Vishay Precision Group Inc. Q1 2023 Earnings Call
Good morning, and thank you for attending todays <unk> first quarter 2023 earnings Conference call. My name is Danielle and I will be the moderator for todays call all.
All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question. Please press star followed by one on your telephone keypad. It is now my pleasure to hand, the conference over to our host Steve Cantor Senior director of Investor Relations, Steve the floor is yours.
Thank you Danielle and good morning, everyone welcome to <unk> first.
First quarter 2023 earnings conference call, our Q1 press release and slides have been posted on our website at PPG sensors Dot com an audio recording of today's call will be available on the Internet for a limited time and can also be accessed through our website.
Next slide Safe Harbor statement today's remarks are governed by the safe Harbor provisions of the $19 95 Private Securities Litigation Reform Act. Our actual results may vary from forward looking statements.
For a discussion of the risks associated with <unk> operations, we encourage you to read our SEC filings, including the Form 10-K for the year ended December 31, 2022, and our other recent SEC filings on the call today are <unk>, CEO and President and Bill Clancy.
And now I'll 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 <unk> consolidated financial results.
And and sales trends for the first quarter.
Bill will provide financial details about the quarter and the outlook for the second quarter of 2023.
Moving to slide three.
We achieved another solid quarter for PPG.
We recorded revenue in line with our expectations.
Increased our gross margin sequentially and year over year.
Oh, the trends improved through the first quarter as orders grew 13% from the fourth quarter.
We generated $8 4 million of cash from operations and $4 9 million of free cash flow.
Which supports our capital allocation strategy to grow shareholder value.
Moving to slide four.
Looking at the first quarter results in detail, we reported sales of $88 9 million.
Which was one 4% higher than a year ago, and seven 7% lower sequentially.
Changes in foreign currency rates.
Impacted our revenues.
FX reduced our total Q1 revenues by $2 4 million.
Compared to a year ago, but had a favorable $1 $7 million impact compared to the fourth quarter.
Orders of $83 1 million grew 13, 1% sequentially.
And strengthened through this through the quarter.
Orders rose in all three reporting segments growing.
Eight 2%.
Six 2% and 30% for the sensors weighing solutions and measurement systems, respectively.
The sequential growth was seen.
In the majority of end markets, indicating an improved business environment due to the timing of project driven orders and the depletion of inventories by customers.
This contributed to a book to bill ratio of <unk>.
94.
As I indicated we improved our adjusted gross margin in particular adjusted gross margin for our sensors segment was 41, 2% up from 37, 6% in the fourth quarter, which had been impacted.
By temporarily temporary manufacturing inefficiencies.
In terms of our supply chain over the past two years, we have done a good job.
Navigating through the global challenges and shortages, while our supply chain is improved from a year ago. It is still not fully back to pre pandemic levels.
As we are still experiencing isolated shortages of components, particularly in our measurement system segment.
For example.
Shortages of key microchip components led us.
Led us to redesign of Dts for that in the first quarter to improve our supply chain availability, while we estimate these shortages will delay our.
Approximately.
One 5 million of revenue per quarter for the next two quarters, we expect to ship the majority of the delayed shipments by Q4 of this year.
In addition, we continue to experience higher costs for some materials.
In the first quarter, we were impacted by 700000 of higher cost compared to the fourth quarter, mainly in our weighing solutions and measurement systems segments, which we offset with higher selling prices and our ongoing cost reduction programs.
All in all in the first quarter, we generated an adjusted EBITDA margin of 15, 9% and adjusted diluted net earnings per share of 52.
I will now review our business segment performance in the first quarter.
Moving to slide five.
Beginning with our sensors segment first quarter revenue of $36 7 million declined two 7% from a year ago and was one 1% higher sequentially.
The growth.
Q4 of 2022, primarily reflected higher sales of precision resistors in the avionic military and space markets.
The sequential growth.
Precision resist those offsets.
Lower sales of advanced sensors in consumer in the consumer market.
Our customers continue to work down the inventory levels.
While book to Bill for sensors was.
<unk> orders of 29, 9%.
<unk> thousand $9 9 million grew eight 2% sequentially as we grew orders for precision resistors in the test and measurement by 22% and in a miss by 95%.
We have discussed before the timing of large orders can fluctuate.
Quarter to quarter based on.
On customer schedules orders for advanced sensors were soft in the consumer market in Q1, but we expect demand to improve gradually in the second quarter.
As part of our strategic initiatives to secure design wins in new emerging applications for our precision resistors, we are seeing growing customer interest.
In our solutions in data center fiber optics, and EV battery management.
In both of these new applications, we believe our precision because this does add value in terms of consistency reliability and performance for our customers' equipment in.
In addition, we are very optimistic about the long term prospects for advanced sensors in a number of emerging markets, including robotics for industrial applications and medical applications.
In terms of operating results for sensors.
<unk> gross margin of 41, 2% improved sequentially from 37, 6%, primarily due to manufacturing efficiencies and favorable foreign currency exchange rates.
Moving to slide six.
Turning to our weighing solutions segment first quarter sales of 31 9 million was two 8% lower than a year ago, and three 7% lower compared to the fourth quarter.
The sequential decrease in revenue was attributable to lower sales in the industrial weighing market, partially offset by higher revenues in the transportation market.
We continue to be pleased with our OEM sales.
To the precision AG and construction equipment markets. While this was modestly lower sequentially. It grew 42% from a year ago.
Book to Bill for weighing solutions was 0.9 orders of <unk>.
$28 7 million with six 2% higher than in the fourth quarter, mainly due.
Two a stronger demand.
In our onboard weighing products.
We continue to move forward with growth initiatives.
Our weighing solutions business with new innovative solutions.
We are now in the final testing of new line.
For off the shelf load sell sensors.
<unk> V Lite.
Which we expect to formally launch later this year.
This technology is.
He is lighter and more complex.
Then our previous version, but provides the same high level of accuracy and rely and reliability.
Customers feedback for this product had been positive and we believe this technology can give us competitive edge to gain share in our traditional weighing market.
Particularly for legal for trade retail application such as supermarkets checkouts.
<unk> as well as possible medical equipment such as.
Incubators for premature babies infant scale and hospital beds.
Weighing solutions gross margin of 34, 9% compared to 33, 4% in the fourth quarter.
The sequential increase in adjusted gross profit margin was primarily due to favorable foreign currency exchange rates, partially offset by lower volume.
Moving to slide seven.
Turning to our measurement systems segment.
Revenue in the first quarter of $23 million grew 18, 3% from a year ago, but declined 24, 4% sequentially.
The sequential decline reflected lower revenue for that in the steel market.
Our diversified technical systems Vps products in the transportation market.
Adjusted gross margin in the first quarter for measurement systems soften sequentially to 54, 1% from 56, 8%, primarily reflected the lower volume and higher material costs.
Sit by higher selling prices.
Book to Bill ratio for measurement systems was 121 is order of 24 5 million.
30% sequentially.
Driven by 49, 4% increase for steel related bookings.
Although patents can fluctuate.
Quarter to quarter due to the timing of customer projects and long lead times for these products.
As I indicated a redesign.
One of EPS products will delay approximately.
One and a half million dollar revenue for each well.
The next two quarters, we expect to recover the majority of these revenues in the fourth quarter.
Despite this short term challenge we continue to be excited about the key growth opportunities and development milestones for measurement systems for.
For instance.
We were pleased.
That sports safety project.
Was extended for Dts.
Which involve using the technology to improve the safety of football players by developing new methodologies for helmet to helmet concussion testing.
Our miniaturized flexible data logos is embedded inside the mouth Gov and can measure acceleration.
Asian and direction did.
The data can then be used to develop safer equipment, including helmets.
More effectively.
While this project is relatively small in terms of revenue for PPG. It does represent the potential.
Our technology to address the real world safety challenges.
Another Dts initiative, we are excited about is the women for Egypt.
In which we have developed a test dummy for the U S army to assess potential injuries.
Soldiers exposed to Andre about the blast.
While the main partner for this project was the U S. Army. We recently received approval to market. These technology to U S allies around the world.
And we are already seeing interest from potential new customers.
Moving to slide eight.
Before turning the call to Bill.
I want to comment on our strategy for growth.
And for allocating our capital to increase stockholder value.
There are many reasons to be excited about the long term potential for PPG.
Over the past several years, we have seen applications for our high performance sensors and precision measurement solutions broaden into new areas.
And markets beyond our traditional markets.
As both it is both exciting.
And new OEM customers seek to differentiate their products.
At the same time, we have seen.
Investing in our technology and operational capabilities to position us to capture.
Growing share growing share of this emerging opportunity.
I believe it is this convergence between between the expansion of market opportunities and our ability to address them that has been one of the key drivers of our growth over the past several years at.
At the same time.
I'll also continuing our cost reduction and operational excellence initiatives around the company.
As we continue to drive the strategy we are confident.
Our strong balance sheet and ample liquidity can continue to support our capital allocation strategy.
That create shareholder value.
Organic growth successful M&A.
And as one stock repurchases.
I will now turn it over to Bill Clancy for additional financial details Bill.
Thanks, Dave moving.
Moving to slide nine.
Turning to the slide in the reconciliation tables or the slide deck in the first quarter of 2023.
<unk> revenues of $88 9 million gross profit was $37 2 million or 41, 9% of sales operating income of $9 9 million or 11, 2% of revenues and diluted net earnings per share of 51.
On an adjusted basis, our gross profit was $37 2 million or 41, 9% of sales.
Operating income was $10 1 million or 11, 4% of sales.
Our diluted net earnings per share was <unk> 52.
Our first quarter revenue decreased seven 7% compared to $96 2 million in the fourth quarter of 2022.
And we're at one 4% above the first quarter a year ago.
Foreign exchange for the first quarter negatively impacted revenues by $2 4 million compared to a year ago and positively.
Impacted revenues by $1 7 million.
As compared to the fourth quarter of 2022.
Gross margin in the first quarter was 41, 9% as compared to 41, 2% and the <unk>.
Fourth quarter of 2022.
<unk> benefited from favorable foreign exchange rate and manufacturing efficiencies.
Partially offset by lower volume higher material cost and wage increases.
On an adjusted basis, our first quarter gross margin was 41, 9%.
As compared to 41, 5% in the fourth quarter of 2022.
Our operating margin was 11, 2% for the.
The first quarter.
Adjusted operating margin in the first quarter was 11, 4% as compared to 14% in the fourth quarter of 2022.
Selling general and administrative expenses for the first quarter were $27 2 million or 36% of revenues.
As compared to $26 7 million or 34% of revenues for the first quarter of 2022.
The increase in SG&A of $500000, mainly relates to 500000 of our head count and wage increases.
How's that for travel and 300000 of commissions, partially offset by 900000 of positive foreign exchange rates.
The adjusted net earnings for the first quarter of <unk> 7 million or <unk> <unk> per diluted share compared to $6 6 million or <unk> 49 per diluted share in the first quarter of 2022.
Adjusted EBITDA was $14 1 million or 15, 9% of our revenue.
Compared to $12 6 million or 14, 4% of revenue a year ago.
Purchase capex in the first quarter of 2023, plus $2 6 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 to $20 million.
This includes approximately $7 million and carryover spending from 2022.
Our adjusted free cash flow was $4 9 million for the first quarter of 2023 as compared to a negative $4 6 million for the first quarter of 2022.
We define adjusted free cash flow as cash from operating activities of $8 4 million less capital expenditures of $3 5 billion.
The GAAP tax rate in the first quarter was 24, 1% as compared to 27% in the first quarter of 2022.
We are assuming an operational tax rate in the range of 23% to 25% for the full year of 2023.
Moving to slide 10.
We ended the first quarter with $93 $3 million of cash and cash equivalents and total long term debt of $68 million.
Regarding the outlook.
For the second fiscal quarter, we expect net revenue to be in the range of 83 million to $93 million at a constant first fiscal quarter of 2023 exchange rates.
In summary.
We've achieved solid performance in the first quarter of 2023.
We grew our orders in the quarter, which underscores the strength of our business model and strategy.
And we continue to implement a balanced capital allocation strategy.
Aimed at increasing our long term shareholder value.
With that let's open the lines for questions.
Thank you.
Certainly if you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason at all you would like to remove that question. Please press star followed by <unk>.
To ask a question please press star one.
A reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.
Pause here briefly as questions are registered.
The first question comes from the line of John .
France rib.
Sydney Company. Please proceed.
Good morning is even though and thanks for taking the questions.
I'd like to start with the discussion discussion around the redesign of the GTS product line could you give us a little bit of.
Color about what you did to redesign the product and when you talk about the deferred revenue of $1 $5 million per quarter.
Does that mean revenue in the measurement systems business will be lower in Q2 by one five versus.
Q1 or is there some other backfill that will offset that.
Good morning, John .
Regarding degree shine.
The DTF.
This is <unk>.
One of the.
Well thats the Dts is launched.
<unk>.
Our products for Dts as you know DCF is.
As a.
Business with Delta, reducing electronic system solutions, our product use various components and microchips.
Fly for some of these have been challenging.
The pandemic, while we have seen and we.
We're able to secure.
Inventory.
The critical microchip components.
Very recently.
The supplier has.
<unk>.
Has stopped.
Supporting that and given.
And therefore, we had to redesign.
We had to redesign the system.
The different microchip.
While we know that the new Microchip the reserve.
The ability of the availability of those microchips.
New supplier.
We expect that orders will be.
Bookings and shipments that were expected to be delivered.
For this specific system in the second and third quarter will be pushed out to the fourth quarter now in order to mitigate.
<unk>.
To mitigate the effect we have several other similar systems now few generation of systems and we are trying to promote it.
I would say a similar product.
With the similar spec in order to mitigate the.
Revenue effects, but for those customers that would specifically requires the system's performance expectation is this one.
The new system will be once.
The system will be redesigned with new components, we would be able to.
Provide the deliveries and the expectation the expectation it would happen in Q4.
Okay. So you have the orders for the new system needs to be re qualified produced and you expect to recover about $3 million in Q4 that was lost in Q2 and threes is that trying to send that properly.
Okay.
Naturally for those type of products.
The delivery.
The lead time deliveries very is very short therefore in most cases, we deliver out of stock.
Currently based on the discussions with customers currently we don't have the bookings, but the expectations are.
Once the bookings would be once we will have the bookings we would be able to deliver them given the fact.
That.
We have announced the disposal.
He is not available.
We do not make to get the booking so as I said Alternatively, we are trying to push to get the bookings for a similar product with similar systems.
With similar performance.
Okay.
Got it.
That helps to actually helps a lot. Thank you.
And then just shifting to the sensor segment.
Another quarter of weak book to Bill, although it sounds like the order.
Cadence picked up.
As you look at the at the year and maybe the cadence of the revenue profile in light of the bookings and orders.
Are we probably looking at a year, where the sensor segment is probably down full year year over year or is there something else, maybe inventory reset or something that.
Something else Thats going on sensors.
Gives you confidence that the second half revenue will be better than the first half.
Given our visibility.
As you saw Q Q1 has the highest bookings of the central segment in respect to the quarter.
Two moving parts on the precision resistors, we do continue to see very strong bookings on the test and measurement for semi conductor for fiber optics data centers and full of military and space, while on the sensor side on the gauges side or the advanced sensor side.
The Big I would say, it's softening came from the consumer path.
Our consumer customers.
We believe that they are already through the end of the cycle.
Depleting their inventory.
And the expectation is that we hope we will already see in the second quarter higher bookings so I. So.
I would say that the business environment.
We are expecting to see in the second quarter is expected to improve in respect to the first quarter.
And we expect to continue to see that also further during the year. So all in all we have we have a very we have a positive prospects.
Adding the.
The business climate regarding.
Regarding sensors as we move along the year.
Okay.
I guess, one last question I'll get back in queue, you mentioned higher costs for the quarter and then maybe I didn't quite understand this properly, but it sounds like there was a net 700000 of.
Yeah.
Adverse costs.
Recovery.
You mentioned also that you are implementing higher prices I wonder.
If I understand if I understood that properly and B when do you expect to get to a price cost equilibrium.
Given your pricing actions to date.
Okay. So when we speak about costs.
Now a few aspects one aspect is that.
If you can recall in Q4, we have.
We have discussed some temporary inefficiencies in.
In the Central segment, which we've covered in Q1.
The second piece is the material costs, we continue to see material cost increase in Q1 of 800000 in respect to Q4.
And $1 2 million up in respect to Q1 of last year of <unk>.
And this is mostly in the weighing and measuring weighing solutions and measurement systems and it mostly for various electronic components.
We continue to pass those higher costs in form of price increases for example.
Year over year, the ASB ever selling price increase is $1 1 million, which offset the material cost increase compared to prior quarter. So far we have increased prices by $400000.
And we.
We also incurred or we also.
We're able to offset higher cost by additional cost reduction.
Company is expected to increase prices or even higher prices as we move along this year and if you can recall last year all in all the company in 2022 have realized approximately $9 million.
From higher selling prices, which essentially offset higher material costs and labor costs.
The intention is to continue and to do it also this year.
Why.
While applying more price increases at selective at selective product lines in.
In addition to the in addition to the cost reduction projects.
Got it thanks, Steve I'll get back into queue.
Thank you.
The next question comes from the line of Griffin Boss of B Riley Securities You May proceed.
Hi, good morning, Thanks for taking my questions.
So I am glad to see the increasing book to bill across the board.
[noise] measurement systems, there's obviously a stand out on that front. So two questions from me on that on that one. So first is still the only factor that's driving the strong book to Bill and measurement systems or are you seeing positive demand trends in other end markets and then second related.
Is driving that strong growth in steel is that primarily the timing of annual orders or are you seeing any new customer wins. There. This stronger golfing steel is coming from increasing steel prices, mainly in mainly in Q1.
In China.
Who produced more than who we split.
Who has who produce more than 50%.
The world steel output the expectation is to increase the volume went up by six 1% year over year.
And also the fact that India, which is the second largest reduced sales.
Have decided this is a nationwide poll cause them to invest.
In steel production in order to.
In order to to.
To make India more as an industrial countries. So the major major steel investments in India in terms of.
In terms of adding more steel capacity while also.
The buying more sophisticated equipment at universities research centers.
In order to develop more I would say more than lighter and stonegate alloys, which also impact our steel business in the measurement systems.
That's regarding that.
The steel production.
The other trend as I indicated is the precision resistors, which is driven by our semiconductor test equipment.
As well as the as.
As well as a unique military and space demand.
And now we see also consumer electronics coming back as they reached a point where they have to start to replenish the inventories. So those are.
I would say first order effect of the three key drivers for the higher demand going forward.
That's great. Thanks for the color there I appreciate it and then maybe one for bill here.
Can you give us some more color on the cadence for Capex, because Q1 came in much lighter than we modeled I know you reiterated the $80 million to $20 million for the year.
I'm just curious the cadence there is it picking up in the back half of the year or should we just expect higher capex.
And into Q3 Q4.
Yeah.
Yes, Griffin sorry, yes, you saw that.
Capital spending was $3 5 million.
Yes, we do expect to have more of the capital spending I would say in the back end of the second half of the year, but still within that $18 million to $20 million target for the full year.
Okay, Alright, great. Thanks, and then just another sort of housekeeping ones. How are you guys repurchased $2 $7 million worth of stock in the quarter can you just remind us how many shares are left under that authorization.
Yeah.
Okay. So I was wondering reiterate your point I mean.
The stock repurchase during the first quarter of 2023 it was zero.
Still have approximately 515000 shares.
Within that program.
To be warranted.
Got it sorry, I misread through <unk> 'twenty, three I thought that that <unk> 23, Okay. All right great I appreciate it that's it for me. Thanks.
Thank you. Thank you.
The next question comes from the line of <unk> Santo.
Gabelli funds you May proceed.
Good morning, Zee, if bill and Steve.
Good morning, good morning, good morning.
Yes, My first question is.
At this time management mentioned about that fence and search for avionics military and space.
May I know.
Like would you be able to share more colors on what youre at fence sensors product footprint in avionics military and space.
Right.
I'm totally the advent.
The only military and space applications.
More relevant for precision resistors.
<unk> electronics.
The robotics applications for medical in the robotics for industrial and medical applications are more relevant for advanced sensors.
We are not selling into <unk> military and space advent pencils. This was.
Maybe.
Yeah.
Misunderstanding on my part.
But only precision resistors, we are selling to that end market.
Oh, Okay, Yeah, I saw that on the press release, Okay, maybe just the wording yes.
And then second second one is <unk>.
ZIP you mentioned about price increase that is that will be coming further in 2022.
You mentioned about the last year 9 million from higher selling prices.
In terms of percentage of ASP.
Do you have any estimate for the price increase will it be like low single digit.
Any color on that will be helpful.
Uh huh.
If I can recall the $9 million last year was around about low to mid single digits.
And the expectation probably is too.
<unk>.
To do the same order of magnitude this year.
Paul.
Overall company perspective in respect revenues naturally.
Okay, and then in terms of the timing of the price increase is it.
Like can you apply price increase on existing backlog or.
Does price increase apply I'd like to new orders.
Naturally.
Given our given our backlog.
Any price increase once we are.
Once we apply a price increase.
Given we discussed with our customers.
The price increase cannot be applied on existing backlog only for new orders.
So we are looking about.
And about one quarter delay given our backlog so.
When I speak about the future.
Price increase.
About all of the price increase that has been applied to apply all of those while we should expect to see them flowing into the P&L.
In the in the coming quarter, so already in Q1.
That's helpful. Last question for Bill Bill you mentioned the tax rate will be plenty of tissue type 225% for this year estimate that is slower than the past few years.
Wired the main drivers for the lower tax rate and.
I'm wondering like.
What is the baseline for the tax rate the tax rate going forward.
Yes.
Right as always based upon the mix the.
The income earned in the various jurisdictions. So yes, we should be in that range.
3% to 24%.
And that's where.
We had we had been over the last few years constantly looking at ways to to lower our tax rate as much as possible, but given where the next of income is being are that's where the tax rate is coming at today.
Okay. Thank you Bill Thank you Dave.
Thank you.
Yeah.
As a reminder, it is star followed by one on your telephone keypad to ask a question.
The next question is a follow up from John France Rib Acidity company you May proceed.
Yes, just curious about your thoughts about debt repayment versus share repurchase going forward.
But John we look at from a cash generation, we look at all of our capital allocation strategies as to what it is.
What is the best way of mechanism utilizing to pay down the debt.
But we also are earning significant interest income with our with our cash and then also more importantly, the strategy of the cash repurchases given.
The board has set up for us.
Right.
And your thoughts in light of that in a higher interest rate environment.
Why wouldn't more.
We have used to reduce debt I guess is what I'm wondering.
Yes, I mean, our goal would be considered.
Okay.
So again.
Now I can say John exactly our our goal is to reduce the debt.
Given unfortunately, the majority of the cash is generated outside of the U S, but having said that.
Our goal is to focus on driving <unk>.
Paying down that debt to lower the interest expense.
And maybe I just don't appreciate.
<unk> $93 million in cash how much of that is outside of the U S.
Approximately 94% is outside the U S. Okay.
Alright that helps a lot, though [laughter], okay alright.
I was just curious about that thank you guys. Thanks for taking my follow up.
Thank you. The next question is a question from Bill.
The Zillow of Teton capital. Please proceed.
Thank you.
And capital and your book to Bill.
Directionally beginning to improve what are you anticipating that the overall.
Company book to Bill will be above one and with that in mind.
As you look out over the air.
Industries that you serve where do you anticipate the most strength.
Over the remainder of the year and what are the dynamics.
Youre seeing that will lead to that.
Uh huh.
That's that.
He got I would tell you regarding the bookings we did you indicated we see any pool.
We.
The bookings for Q1.
It has been increased by $9 6 million in respect to Q4.
Given the solid demand.
All of those.
Upside expectation, we do expect also to see an improved bookings.
In the second quarter in respect to the first quarter.
No.
At the same time, we also expect to continue and deliver.
At the similar revenues as the first quarter or so.
Hard to tell when those two points.
Going to meet but no doubt that the.
Trend, where we are.
On the positive trend as we see an improved.
Business environment.
Regarding the deliveries.
Currently.
We are we are shipping based on customers' schedule, but we are very I would say we are still optimistic if nothing change.
Changes.
From an overall perspective, we are.
I would say.
At this point given our visibility we are optimistic.
<unk>.
Also the second half of the year I am sorry, what was your outlook regarding which which end market at this point are doing quite well and at least <unk>.
Just on what we know today I expect that.
To continue to do well, it's always I mentioned that our test and measurement business for semiconductor equipment.
Some of the emerging market.
The emerging markets.
Precision resistors in respect to.
Data center fiber optics equipment, we still compete with.
To see strong demand consumer electronics business on the <unk>.
<unk> on the advance sensors is expected to.
To improve the demand.
Military and space business still.
Continues to continues very strong on the measurement systems, we spoke already about.
The steel business.
Driving.
Demand behind that and.
Regarding waste weighing solutions, giving given the realized and some of the developments that I've talked during the call. We should also expect to see some I would say and more.
A potential upside regarding the demand.
In the industrial market.
That's helpful you've made.
Commented I just wanted to make sure I heard correctly.
You said.
Referenced improving business conditions.
We hear that correctly and if so would you.
And tie that in relative to all of the.
Macroeconomic talk.
With the fed trying to slow the U S economy et cetera, it sounds like it's a bit in contrast to that.
Yeah.
I would say that our insight regarding the pool.
Business environment is given our given our visibility.
And the discussions with customers.
At this point in time.
Once we were looking at few I would say few vessels. One vessel is the depletion of our inventories at our customers as we see customers continue to deplete the inventory and they are reaching a point, where they will have to start with.
They will have to start to replenish that so I assume that's a good sign.
Given the macro.
Even outside the U S.
Like for example, the development in India.
We believe this.
<unk> is expected to continue through the rest of the year naturally.
Uh huh.
Nobody has a crystal ball, but at least based on the indications today.
We are more optimistic than pessimistic in respect to the to the coming quarters.
Great. Thank you and then.
Lastly, relative to advanced sensors.
Would you.
Share with us.
What the pipeline of perspective.
Opportunities looks like there.
That's a business that had been growing very rapidly.
And we just haven't we just haven't talked very specifically about it on this call.
So advanced sensors.
<unk> grew very rapidly over the last few years.
We are selling to various markets, but the big four specs.
Steel.
In consumer electronics, we are looking at potential new designs at Dixie.
Listing and new customers, we are looking at the robotics application or both for industrial and medical applications and naturally the design cycle for those.
For our customers for our OEM customers is around two two and a half years.
But we have.
<unk> already initiated many many.
We have a plant that many many designs at various customers and the expectation is that.
We are going to we're going to see in becoming I would say in the coming future menu of those designs coming to fruition and are much more volume.
Getting to advanced sensors at this point in time from a macro standpoint, the biggest impact for advanced sensors was the consumer electronics supply and demand fluctuation or I would say the inventories which are in the queue. But this is more managing talent designs rather than looking at.
Future designs, which are in the funnel, which should come to fruition.
To to future revenues.
But it still.
One of our most.
Promising product lines.
Okay.
Thank you for the time.
Thank you there are currently no additional questions registered at this time, so I will pass the conference back over to Steve Cantor for any closing remarks.
Thank you Danielle before we conclude I wanted to let everyone know that we will be participating in a couple of conferences coming up.
Riley.
Conference later in May and also the Sidoti small cap conference in June .
I'm happy to share any additional information that could reach out to me directly. Thank you all again for joining the call and have a great day.
And with that we will conclude today's call. Thank you for participating you may now disconnect your lines.
Yes.
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