[Management View]
Vishay Precision Group (VPG) reported sequential growth in both revenue and consolidated orders, alongside broad-based margin improvements across all three operating segments. Management highlighted a strategic focus on business development and cost-reduction programs, demonstrating tangible progress in both new order attainment and fixed cost optimization.

[Outlook]
VPG set a full-year net revenue expectation of $73 million to $81 million for 2025, reinforcing its outlook despite ongoing macroeconomic and tariff-related headwinds. The company is supporting design-in initiatives in the humanoid robotics market, confirming readiness for higher-volume orders pending customer production schedules.

[Financial Performance]
Total Revenue: $75.2 million, up 4.8% sequentially.
Consolidated Orders: $79.9 million in bookings, reflecting 7.5% sequential growth.
Adjusted Gross Margin: 41%, a gain of 270 basis points from 38.3% in Q1 2025.
Segment Revenues: Sensors down 1.8%, Weighing Solutions up 11.3%, Measurement Systems up 5.1%.
Adjusted Operating Margin: 4.8%, up from 1.1% in the prior year.
Adjusted EBITDA: $7.9 million, 10.5% of revenue, up from $5.1 million (7.2% of revenue) in the previous quarter.
Cash and Free Cash Flow: $6 million in cash from operations, $4.7 million in adjusted free cash flow, $90.3 million in ending cash.

[Q&A Highlights]
Question 1: You've received $17 million of business development revenue with a goal of $30 million this year. Do you expect additional revenue from humanoid robotics later this year, and how do you expect the size of those orders to change relative to current orders?

Answer: We received a $1.5 million order from April to July and are pleased with the progress. We may expect more orders depending on the customer's production schedule. We are ready to support higher volume orders in 2026, but it depends on the customer. The price range for robots is expected to change with higher volumes, and the company is prepared for that.

Question 2: Your business activity has been improving. How do you see the scalability of the business in terms of EBITDA and operating margin as sales increase next year?

Answer: For every incremental dollar of revenue, we expect 30% to 40¢ to drop to the pretax level. Given the cost initiatives taken in the last two years, we should be in a better position to capitalize on profitability once the volume rebounds.

Question 3: There is variability in the transportation market. Can you discuss what you are seeing in the transportation side of your business?

Answer: The upside in measurement systems is mainly in steel, AMS, and DTS automotive business. The slower demand in weighing solutions is due to high orders in Q1 that did not repeat in Q2. The Q1 orders were six to nine months orders expected to continue in the coming months.

Question 4: The steel market seems weak. Can you discuss the order bookings in steel?

Answer: The global steel market continues to be soft due to slow automotive production and high tariffs. Orders received for steel are mainly for R&D for DSI products, not necessarily for in-line equipment inspection in steel mills.

Question 5: Will the $5 million cost savings program be completed by the third quarter or year-end?

Answer: The $5 million cost savings are expected to be completed by Q4. We have captured $2.8 million out of the $5 million in the first six months.

Question 6: How do July trends compare to the second quarter?

Answer: There are no surprises in July trends compared to the second quarter.

Question 7: Should robotics begin production in 2026, at what point would you need to add capacity to meet projections for 2030?

Answer: The ramp-up schedule depends on the customers. We collaborate closely with them to ensure our capacity aligns with their demand. We hope the ramp-up will be sooner rather than later, but it depends on the customer.

[Sentiment Analysis]
Analysts showed a positive tone, appreciating the company's progress in business development and cost optimization. Management maintained a confident and optimistic outlook despite macroeconomic challenges.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | YoY Change |
|-------------------------|---------------|---------------|----------------|
| Total Revenue | $75.2 million | $71.8 million | +4.8% |
| Consolidated Orders | $79.9 million | $74.3 million | +7.5% |
| Adjusted Gross Margin | 41% | 38.3% | +270 bps |
| Adjusted Operating Margin| 4.8% | 1.1% | +370 bps |
| Adjusted EBITDA | $7.9 million | $5.1 million | +54.9% |
| Cash Position | $90.3 million | $83.9 million | +7.6% |

[Risks and Concerns]
Tariff changes impacted gross margin negatively by approximately $500,000. The global steel market remains soft due to slow automotive production and high tariffs. Unfavorable foreign exchange rates increased SG&A expenses.

[Final Takeaway]
Vishay Precision Group demonstrated strong sequential growth in revenue and orders, driven by strategic business development and cost optimization initiatives. Despite challenges such as tariff impacts and a soft steel market, the company maintained a positive outlook with robust financial performance and readiness to support higher volume orders in the humanoid robotics market. Investors should note the company's disciplined approach to acquisitions and its focus on maintaining a healthy balance sheet.