Hello and welcome to VPG's second quarter 2022 earnings call. My name is Alex, and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star one on your telephone keypad. If you'd like to withdraw your question, you may press star two. I will now hand over to your host, Steve Cantor, Senior Director of Investor Relations. Steve, over to you. Thank you, Alex, and good morning, everyone. Welcome to VPG's 2022 second quarter earnings conference call. Our Q2 press release and accompanying slides have been posted on our website at vpgsensors.com. An audio recording of today's call will be available on the Internet for a limited time and can also be accessed on our website. Today's remarks are governed by the safe harbor provisions of the 1995 Private Securities Litigation Reform Act. Our actual results may vary from forward-looking statements, and for a discussion of the risks associated with VPG's operations, we encourage you to refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2021, and our other recent SEC filings. On the call today are Ziv Shoshani, CEO and President, and Bill Clancy, CFO. I'll now turn the call to Ziv for some prepared remarks. Please refer to slide three of the quarterly presentation. Ziv? Thank you, Steve. I will begin with some commentary on VPG's consolidated financial results and sales trends for the second quarter. Bill will provide financial details and our outlook for the third quarter of 2022. The second quarter marked one of the best quarters in VPG's history as we continued to execute well. We achieved a number of quarterly financial milestones, including record adjusted diluted net earnings per share, adjusted EBITDA, and backlog. These results are a reflection of our diversified business model and market, our strong VPG teams around the world, as well as the growth and the cost savings initiatives and investments across our businesses. Our record backlog positions us well for the rest of the year and supports our outlook for continued growth in the third quarter. We continue to implement our new operating strategy as we focus on solid and consistent long-term opportunities in expanding precision measurement sensing applications. As a reflection of our financial and operating performance, our board of directors has authorized stock repurchase program. Moving to slide four. Looking at the second quarter results in detail, we reported sales of $88.6 million, which was 17.6% higher than a year ago and 1.1% above the first quarter of 2022. Excluding foreign exchange rate impact, revenues grew 24.2% from prior year and 3.4% sequentially. We achieved another strong quarter of orders of $95.9 million and a positive book-to-bill of 1.08. This is the sixth sequential quarter of reporting book-to-bill above one. We improved our adjusted gross margin to 42.9% as compared to the first quarter adjusted gross profit margin of 41.0%, and generated an adjusted EBITDA margin of 17.8% and a record-adjusted diluted net earnings per share of $0.68. These results reflects the steps we continue to take to realize the operating profit leverage embedded in our model. We continue to manage the impact of the global supply chain challenges. In some areas, we continue to make strategic purchases of materials, and in other instances, we have redesigned our products to manage the supply chain constraints, mainly for microchips. Through the first half of 2022, we realized approximately $3.7 million from price increases compared to the same timeframe a year ago. We are on track for these increases to contribute to our target for $6 million-$8 million for incremental revenue in 2022, which we expect will offset higher pandemic-driven costs for direct labor, materials, and logistics. I'll now review our business segment performance in the second quarter. Moving to slide five. Beginning with our Sensors segment, which is comprised of our advanced sensors products and our precision resistors, second quarter revenue of $40.3 million grew 29.2% from a year ago and was 6.7% higher sequentially. Excluding foreign exchange rate impacts, Q2 revenues grew 9.9% sequentially and were up 38.3% from a year ago. The sequential growth was primarily driven by higher sales of precision resistors in the test and measurements market and higher sales of advanced sensors for consumer and medical applications. For the second consecutive quarter, advanced sensors revenues was above annual $50 million run rate. Book-to-bill for sensors was 1.17, reflecting solid orders of $47.1 million, which were up 9.1% from a year ago, but down 2.0% sequentially. Bookings continued to be strong for precision resistors in the test and measurement for front-end and back-end semiconductor equipment, as well as for avionics, military, and space or AMS markets. While orders slowed for advanced sensors for general industrial and AMS markets, a portion of which relates to the timing of semiannual orders, we continue to see good customer engagement and sales opportunities in consumer and medical applications. In terms of operating results for sensors, adjusted gross margin of 44.3% increased from 38.6% in the first quarter of 2022, reflecting higher revenue and labor efficiencies. Moving to slide six. Turning to our Weighing Solutions segment, which is comprised of our Foil Sensors, onboard weighing, and process weighing businesses. Second quarter sales were $28.5 million. The 13.1% sequential decline reflected lower sales of OEM Foil Sensors in our precision agriculture and construction markets, and lower sales of onboard weighing products to the transportation market. Our sales of OEM Foil Sensors reflected a redesign of electronic boards to improve supply chain availability. We expect the redesigned products to ship in the second half of the year. In terms of our onboard weighing solutions, which are sold in the aftermarket, our sales continued to be impacted by long lead times industry-wide for new trucks and vans. Book-to-bill for Weighing Solutions was 1.03. Orders of $29.3 million declined $5.6 million or 16% from the first quarter due to softer demand for Force Sensors in other markets and for process weighing applications. Weighing Solutions gross margin of 33.7% in the second quarter declined from 36.9% in the first quarter due to lower volume, unfavorable foreign exchange rates, and unfavorable product mix. Moving to slide seven. Turning to our Measurement Systems segment. Revenues in the second quarter of $19.9 million increased 15.9% sequentially, reflecting higher sales of project-driven solutions to the steel market. Excluding foreign exchange rates impact, Q2 revenues increased 16.7% sequentially. After record quarterly orders in the first quarter, orders declined 26.9% due to the timing of customer projects. Book-to-bill was 0.98. Adjusted gross margin in the second quarter for Measurement Systems was 53.3%, adjusted for purchase accounting related to the DTS acquisition, and declined modestly from 54.1% in the first quarter, as higher volume was offset by unfavorable product mix and a reduction in inventory. Before turning the call to Bill, I would like to comment on our announcement today of the stock repurchase authorization. As I mentioned earlier, in the second quarter, we generated $15.8 million of adjusted EBITDA and an adjusted EBITDA margin of 17.8%. We believe that we have a strong balance sheet and ample liquidity to support our capital allocation strategy to fund organic growth, M&A opportunities, and stock repurchases. Accordingly, the board has authorized a stock repurchase program to buy back up to 600,000 shares of our outstanding common stock. Finally, I want to make a comment on VPG's ESG program. In August last year, we launched a three-year ESG plan. As part of the plan this past quarter, we posted a new ESG-related content on our website. We are proud that VPG and its products are playing a role in making the world safer, smarter, and more productive. I will now turn it over to Bill Clancy for additional financial details. Bill? Thanks, Ziv. Referring to slide eight and the reconciliation tables of the slide deck. In the second quarter of 2022, we achieved revenues of $88.6 million. A gross profit of $37.3 million or 42.1% of sales. Operating income of $10.6 million or 11.9% of revenues, and diluted net earnings per share of $0.79. On an adjusted basis, our gross profit was $38 million or 42.9% of sales. Operating income was $12.1 million or 13.7% of sales, and diluted net earnings per share was $0.68. Our second quarter of 2022 revenues increased 1.1% compared to $87.7 million in the first quarter of 2022, and we're 17.6% above the second quarter a year ago. Foreign exchange for the second quarter of 2022 negatively impacted revenues by $4 million compared to a year ago, and negatively impacted revenues by $2 million as compared to the first quarter of 2022. Gross margin in the second quarter was 42.1% compared to 40.2% in the first quarter, which benefited from higher volume and labor efficiencies, partially offset by unfavorable foreign exchange rates. On an adjusted basis, second quarter gross margin was 42.9% as compared to 41% in the first quarter of 2022, and excludes $700,000 of acquisition purchase accounting adjustments. Our operating margin was 11.9% for the second quarter of 2022. Our second quarter adjusted operating margin was 13.7% and excludes the adjustments I just mentioned, as well as $900,000 of restructuring costs. Selling general and administrative expenses for the second quarter of 2022 were $25.9 million or 29.2% of revenues, compared to $22.5 million or 29.8% of revenues for the second quarter of 2021. The increase in SG&A of $3.4 million mainly relates to $2.3 million, reflecting a full quarter of DTS expenses, $400,000 for travel, $400,000 of wage increases, and $300,000 related to sales commissions. The adjusted net earnings for the second quarter of 2022 were $9.3 million or $0.68 per diluted share, compared to $6.7 million or $0.49 per diluted share in the second quarter of 2021. Adjusted EBITDA was $15.8 million or 17.8% of revenue, compared to $12.5 million or 16.6% a year ago. Purchased CapEx in the second quarter of 2022 was $6.3 million. The majority of which reflects equipment purchases and related infrastructure. For fiscal 2022, we expect purchased CapEx to be approximately $30 million. Approximately half of our purchases are infrastructure related to support additional capacity expansions for growth initiatives, for precision resistors in the Sensors segment, and force sensors in the Weighing Solutions segment. The other 50% of CapEx is mainly for equipment for expansion and cost efficiencies in the sensor segment. Adjusted free cash flow was $4.9 million for the second quarter of 2022, as compared to $4.2 million for the second quarter of 2021. We define adjusted free cash flow as cash from operating activities, which was $9 million, less capital expenditures of $4.5 million, plus a sale of fixed assets, which was $400,000. The GAAP tax rate in the second quarter was 19.2% as compared to 6.1% in the second quarter of 2021. If you recall that in the prior year, our tax rate reflected a one-time tax benefit of approximately $1 million associated with the DTS acquisition. We are assuming an operational tax rate in the range of 20%-22% for the full year of 2022. In terms of our target model, we outperformed in the second quarter as we benefited from the positive effects of currency, higher inventory, lower than planned spending, and the lower tax rate. Without these factors, our performance was in line with our model. Moving to slide nine. We ended the second quarter with $79.4 million of cash and cash equivalents and total long-term debt of $60.8 million. Regarding the outlook. For the third fiscal quarter, we expect net revenues to grow sequentially and be in the range of $90 million-$100 million at constant second fiscal quarter of 2022 exchange rates. In summary, the second quarter marked one of the best quarters in VPG's history. Solid orders contribute to a record backlog, which underscores the strength of our business model and strategy, and we continue to execute on our long-term initiatives to accelerate growth of sales and profits. With that, let's open the line for questions. Thank you. Thank you. As a reminder, if you'd like to ask a question, you can press star one on your telephone keypad. If you'd like to withdraw your question, you may press star two. Please ensure you're unmuted locally when asking your question. Our first question comes from John Franzreb from Sidoti & Company. John, your line is now open. Good morning, guys. Thanks for taking the questions. Actually, congratulations on a great quarter. I wanna start with the quarter in and of itself. On a sequential basis, revenue is up only $1 million, but adjusted operating income was up an amazing $3 million. Can you kind of walk me through the key puts and takes of that? Yes, absolutely, John. As you indicated, the $1 million top line growth and $2 million, close to $3 million at the bottom line. If in respect to prior quarter, out of the $2.9 million, as Bill indicated, we have $500,000 of favorable exchange rate, and then the volume and the average selling price are $1.8 million positive, and the rest of the gap is $600,000 of lower fixed cost, mainly utilities and repairs and maintenance. This is to reconcile the gap, but please bear in mind that at the top line we had a negative $2 million for an exchange rate quarter-over-quarter. The net effect is $1 million, but it includes $2 million negative exchange rate at the top line. Right. Got it. When you think about DTS, you've had it for about a year now. Two things. Firstly, if you said this, I apologize if I missed it. What was the DTS revenue contribution in the quarter? Can you just give us, like, a, what your thoughts are about having the business a year versus when you first acquired it? I don't think that the DTS revenues for the quarter were right around $7 million. $7.9 million. Yeah. $7 million. Yeah. $7 million. As we are finalizing the integration of the DTS- Mm-hmm. Post the acquisition, the programs that we put in place, we already in phases where we. Well, the run rate, the current run rate is, I would say, double-digit higher than prior to the acquisition. At this point in time, we are moving ahead quite well with the integration plan and looking at the good business perspectives for DTS coming from automotive and the AMS applications. Got it. Been a good acquisition on your part. Congratulations. It sounds like you've been pushing through price. That wasn't always the case. Are you pushing through price in specific segments or product lines that you find the need to? And how much pricing or how much pushback are you getting on it? Okay. If you can recall, John, we have indicated already, I would say a few quarters ago, that selectively we have started to increase prices to customers this year in respect to last year, the run rate. So far we have recorded. Mm-hmm. -3.7. For the first six months in respect to last year, we believe that we are going to achieve $6 million-$8 million of price positive to offset the additional COVID-related costs. I think, as you know, the pricing that we have started already a few quarters ago has been. We have been discussing with our customers the price increases and it has been. We are very confident that those price increases has been done in such that we are not jeopardizing the relationship we have with customers. By the way, we are not alone raising prices in our markets. Many of our suppliers did that. As I said, the main important key thing is not damaging the customer relationship. Selectively, I believe we have been doing that so far quite successfully. One last question before I get back into queue. It seems like a lot of people are concerned about supply chain issues and they're ordering probably in advance of what they normally would be ordering. Do you get a sense that your customers are doing the same thing, and that's why the backlog is so strong and the booking profile is so strong? Or do you think they are ordering based on the current environment and not building inventory? I would say that the current environment, the order intake of the current environment is quite different than six months ago. The situation h as stabilized, and we believe that the current order intake and the current environment do represent real demand. We do not believe Mm-hmm. That at this point in time, based on the order intake, we are not seeing any double booking, especially as we are selling more customized products in relation to commodity products. Mm-hmm. The current order run rate, in our opinion, represents the true market demand. Okay, great Ziv. Thanks for taking my questions. I get back in the queue. Thank you. Our next question comes from Bill Dezellem from Tieton Capital. Bill, your line is now open. All right, thank you. Absolutely great quarter. Congratulations. My apologies for asking a negative question here, but would you please talk about the onboard weighing and the other Weighing Solutions, revenues and, you know, the impact that you saw and what were the dynamics behind the scenes, please? Sure. Absolutely. Let me start with our force sensor product line within the Weighing Solutions. The force sensor product line revenues has been impacted by the timing of the redesign of our electronic boards due to the shortages of microchips. We have finished to redesign and to qualify the new boards with our customers, so we expect a catch-up on those revenues in the second half of the year. To an extent, some of our key OEMs has been delaying placing those orders until those redesigns and the qualification would be completed. Therefore, we do believe that in the coming quarter, we are going to see higher revenues for force sensors. Regarding our onboard weighing, a part of the onboard weighing demand is coming from installing runway and trackway systems on vehicles. Unfortunately, the recovery of vehicle production has not been dramatic as we have expected. The vehicle manufacturers have been impacted by the shortages of microchips. Therefore, we are seeing lower demand, which we do expect to recover in the coming future, which mainly impacts our order intake and revenues regarding onboard weighing. That's the main trigger for onboard weighing, the supply chain constraint for vehicle. Chip supply problems with your customers, with the onboard weighing and the chip supply problem with your own products for the other Weighing Solutions. If you look out at your customers that have been waiting for you to redesign the chips, what's the magnitude of that potential book of orders that could be released here this quarter? We are looking for force sensors. We are looking at a potential upside of $2 million-$2.5 million of higher revenues as those electronic boards being qualified by our customers. Now, once again, congratulations and look forward to next quarter. Thank you. Our next question comes from Hendi Susanto from Gabelli Funds. Hendy, your line is now open. Good morning, Ziv, Bill and Steve. Morning, Hendi. Given the macro concern. Your customers. [audio distortion] At this point in time, we do not see any fundamental sequential slowdown in demand, and we see more of a solid, stabilized order trends. Our diversified end markets and the high-value nature of our product has provided us with stability and consistency through the business cycle. We do feel that we have some upside as microchip shortages would ease, and we believe that we know that we have a solid backlog. To that extent, as I indicated, we don't see the panic effect that some of which was potentially driven in some end markets two, three quarters ago, and now the ongoing demand, in my opinion, reflects the true demand that the market needs, given the inventory and the queues that our customers have. Ziv, inventories of your customers, would you characterize the inventories running at normal level, below optimal or higher than usual? I would say that we feel that the inventory levels at our customers is at what they would expect the right level. Look, maybe another reflection of that is we have a very solid, and you see a record backlog. The nature of the backlog is such that, and this is based on customer requirements, naturally, that I would say around close to 50% of the backlog is expected to be shipped within the coming quarter, which means we have orders that customer placed that are also expected to be shipped in Q4 and, of course, to a much lower degree in Q1. We feel that the backlog is solid and the inventory levels at our customers is probably at the right level where they have set it and they have considered that to be at the right level. I see. With regard to the selective price increase, is it still ongoing? No. The pricing we have initiated the price increase, as I said a few quarters ago. Excuse me. Let me take a step back. When we took the initiative to increase prices, naturally, you cannot increase it on current backlog, only for new orders. There is a timing issue where those new orders with the new pricing are flowing into the backlog. What we are seeing now is the full effect of the timing of those price increases flowing through the backlog and to the financial reports. Great. Ziv, how should we think about Advanced Sensors capacity expansion and investment going forward? Would you be able to share what the next milestone of Advanced Sensors annual sales target? Sure. Advanced sensors, as we indicated, the revenue has increased 3.4% quarter-over-quarter. This is the second consecutive quarter that we are running over $50 million annual run rate. At this point in time, we have filled all the direct labor open positions for advanced sensors. We did not book any startup cost, which means the transition to the new facility is behind us, and we are fully equipped to support the current run rate of demand. Once and if needed, we have the capacity to support higher demand. At this point in time, given the current demand, the revenues are expected to be at the order of magnitude as we were running in Q2. We don't need any additional equipment to support higher volume given the current demand. The milestone at this point in time, which we have been taking, is reducing customer lead times and improving availability and service of products as we finalize the transition. This is a question for Bill. Bill, our gross margin was strong in Q2. Now that there is no more Advanced Sensors facility transition startup costs, how should we think about the gross margin model of sensor segments? Furthermore, any guidance on how should we think about the overall gross margin will be helpful as there is some benefit from the selective price increase. Andy, I would say for the sensor segment, the gross margin, so if we maintain, you know, the current product mix and constant exchange rate, which is very important- You know, given that structure, we can continue to perform at that, at the gross margin level where we are today. I would say and that would also reflect the overall gross margin level at a constant exchange rate and the current product mix, you know, given that, you know, we have seen some efficiencies. Given that structure, we should see similar if not slightly better gross margins going forward. I would like to clarify the magnitude of the impact of the chip shortage in the second quarter. Ziv mentioned the upside of $2.5 million. Is that, I mean, like the magnitude of the impact of the chip shortage in the second quarter, more or less? Yes, this is correct in respect to our. Yes. OEM customers for the four sensors. We have not quantified how many orders we would receive from our customers for the onboard weighing applications once the production of vehicles would get to a more normalized pre-pandemic level. Okay. Thank you so much, Ziv, Bill. Thank you, Hendi. Thank you. As a reminder, if you'd like to ask a question, press star one on your telephone keypad. We have a follow-up question from John Franzreb from Sidoti & Company. John, your line is now open. Yeah, I guess just to follow up on one of Hendi's questions, maybe it'd be helpful if we just kind of talk about the puts and takes on currency on your business as a whole, you would deem the upside or downside risks on a currency basis. All right. John, as you know, we mentioned, you know, on the call, like we had exchange rate negatively impacting the revenue sequentially by $2 million. Yet overall, at the operating margin level, you know, we had a positive half million dollars. You could see basically the impact to the revenues. The gross margin had a negative half million dollar impact, but yet we saw savings coming through SG&A. It does have, you know, significant swings through all the lines themselves. But the bottom line. Mm-hmm. You know, sequentially, we had a half million dollar positive exchange rate impact sequentially on the results. Is that mostly Euro, Bill? I would say, well, the revenues could be the Euro, Canadian, and also the Japanese yen. The costs Mm. Would probably predominantly the new Israeli shekel. Shekel, right. Okay. I guess along the same vein. Go ahead, Ziv. You wanted to add something? No, I just want to say that all in all, John, it just, from a high-level standpoint, 60% of the company's revenue are in U.S. dollars. Okay. Around, I would say. Got it. Close to 15%-18% Euro and the rest would be split between Japanese yen, British pound, and Canadian dollar. That's the top line effect. Right. Perfect. Another topic of conversation on a lot of conference calls is concerns about a recession. In your business, where do you think you would see a recessionary indicator as far as your bookings? In my opinion, semiconductor equipment is still running very strong also given the chip shortages. I would say that. Mm-hmm. If there would be an indication or regarding a potential softening. Mm-hmm. To the bookings, it would be on the general industrial type of business, which is, which touches many general type of industrial applications, which would give us a certain indication that potentially could be too much inventory in the pipeline that has to be depleted first before placing orders again. So general industrial probably would be the leading indicator given the fact that it touches so many different. It is a very diversified application. Got it. One last question if I could squeeze it in. The amount of new vehicle launches in the automotive market is set to rise from the mid-30s last year to the mid-50s this year and maybe into the mid-60s next year. Are you a beneficiary of that trend? Do you see that in your test business or no? This is John, and this is regarding. I'm sorry, I couldn't hear you well. This is regarding E-vehicles or just general vehicles? Just new vehicle platforms in and of themselves. The numbers in the mid-30s last year, it's going to be in the mid-50s this year and probably in the mid-60s next year, and probably stay at some sort of elevated level for the next two years after. But I was just wondering if you see that as far as your testing products are concerned or no? You see that kind of a trend? The application we are selling to those vehicle manufacturers would be potentially the onboard weighing platform. I would say, given the fact that if there will be a certain potentially volume change up or down, it would affect our onboard weighing demand. Also, this is Steve, John. Also, I think it does impact our crash test business, so DTS. As you would expect, we would continue to benefit from the rollout of new models which have to undergo these crash tests. What you just described would certainly be a positive for us. Okay. Great, guys. Thanks for taking my questions, and congratulations on a big quarter. Thank you. Our final question for today is from Bill Dezellem from Tieton Capital. Bill, your line is now open. Thank you. I'd actually like to follow up on the advanced sensor business, please. You went through several quarters of expansion and therefore you were constrained on your ability to produce, which we have perceived also constrained your customers' willingness or ability to place orders. The question is, what are you now seeing in terms of order strength and really the design ramp that would be in anticipation of orders now that you are no longer supply constrained and do have your labor and factory completely built out? I would say that we have seen on the advanced sensors some softening on the general industrial application. The funnel of opportunities for advanced sensors in regards to new designs in consumer, especially in consumer and medical, remain solid. Our larger volume opportunities have a longer selling cycle, which involve extensive technical discussions with our customers. Overall, we are seeing the demand has stabilized, but once those potential opportunities will turn into you know first pilot line and then moving to a full volume production, we would see an, I would say, another increase in the run rate of advanced sensors to a much higher level. At this point in time, as you indicated correctly, we have the manufacturing capabilities to support current demand, but we are constantly working. We have a funnel of opportunities that it would be that I would say it would be quite hard to time when those products would be launched by our customers. Once the lower volume, and especially the higher volume opportunities will turn into real orders, we should definitely see the sales running through this platform. Ziv, I did hear what you just said that it's difficult to identify timing, but I am gonna ask relative to your comment that once some of these higher volume pieces of business do come through, that revenues could be meaningfully higher. What's your thought in terms of the timing? I mean, is that early 2023? Is it 2024? What general help can you provide there? Okay. I would say that at this point. Well, let me say the following. Those are highly discrete projects for our customers. We even have a very limited exposure. They give us a certain forecast and a certain visibility, which is only, I would say 10-12 weeks, and they try to keep it very close to their, you know, to their chest. It would be almost, I could say, just a complete guess on my side to say if it's going to be early next year or later in 2023. I don't think we should expect to see any of them turning into real opportunities by the end of this year. It would be a complete guess on my side to say if it will come early or later, for example, next year. I just don't know. Thank you for that perspective. Thank you. We have no further questions for today. I'll hand back to Steve Cantor for any further remarks. Thank you. Before closing, I want to let investors know that we will be at the Jefferies Industrials Conference tomorrow, and also participating in the Sidoti Virtual Conference in September. In addition, Stifel is organizing some meetings for us next week in Philadelphia. With that, I'd like to thank everyone for joining our call today, and we look forward to updating you next quarter. Have a great day. Thank you for joining today's call. You may now disconnect your line.