Vishay Precision Group's ERP Shipment Delay and Cost Savings Timelines Spark Contradictions

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $83.9M, up 12% YOY, flat sequentially
• EPS: $0.04 diluted earnings per share (adjusted), $0.04 loss per diluted share (GAAP)
• Gross Margin: 38.6%, down due to unfavorable FX and product mix, with Sensors segment at 31.2%
• Operating Margin: -0.4% (GAAP), 1.7% (adjusted), impacted by FX headwinds

Guidance:

• Q3 2026 revenue expected in the range of $84M to $89M, assuming normal operations and constant Q2 exchange rates, excluding expected tariff refunds.
• Full year 2026 organic revenue growth expected to exceed the 8-10% target from the three-year model.
• Full year 2026 capital expenditures forecast at $10-12M.

Business Commentary:

Revenue and Order Growth:

• VPG's second quarter 2026 saw orders of $95.5 million, marking a 12% year-over-year increase, driven by strength in semiconductor equipment and AI-related data center, infrastructure, and aerospace and defense applications.
• The growth was underpinned by sustained demand in these key markets, with the company's strategic focus on increasing exposure to secular growth markets.

Sensor Segment Performance:

• The sensor segment reported revenue of $33.4 million, flat sequentially but up 26% year-over-year, with a book-to-bill ratio of 1.44.
• This reflects robust demand in test and measurement, AMS, and avionics markets, alongside significant orders for precision resistors linked to AI infrastructure investments.

Weighing Solutions and Measurement Systems:

• The weighing solutions segment reported revenue of $30.3 million, even sequentially but up 3% year-over-year, with a book-to-bill ratio of 0.94.
• The segment saw positive trends in consumer e-bike applications and construction equipment, offset by lower orders in transportation due to higher oil prices.

Operational Challenges and ERP Impact:

• The company experienced a revenue impact of approximately $3 million due to delays in the CELT business from ERP implementation issues.
• These supply chain challenges resulted in temporary shipment delays, which the company expects to resolve by the end of the fourth quarter.

Cost Savings and Financial Outlook:

• VPG achieved $1 million in cost savings during the second quarter, with plans to reach approximately $6 million by year-end.
• The company remains confident in achieving organic revenue growth above its three-year model target, supported by strong order trends and backlog.

Sentiment Analysis:

Overall Tone: Positive

• Management expresses confidence in the outlook, citing 'strong order trends and backlog', 'positive outlook for the year', and being 'well-positioned' for growth in key secular markets. They state 'we are confident we can deliver organic revenue growth for 2026 above the target' and note 'momentum' and 'continued success'.

Q&A:

• Question from Jason Smith (Lake Street Capital): Could you expand a little on that humanoid pipeline, how many engagements you currently have and where that is?
  Response: Management has a formal vendor nomination from the initial humanoid customer, expecting a production ramp in H2 2026, and is in various stages of engagement with 150+ potential humanoid suppliers.

• Question from Josh Sickles (B. Riley): Regarding the math on EBITDA, stripping out FX and ERP delays, does that imply around $10M of EBITDA for the year?
  Response: Management agrees the math is close, noting FX and product/mix impacts were around $9M, with the $3M ERP delay revenue to be recognized by end of Q4.

• Question from Josh Sickles (B. Riley): How should we think about the cadence for the Weighing Solutions and Measurement Systems divisions in the back half?
  Response: Measurement Systems expects improved order intake in Q3, driven by the DTS business; Weighing Solutions expects a more stable second half but not a rapid improvement without favorable macro triggers.

• Question from Josh Sickles (B. Riley): Can you quantify what you're expected back in terms of tariff reimbursement?
  Response: Tariff reimbursements received to date are about $1.5M and are not material, being profit neutral as they reduce both revenue and COGS.

• Question from John Franzreb (Sedonia Company): Can you talk about your ability to raise prices given higher input costs?
  Response: Price increases have been implemented on some selective products, with benefits expected in the second half, but not yet material to the P&L due to the large backlog.

• Question from John Franzreb (Sedonia Company): Will the deferred Calc order be balanced between Q3 and Q4?
  Response: Shipment of the $3M deferred order is expected to be completed by the end of Q4, with some movement in Q3 as capacity increases.

• Question from John Franzreb (Sedonia Company): Can you give a sense of how much capacity you're adding and incremental revenue potential?
  Response: Capacity has been added based on customer projections to support the humanoid ramp, with the ability to address thousands of bots per week once orders are received.

• Question from John Franzreb (Sedonia Company): What is the cost savings progression for the $6M target?
  Response: $600k was achieved in Q2, with the remaining savings planned for the second half to reach the full $6M target.

Contradiction Point 1

Financial Impact of ERP-Related Shipment Delay

It involves differing descriptions of the financial impact of a shipment delay, which is crucial for understanding the company's profitability and EBITDA.

Josh Sickles (B. Riley) - Josh Sickles (B. Riley)

2026Q2: The ERP-related delay impacted revenue but is profit-neutral as it relates to deferred shipments. - Bill Clancy(CFO)

Can you quantify the expected amount of tariff reimbursement? - Josh Stickels (B. Riley)

2026Q2: The FX headwind was ~$900k sequentially, there was an unusual product mix impact of ~$800k, and the $3M KELK shipment delay has a contribution margin of ~1.5. The total adjusted EBITDA would be around $9 million. - Ziv Shoshani(CEO)

Contradiction Point 2

Cadence for Shipping Deferred Orders

It involves differing timelines for shipping deferred orders, which affects revenue recognition and production capacity planning.

John Franzreb (Sedonia Company) - John Franzreb (Sedonia Company)

2026Q2: Some shipments will occur in Q3 as production increases, but the majority of the $3 million in deferred orders is expected to ship in Q4, bringing shipments back to normalized levels. - Ziv Shoshani(CEO)

Will the deferred calc order be split between Q3 and Q4 or fully recognized in Q4? - John Franzreb (Sidoti & Company)

2026Q2: Production capacity is increasing, so some improvement will be seen in Q3. However, the larger output and completion of the delayed shipments are expected in Q4. - Ziv Shoshani(CEO)

Contradiction Point 3

Timeline for Realizing Price Increase Benefits

It involves differing expectations on when benefits from price increases will be realized, affecting P&L forecasting.

Josh Sickles (B. Riley) - Josh Sickles (B. Riley)

2026Q2: Price increases have been implemented on a selective basis for some products, with benefits expected to be seen in the P&L in the second half of the year. - Bill Clancy(CFO)

What is the year-to-date [of cost savings] number and when was the balance of the $6 million achieved? - John Franzreb (Sidoti & Company)

2026Q2: In Q3, the revenue impact of price increases could be in the 'hundreds of thousands of dollars' and slightly higher in subsequent quarters. - Bill Clancy(CFO)

Contradiction Point 4

Humanoid Robotics Customer Engagement Status

It involves differing characterizations of the stage and number of customer engagements in the humanoid robotics pipeline, impacting growth expectations.

Jason Smith of Lake Street asks: What are your thoughts on the current market conditions? - Jason Smith (Lake Street)

2026Q2: Received a formal vendor nomination letter from the initial humanoid customer... A second humanoid customer has decided to re-evaluate and refine its design. The company is providing prototypes to a third and fourth humanoid customers. Identified and are in early contact with a heat map of approximately 150 to 200 potential humanoid robotics developers. - Ziv Shoshani(CEO)

How many engagements are in the humanoid pipeline and where are they located? - Josh Nichols (B. Riley Securities)

2026Q1: The potential fourth customer is a start-up in the early stages, developing humanoid platforms... Discussions are in the early engineering design phase and have a long cycle time. - Ziv Shoshani(CEO)

Contradiction Point 5

Timeline for Realizing Cost Savings

It involves differing timelines for achieving significant cost savings, affecting financial planning and P&L expectations.

Josh Sickles (B. Riley) - Josh Sickles (B. Riley)

2026Q2: The company is on track to achieve ~$6M in cost savings for the year, which is part of a three-year plan for ~$20M in reductions. - Bill Clancy(CFO)

Given the exceptionally strong order activity and book to bill in the weighing solutions business, how should we think about the cadence for these two divisions? - John Franzreb (Sidoti & Company, LLC)

2025Q4: The $6 million in cost reductions... is expected to be realized and reflected in the 2026 P&L. - Ziv Shoshani(CEO)