Welcome to the VPG's second quarter fiscal 2023 earnings call. My name is Elliot, and I'll be coordinating your call today. If you'd like to register a question during today's event, please press star followed by one on your telephone keypad. I'd now like to hand over to Steve Cantor, Senior Director of Investor Relations. The floor is yours. Please go ahead. Thank you, Elliot. Good morning, everyone. Welcome to VPG's second quarter of 2023 earnings conference call. Our Q2 press release and slides have been posted on our website at vpgsensors.com. An audio recording of today's call will be available 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. 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, 2022, 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 presentation. Ziv? Thank you, Steve. I will begin with some commentary on VPG's consolidated financial s ales trends for the second quarter. Bill will provide financial details about the quarter and our outlook for the third quarter of 2023. Moving to slide three, we achieved another strong quarter for VPG. We grew revenue year-over-year and sequentially. We performed well financially as we increased adjusted gross margin, adjusted operating margin, and adjusted diluted EPS from Q1. We generated $16 million of adjusted EBITDA, $9.8 million of cash from operations, and $6.4 million of adjusted free cash flow, which supports our capital allocation strategy to grow stockholders' value. Orders grew sequentially, and we have a solid outlook for the third quarter, driven by our backlog. Customer engagement remains high as we continue to extend on long-term strategic growth initiatives to capture, expanding and broadening opportunities for our precision measurement and sensing technologies. Moving to slide four. Looking at the second quarter results in detail. We reported sales of $90.8 million, which was 2.5% higher than a year ago and 2.2% higher sequentially. Orders of $85.6 million grew 3% from the first quarter. This reflected higher sequential bookings for all three business segments and resulted in a book-to-bill ratio of 0.94. In the current macro environment, our customers are maintaining lower inventory levels. Nevertheless, given the custom nature of our products, we anticipate we will see bookings improvements approximately in Q4 of this year to early 2024. As I indicated, we improved our adjusted gross margin to 42.7% from 41.9% in the first quarter, driven by higher sales, higher selling prices, and a favorable impact of FX. This was partially offset by unfavorable product mix in our measurement system segment. Our supply chain continued to improve compared to a year ago. We incurred higher material costs, which we were able to offset to higher selling prices. The redesign of one of our DTS products, due to insufficient availability of key components, is complete, and we are on track to ship the redesigned product in the fourth quarter. In terms of our organic growth strategies, we continued our focus on key strategic initiatives to capture emerging opportunities for our precision measurement and sensing technologies. As we have discussed before, we have seen broadening of emerging opportunities in new markets and applications that can benefit from our high-performance, high-precision solutions. During the second quarter, we continued to expand our engagement with existing customers, as well as develop innovative products to meet their emerging requirements. These engagements are in the range of markets, including industrial automation, robotics, space and defense, precision agriculture, fiber optics data center networks, medical equipment, and consumer. We made progress in many of these markets over the past few years, and we are optimistic about their potential to contribute to our long-term organic growth. I'll touch on some of these initiatives as I now review our business segments performance for the second quarter. Moving to slide 5. Beginning with our sensor segment, second-quarter revenue of $36.3 million declined 10% from a year ago and was 1.3% lower sequentially. Compared to the first quarter, sales of our precision resistors were slightly lower, as sales for these products to the test and measurement market were flat, and sales to the AMS market were lower as customers continued to work down inventories. Sales of advanced sensors were flat with the first quarter. Orders for sensors of $30.6 million were 2.3% higher sequentially, which resulted in a book-to-bill of 0.84. For precision resistors, order were flat to the semiconductor test market, while orders to the AMS market were soft in the second quarter, as our distributors continue to be cautious in their ordering pattern, given the macro environment. Strategically, we have made progress in the second quarter with our initiatives to secure design-ins for new applications for our precision resistors. For example, our products were specced into a number of new space and missile defense projects. In addition, we are gaining traction with key fiber optics equipment makers, with new products that provide long life stability that can contribute to a more robust network performance. Orders for advanced sensors to the consumer market improved in Q2, have not yet returned to the 2022 peak levels. We continue to get further traction with the additional applications for advanced sensors in a number of emerging markets, including in robotics for industrial and medical applications. In terms of operating results for sensors, adjusted gross margin of 40.1% declined sequentially from 41.2%, primarily due to lower volume, partially offset by favorable foreign currency rates. Moving to slide six. Turning to our weighing solution segment, second quarter sales of $31.3 million were 9.8% higher than a year ago and 1.9% lower compared to the first quarter of 2023. Sequentially, higher sales in the industrial weighing market were offset by lower sales for precision agriculture and construction applications. Book-to-bill for weighing solutions was 0.97. Orders of $30.3 million grew 5.7% from the first quarter. Orders grew in the transportation market for our onboard weighing products, for trucks and vans, and for construction equipment. This offset weaker demand in Europe for some legacy industrial weighing applications. We continue to be pleased with our initiatives to expand our OEM sales for weighing solutions in a number of markets, including precision ag, constructions, medical, and consumer. To the first half of 2023, our OEM sales grew 58% from the same period a year ago. OEM applications for precision ag applications have been among the most rapidly growing areas for the weighing solution, in part due to the increasing precision technology being embedded in the next generation agriculture equipment and our strong brand and market position. We have also been successful in penetrating consumer applications, including both high-end road bikes as well as e-bikes. Weighing solution gross margin of 38.7%, reached an all-time high and grew from 34.9% in the Q1. The sequential increase was primarily due to favorable product mix, increasing selling prices, and cost reduction programs. Moving to slide seven. Turning to our measurement system segment, Q2 revenue of $23.3 million grew 17.1% from a year ago and increased 14.8% sequentially. The sequential increase was driven by higher revenue of products in the steel market. I mentioned earlier that we expect the redesign of DTS product to begin shipping in the Q4. The impact on sales of the redesign for measurement systems in Q2 was approximately $1 million, which we expect to recover in Q4. Book-to-bill ratio for measurement systems was 1.06, as orders of $24.7 million were essentially even with the first quarter. Sequentially, orders for our KELK steel productivity system were strong. As we have discussed, order pattern can fluctuate quarter-to-quarter due to the timing of customer projects and the long lead times for these products. One of the existing strategic opportunities in the measurement systems is an initiative to leverage KELK technology and market leadership in the roll force measurement solutions used in the steelmaking process to aluminum manufacturing. This would represent a new market for our product. Adjusted gross margin in the second quarter for measurement systems softened sequentially to 52% from 54.1%, primarily reflecting the impact of approximately $1 million from unfavorable product mix. Moving to Slide eight. Before turning the call to Bill, I want to highlight our strong cash flow in the quarter. We generated $16 million of adjusted EBITDA and an adjusted EBITDA margin of 17.6%. Our adjusted free cash flow during the quarter was $6.4 million. We grew cash on our balance sheet to nearly $100 million, which reflects our strong operating model. With the completion of our two infrastructure-related projects in India and in Japan, expected later this year, we are in the position to see our free cash flow grow further in 2024. Given our balance sheet and ample liquidity, we can continue to support a capital allocation strategy that creates stockholders value through organic growth, successful M&A, and awarded stock repurchases. In closing, I am pleased with our financial performance this quarter and our high level of design-in activity with customers. Our outlook for the third quarter is solid. We expect Q4 of 2023 revenues to be at the same in the same level as Q3 2023, given a similar business environment. I will now turn it over to Bill Clancy for additional financial details. Bill? Thanks, Ziv. Referring to Slide nine and the reconciliation table of the slide deck, in the second quarter of 2023, we achieved revenues of $90.8 million, gross profit of $38.7 million, or 42.6% of sales. Operating income of $11.8 million, or 13% of revenues, and diluted net earnings per share of $0.60. On an adjusted basis, our gross profit was $38.8 million, or 42.7% of sales. Operating income was $12 million, or 13.2% of sales, and diluted net earnings per share was $0.58. Our second quarter revenues increased 2.2% compared to $88.9 million in the first quarter of 2023, we're 2.5% above the second quarter a year ago. Changes in foreign currency rates reduced our total second quarter revenue by $700,000 compared to a year ago, but had a favorable $200,000 impact compared to the first quarter. Gross margin in the second quarter was 42.6%, as compared to 41.9% in the first quarter of 2023, which benefited from higher volume, higher average selling prices, and favorable foreign exchange rates. On an adjusted basis, second quarter gross margin was 42.7%, as compared to 41.9% in the first quarter of 2023. Our operating margin was 13% for the second quarter. Adjusted operating margin in the second quarter was 13.2%, as compared to 11.4% in the first quarter of 2023. Selling, general, and administrative expenses for the second quarter were $26.8 million, or 29.5% of revenues, as compared to $25.9 million, or 29.2% of revenues for the second quarter of 2022. The increase in SG&A of $900,000 was mainly attributable to $700,000 for wage increases, $300,000 for travel, $300,000 of commissions, and $100,000 of other costs, partially offset by $500,000 of positive foreign exchange rates. The adjusted net earnings for the second quarter were $8 million or $0.58 per diluted share, compared to $9.3 million or $0.68 per diluted share in the second quarter of 2022. Adjusted EBITDA was $16 million, or 17.6% of revenue, as compared to $15.8 million, or 17.8% a year ago. Purchase CapEx in the first 6 months of 2023 was $6.9 million, the majority of which reflects equipment purchases and related infrastructure. For fiscal 2023, we expect purchase CapEx to be in the range of $18 million-$20 million, which includes approximately $7 million in carryover spending from 2022. During the second quarter, we purchased $420,000 of our stock. Since we announced the stock repurchase authorization last August, we have repurchased $3.1 million of stock. We are pleased to announce that our board has extended its authorization for our stock repurchase plan for another year. Adjusted free cash flow was $6.4 million for the second quarter of 2023, as compared to $4.9 million for the second quarter of 2022. We define adjusted free cash flow as cash from operating activity of $9.8 million, less capital expenditures, which were $3.4 million. The GAAP tax rate in the second quarter of 2023 was 28.8%, as compared to 19.2% in the second quarter of 2022. We are assuming an operational tax rate in the range of 25%-27% for the full year of 2023. Moving to slide 10. We ended the second quarter with $98.5 million of cash and cash equivalents, and total long-term debt of $60.8 million. Regarding the outlook, for the third fiscal quarter, given our backlog of $139.7 million, we expect net revenues to be in the range of $85 million-$95 million at constant second fiscal quarter of 2023 exchange rates. In summary, we've achieved solid performance in the second quarter. We performed well financially as we increased adjusted gross margin, adjusted operating margin, and adjusted diluted EPS from the first quarter. We continue to execute on our strategic growth initiatives. With that, let's open the lines for questions. Thank you. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from John Franzreb with, with OP. Your line is open. Good morning, guys, congratulations on a great quarter. I'd like to start with the, Hi John. Really good results coming out of weighing. The gross margin, fairly impressive. Can you talk a little bit about the mix that you're seeing there, and the cost reductions, and the sustainability of a gross margin at that level? Good morning, John. Regarding the gross margin for weighing solutions, the adjusted gross margin reflected the favorable product mix between our four sensors on board weighing. We have seen more sales on the TruckWeigh and VanWeigh. Sales has increased by 27.9% sequentially for TruckWeigh and VanWeigh. This is regarding the mix. Also, we have seen also an increased selling prices to offset the additional material cost reduction. In addition to that, we are continuing to execute on our operational excellence plan, which we are continuing to relocate products from higher labor cost locations to a lower labor cost location. I would say the result of the gross margin is reflected in few factors, is the favorable product mix, the selling prices, the ASPs increase, as well as the cost reduction initiatives. So Ziv, do you, do you think that that means you, you reset the weighing solutions margin profile permanently higher? I would say that, I think that we have reached a, a record level, and I think that this range, range, is, sustainable, is sustainable going forward at a, at a constant business environment. Excellent. You also touched on this in your prepared remarks, but there was a big jump in 2Q versus 1Q in your steel sales. What are you hearing from those steel customers? I know it's a lumpy business, but how does it look for the balance of the year? In the second quarter, we have recorded, I think, record steel bookings. Steel business is still very, very strong. I think it's still premature to say how the rest of the year is going to look like, but at this point in time, it looks like a very robust business, and in the second quarter, we had strong bookings. Got it. In your advanced sensor line, you mentioned that consumer business in the advanced sensor was still down versus a year ago. How is total volume look in advanced sensor? Is it flat year-over-year? Just, can you give us a sense how it's performing on a relative basis, all in? Sure. Advanced sensor revenues were flat in the second quarter compared to the first quarter. Order for consumer application continued to recover, while orders for industrial applications were softer, especially in Europe, as customers continued to deplete their inventory levels and adjust their production schedules. Going back to the comment regarding consumer, consumer business has improved quarter-over-quarter, and at this point in time, we see a more stable environment going forward for consumer. But we are not back to the pre to the 2022 levels, to the peak 2022 levels. Okay, just one last question on the, on the tax rate, significantly higher than what I was looking for. Mm-hmm. Is that a certain business driving that or sales to a certain geography driving that? Can you just talk a little bit about that? Yeah, John. The higher tax rate for this quarter is truly driven on the mix of the income, where the income is being earned, and obviously, it's being earned in higher tax rate jurisdictions than it was, you know, a year ago. It's truly a mix of where the earnings are being recorded. Okay, thanks, Bill. I'll get back into queue, guys. Thank you. Okay. As a reminder, if you'd like to ask any questions, please press star one on your telephone keypad now. We now turn to Griffin Boss with B. Riley Securities. Your line is open. Hi. Thanks. Good morning, guys. I, I wanted to dig into something that, that Ziv talked about in, in terms of leveraging the KELK technology, applying that to the aluminum market. Are you speaking with existing customers who have demand for your products in that market, or would you be targeting a new customer base? Similarly, when would you expect to make inroads here? Is this a longer-term opportunity or, or are you working on that, you know, in the near term? Sure. historically, the legacy business for KELK is in the steel market. We have we have identified a similar opportunity in the aluminum steel, at the aluminum steel mills. Now we are working, with, with some customers in order to modify our systems so we would be able to provide a, a similar, I would say, similar performance. At this point in time, the discussion is fairly in the early stage, but, but I believe that once you establish a platform, the scalability is going to be fairly quickly. We, we are in the design phase and in discussion with, with those customers. Great. Okay. That's helpful. Thanks, Ziv. Just looking at Q3 currently, just want to get a sense of how to the extent you could talk about it, orders are trending sort of into the back half of the year. Are they, do you see orders picking up right now from the Q2 levels? Sure. In the second quarter, we have reported orders going up in all three segments. If we drill down to the different reporting segments, we will see that in sensors, we had few quarters of very soft test and measurement, mainly semiconductor test and measurement business. We believe that through the end of the year, orders will start to rebound. In general, industrial and avionics, military, and space, distributors and EMS are still very, very cautious in regards to the supply chain, given the macro environment. For weighing solutions, which is mainly driven by general industrial, we have seen also softening of orders, softening of orders in respect to few quarter, few quarters ago. Still, quarter-over-quarter, there is a stability, and the expectation is, going forward to the second half of the year, is that we should expect to see a stable environment in the second half of the year. Measurement systems, as I mentioned, two strong quarters of book-to-bill above one, cyclical demand coming from the steel market, and we still have to see how this is going to resolve, but all. The overall vibe is that looking, moving into the second half of the year, we should see a stable business environment in respect to the second quarter. Okay, great. Yeah, and then, Ziv, just towards the end of your prepared marks, I, I just want to make sure I heard you correctly. Did you, along those same lines, say that you expected Q4 to be sort of similar levels as Q3, given the business environment? We were speaking about stable business environment, all in all, in respect to, to the second quarter. At this point in time, the projection is in respect to the second quarter. Okay. All right, sure. Maybe just last one for me, for Bill, regarding the CapEx. Is this going to be, sort of a similar level in Q3 and Q4, or should we sort of expect the CapEx level to increase, more in the fourth quarter? Griffin, yeah. We said we would spend about $18 million-$20 million for the full year. We're at roughly, what, $7.8 million or about $7 million now. You will see more of the capital spending in the second half. I think as Ziv in his remarks, when we finalize, you know, the expansion in India and Japan, we'll be paying the majority of that probably late third quarter, early fourth quarter. Overall, it'll be close to the $18 million-$20 million number for the year. Perfect. Okay. Super helpful. Thanks, guys. We now turn to John Franzreb with Sidoti. Your line is open. Hey, guys. Just a quick update on your thoughts about the M&A environment, and I remember Nicole hearing that in the prepared remarks. Regarding the M&A environment, given our balance sheet, naturally, John, M&A is very high on our radar, on our radar. At this point in time, we have been interacting with few companies, and given the, the business environment and the higher interest rates, deals or valuation should go down. At this point in time, we have not seen real, real valuation drop. We still believe it's on the higher end, but we are exploring and in dialogue with, with few, few companies. Exploring few options. At this point, it didn't come to fruition. But we believe that in the, in the coming quarters, valuation would be more reasonable, and hopefully we would be able to, to complete. Okay, thank you, Ziv. I'm just curious if there's been, given the stagnant environment we're currently in, is there any changes to your three to five year growth targets and profitability targets? Are they still intact? Because I know they also encompass some potential M&A. At this point in time, we have not changed our three to five years target. Okay, thank you for taking my follow-ups. Thank you. As a reminder, if you'd like to ask any further questions, please press star one on your telephone keypad now. Now turn to Andy Susanto with Gabelli Funds. Your line is open. Good morning, Ziv, Bill, and Steve. Morning. All right. Morning. Steve, I have a question. Currently, customers and distributors are being cautious with regards to inventories. When things normalize, when, let's say, they have comfort to start building inventories again, what are the likely paths toward that state? Could you repeat that? I'm sorry, I, I didn't hear- Okay, yeah. the last piece of your question. I'm sorry. Let's say, in terms of, let's say, anticipation of inventory build, once there is less micro concerns, let's say, no more excess inventories, what kind of, let's say, like, signs that we should see? Do you think they will refill inventory, like, incrementally, or could there be some step-up function, like customers and distributor, distributors, like, buying, your products to step up their inventories? Like, what kind of paths do you think, that may happen when, there's no more, there's, there's, when, when there is more optimism on, on, on, on the state of the economy, and then customer and distributors start to buy inventor- start to build their inventories again? Okay. Okay, thank you. First, there is a high level of customer engagement, given our market leadership and the critical nature of our products. Therefore, we are not selling commodity, we are selling custom value-added products. I believe that once market, market conditions would allow, we and, and, and customer would be less concerned, or may, if I may say, less hesitant, we will see a much more robust order intake, looking at our products, because at the end of the day, the products we have been designed at our OEM provides a unique value proposition. Therefore, we should see a much more robust order pattern once the market, once the market condition changes. Okay, thank you. Then one question for Bill. Bill, inventory is now at $89 million. That is, I think, that represents, like, a working capital invested in inventories. If you look back, like inventories was running at, let's say, like $62 million, $76 million in 2020 and 2021. Should we expect that the inventory in absolute dollars would decline, meaning that you would be able to extract more cash from your working capital, and how soon do you think that can take place? Yeah, Andy, I mean, obviously, you know, we have a very, very strong backlog, and the inventory has been built, you know, for that, for that, that backlog in the upcoming, you know, quarter. I would anticipate, you know, we would begin to see the inventory levels to, to drop to a more normalized level, which over time would add some more cash into our financial statements. I see. Yeah. Okay, thank you, Ziv. Thank you, Bill. Yep. Our next question comes from Zach Herzel with Herzl Capital. Your line is open. Hey, guys. Following up on the earlier question on the M&A, I've talked to a lot of bankers and private firms, other companies, I guess valuations haven't come down much, like, like you guys thought they might. The good thing is they, you know, the, the reverse. I'm confident through those conversations that VPG could get, you know, $50-$60 a share if they were to sell. Is that something you guys would be interested in? If so, I can put you in touch with the right people. Well, Zach, I think that the board is always exploring different opportunities at, at, at different times, and are exploring all capital allocation options, including, including the one that you have mentioned. Nevertheless, M&A is still high on our radar, radar, radar, and, and we believe, given the fact that we have been that we are in touch and we are exploring few opportunities, that, once we, we complete, even one or two of those acquisitions, we could de- definitely generate stockholders' value. All in all, the board is always looking at all capital allocation options. I hear that. The problem is that, you know, you guys have had $100 million in cash for 10 years, and you've said for the last three, when I've been, you know, talked to you guys, that you were gonna buy a company. I know that there was an opportunity to sell for or to get the $50 a share to sell two, you know, two years ago, and you didn't take it. So, you know, I think I talked to shareholders now, and I think they would rather take the $50-$60 a share now than to, you know, to keep going with the promises that, you know, the board says that either they would sell or that the management team is gonna grow by double-digits, and the stock price is gonna get to $50-$60 a share anyway. You know, it hadn't happened yet, and the shareholders I talked to said that they would rather sell for the and get the $50-$60 a share now. Is that something, should I go through the management team or the board or directly to shareholders? If that's something they wanna do, how can we get that done? Well, Zach, I, I would say that, that, that as, as you know, as a shareholder, you know the channels, and there is a way how to given, you know, given your, your opinion, how, to whom you should communicate that. Definitely, I hear what you are saying, and I really appreciate your input. Of course, I respect very much your opinion, and I hear you. So I really thank you for your input. This concludes our Q&A. I'm gonna hand back to Steve Cantor, Senior Director of Investor Relations, for closing remarks. Great. Thank you for joining our call today. I do want to note that we will be participating in the Jefferies and Sidoti conferences in September. You can see our website for more information on that. With that, I'd like to wish you all a good day and look forward to updating you next quarter. Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.