VPG Continues its Stellar Run with Record-Setting Order Momentum and Strong Backlogs
Good morning, everyone. Welcome to VPG's second quarter 2026 earnings conference call.
VPG, a leading provider of sensors and related products, continued its stellar run in the second quarter of 2026, delivering another strong order momentum that highlighted the success of its strategy to increase exposure to secular growth markets. The company's orders were $95.5 million, driven by sustained strength in its Sensors segment and continued demand from AI-related markets, including semiconductor equipment, data center infrastructure, and aerospace and defense applications.
"We delivered another quarter of a strong order momentum, highlighting the continued success of our strategy to increase our exposure to secular growth markets," said Ziv Shoshani, CEO and President. "Orders were $95.5 million, driven by sustained strength in our Sensors segment and continued demand from AI-related markets."
The company's consolidated book-to-bill ratio was 1.14, marking its seventh consecutive quarter at or above 1.0. Within the Sensors segment, the book-to-bill ratio was a very strong 1.44, reflecting robust demand across key growth markets.
"We continue to add manufacturing capacity and personnel to support future growth and address rising customer demand," said Shoshani. "During the quarter, we received an official vendor nomination letter from our initial humanoid robotics customer. This is an important milestone that positions us to support their expected production ramp beginning in the second half of 2026."
The company's revenue was $83.9 million, essentially flat sequentially and up 12% year-over-year. However, revenue was negatively impacted by a temporary delay in approximately 3 million of shipments at its KELK business due to supply chain challenges resulting from the implementation of a new ERP system.
"The ERP issue has been addressed, and production has increased to a normalized level," said Shoshani. "We expect to ship the delayed orders by the end of the fourth quarter."
Operating profit was down $200 thousand sequentially as a result of unfavorable product mix and an unfavorable foreign exchange, which were partially offset by manufacturing efficiencies.
The company's operational improvements initiatives are beginning to gain traction, generating nearly $1 million of cost savings during the second quarter. It remained on track to achieve approximately $6 million of savings this year, representing the first phase of its three-year plan to deliver approximately $20 million of cost reductions through manufacturing footprint optimization, increased automation, and procurement efficiencies across its global supply chain.
Most importantly, the company's strong order trends and backlogs support its positive outlook for the year. It expects fiscal 2026 organic growth to exceed the 8%-10% annual growth target outlined in its three-year plan.
