus a spread. At December 31, 2023, the Company had $32.0 million of borrowings outstanding under the revolving credit facility.
At December 31, 2022, we had $88.6 million of cash and cash equivalents, which accrue interest at various variable rates.
At December 31, 2023, we had $84.0 million of cash and cash equivalents, which accrue interest at various variable rates.
Our results of operations may be materially and adversely affected if we have difficulty obtaining these raw materials, the quality of available raw materials deteriorates, or there are significant price changes for these raw materials.
Certain metals used in the manufacture of our products are traded on active markets, and can be subject to significant price volatility. Our results of operations may be materially and adversely affected if we have difficulty obtaining these raw materials, the quality of available raw materials deteriorates, or there are significant price changes for these raw materials.
Furthermore, the timing of cash receipts and disbursements could result in materially different actual results versus the hypothetical 10% movement in the value of the U.S. dollar, particularly if there are significant changes in exchange rates in a short period of time. - 42 - Commodity Price Risk Although most materials incorporated in our products are available from a number of sources, certain materials are available only from a relatively limited number of suppliers.
Furthermore, the timing of cash receipts and disbursements - 44 - could result in materially different actual results versus the hypothetical 10% movement in the value of the U.S. dollar, particularly if there are significant changes in exchange rates in a short period of time.

Other VPG 10-K year-over-year comparisons