Quarterly Report for Quarter Ending April 4, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

VPG is a global leader in precision measurement and sensing technologies that help power the future by bridging the physical world with the digital one. Many of our specialized sensors, weighing solutions, and measurement systems are "designed-in" by our customers, and address growing applications across a diverse array of industries and markets. Our products are marketed under brand names that we believe are characterized as having a very high level of precision and quality.

Driven by the continued proliferation of data generated by the expanding use of sensors across a widening array of industrial and new applications, precision measurement and sensing technologies help ensure and deliver required levels of quality of mission-critical or high-value data. VPG's products are often at the first stage of a data value chain (i.e., the process of converting the physical world into a digital format that can be used for a specific purpose) and as such impact the effectiveness of a vast number of critical, high-value downstream processes. Over the past few years, we have seen a broadening of precision sensing applications in both our traditional industrial markets and new markets, due to the development of higher functionality in our customers' end products. Our precision measurement solutions are used across a wide variety of end markets upon which we focus, including industrial, test and measurement, transportation, steel, medical, agriculture, avionics, military and space, and consumer product applications. The Company has a long heritage of innovation in sensor technologies that provide accuracy, reliability and repeatability that make our customers' products safer, smarter, and more productive. As the functionality of customers' products continues to increase, and they integrate more precision measurement sensors and related systems into their solutions, we believe this will offer substantial growth opportunities for our products and expertise.

The impact of the recent wars in Israel on our operations

On February 28, 2026, Israel launched a preemptive strike on Iran, with military support from the United States. Iran retaliated with ballistic missile and drone strikes targeting both civilian and military sites in Israel. A ceasefire was reached on April 8, 2026, although there is no assurance that the ceasefire will continue.

While sales to customers in Israel account for a relatively small portion of our revenues, our operations in Israel include executive offices, which are the workplace for key executives including our chief executive officer, as well as two manufacturing facilities located in the central part of Israel that manufacture products representing approximately 30% of our total worldwide revenues in the three fiscal months ended April 4, 2026. As of May 12, 2026, these facilities remain open and operational. The war did not have a material impact on the Company's financial results or operations for the three fiscal months ended April 4, 2026. We have implemented a contingency plan that, in the event conditions in Israel deteriorate such that we no longer operate there at normal levels, we believe will provide for securing supply of materials and logistics by producing a safety stock of finished goods and transferring these goods to our distribution centers outside of Israel, while continuing to take measures with regards to the safety of our employees. We may, however, determine to temporarily discontinue production in Israel for the safety of our employees. We could also face future production slowdowns or interruptions at either manufacturing location in Israel due to the impacts of the conflicts, including personnel absences as a number of our employees have been called to active military duty, or due to other resource constraints such as the inability to source materials for production.

The impact of recent changes in tariffs

VPG have manufacturing operations in India, China, Japan, Europe, Canada, Israel, and the United States, as well as in other countries. Beginning in the second quarter of 2025, new tariffs were announced on import to the U.S. In response several countries have imposed reciprocal tariffs on import from the U.S. and other retaliatory measures. The tariffs have been set at various rates, with exemptions applicable to certain categories of imports and exports. The Company mitigates the impact of tariff changes through pricing adjustments to customers. Accordingly, tariff fluctuations have not had a material effect on gross margin or results of operations.

VPG continues to actively monitor and evaluate the ongoing situation, focusing on quickly responding to cost and price adjustments.

Overview of Financial Results

VPG reports in three product segments: Sensors, Weighing Solutions, and Measurement Systems. The Sensors segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The Measurement Systems segment is comprised of highly specialized systems for steel production, materials development, and safety testing.

Net revenues for the fiscal quarter ended April 4, 2026 were $84.4 million versus $71.7 million for the comparable prior year period. Net loss attributable to VPG stockholders for the fiscal quarter ended April 4, 2026 was $0.3 million, or $(0.02) per diluted share, compared to net loss of $0.9 million or (0.07) per diluted share, for the comparable prior year period.

The results of operations for the fiscal quarters ended April 4, 2026 and March 29, 2025 include items affecting comparability as listed in the reconciliations below. The reconciliations below include certain financial measures which are not recognized in accordance with U.S. generally accepted accounting principles ("GAAP"), including adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA, and adjusted EBITDA. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance. Non-GAAP measures such as adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA, and adjusted EBITDA do not have uniform definitions. These measures, as calculated by VPG, may not be comparable to similarly titled measures used by other companies. Management believes that these non-GAAP measures are useful to investors because each presents what management views as our core operating results for the relevant period.

Beginning in fiscal 2026, the Company revised its definition of certain non-GAAP financial measures to exclude share-based compensation expense in addition to the other items described below. This change is being made in light of the Company's evolving compensation structure following recent organizational changes, including the hiring of senior executives and the expansion of equity-based incentive programs to attract and retain key talent.

Management believes that excluding share-based compensation expense in certain non-GAAP financial measures provides investors with additional insight into the Company's core operating performance and enhanced understanding of business trends across reporting periods, including those in comparison to its main peer companies.

Share-based compensation expense will continue to be reflected in the Company's GAAP financial results and will be set forth in a specific line item in the reconciliation table between GAAP and non-GAAP measures. Prior-period non-GAAP financial measures have been recast to conform to the current presentation.

The adjustments to the applicable GAAP measures relate to occurrences or events that are outside of our core operations, and management believes that the use of these non-GAAP measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods. In addition, the Company has historically provided these or similar non-GAAP measures and understands that some investors and financial analysts find this information helpful in analyzing the Company's performance and in comparing the Company's financial performance to that of its peer companies and competitors. Management believes that the Company's non-GAAP measures are regarded as supplemental to its GAAP financial results.

		Gross Profit								Operating Income								Net Earnings (loss) Attributable to VPG Stockholders								Diluted Earnings (loss) Per share
Three months ended		April 4, 2026				March 29, 2025				April 4, 2026				March 29, 2025				April 4, 2026				March 29, 2025				April 4, 2026				March 29, 2025
As reported - GAAP		$	32,874			$	27,045			$	340			$	(60	)		$	(319	)		$	(942	)		$	(0.02	)		$	(0.07	)
As reported - GAAP Margins			39.0	%			37.7	%			0.4	%			(0.1	)%			-				-				-			$	-
Start-up costs			-				463				-				463				-				463				-			$	0.04
Restructuring costs (a)			-				-				449				395				449				395				0.03			$	0.03
Share-based compensation cost (b)			-				9				837				545				837				545				0.06			$	0.04
Foreign currency exchange gain (c)			-				-				-				-				243				972				0.02			$	0.07
Less: Tax effect of reconciling items and discrete tax items			-				-				-				-				303				534				0.02			$	0.04
As Adjusted - Non GAAP		$	32,874			$	27,517			$	1,626			$	1,343			$	907			$	899			$	0.07			$	0.07
As Adjusted - Non GAAP Margins			39.0	%			38.4	%			1.9	%			1.9	%

		Fiscal Quarter Ended
		April 4, 2026				March 29, 2025
Net loss attributable to VPG stockholders			(319	)		$	(942	)
Interest Expense			329				550
Income tax expense (benefit)			129				(332	)
Depreciation			3,223				3,056
Amortization			987				979
Restructuring costs (a)			449				395
Start-up costs			-				463
Share-based compensation cost (b)			837				545
Foreign currency exchange gain (c)			243				972
ADJUSTED EBITDA		$	5,878			$	5,686
ADJUSTED EBITDA MARGIN			7.0	%			7.9	%

(a) Restructuring cost in 2026.

(b) Share-based compensation excluded for Non-GAAP results, effective beginning 2026, with prior period comparability.

(c) Impact of foreign currency exchange rates on assets and liabilities.

Financial Metrics

We utilize several financial measures and metrics to evaluate performance and assess the future direction of our business. These key financial measures and metrics include net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover.

Gross profit margin is computed as gross profit as a percentage of net revenues. Gross profit is generally net revenues less costs of products sold, but could also include certain other period costs. Gross profit margin is a function of net revenues, but also reflects our cost-cutting programs and our ability to contain fixed costs.

End-of-period backlog is one indicator of potential future sales. We include in our backlog only open orders that have been released by the customer for shipment in the next twelve months. If demand falls below customers' forecasts, or if customers do not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty. Therefore, backlog is not necessarily indicative of the results expected for future periods.

Another important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the amount of product ordered during a period compared with the amount of product shipped during that period. A book-to-bill ratio that is greater than one indicates that revenues may increase in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of lower demand and may foretell declining sales. The book-to-bill ratio is also impacted by the timing of orders, particularly from our project-based product lines.

We focus on inventory turnover as a measure of how well we manage our inventory. We define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory (computed using each quarter-end balance) for this same period. A higher level of inventory turnover reflects more efficient use of our capital.

The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following tables show net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover for our business as a whole and by segment during the five quarters beginning with the first quarter of 2025 through the first quarter of 2026.

		1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			1st Quarter
(dollars in thousands)		2025			2025			2025			2025			2026
Net revenues		$ 71,741			$ 75,161			$ 79,728			$ 80,573			$ 84,353
Gross profit margin		37.7	%		40.7	%		40.3	%		36.8	%		39.0	%
End-of-period backlog		$ 100,300			$ 108,201			$ 107,624			$ 108,236			$ 124,995
Book-to-bill ratio		1.04			1.06			1.00			1.01			1.21
Inventory turnover		2.12			2.09			2.20			2.38			2.45

		1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			1st Quarter
(dollars in thousands)		2025			2025			2025			2025			2026
Sensors
Net revenues		$ 27,055			$ 26,563			$ 31,624			$ 30,402			$ 33,314
Gross profit margin		30.1	%		32.0	%		33.6	%		28.5	%		34.8	%
End-of-period backlog		$ 42,049			$ 46,661			$ 48,503			$ 52,680			$ 63,993
Book-to-bill ratio		1.06			1.12			1.07			1.15			1.36
Inventory turnover		2.38			2.27			2.66			2.86			2.85
Weighing Solutions
Net revenues		$ 26,439			$ 29,428			$ 27,538			$ 27,739			$ 30,236
Gross profit margin		36.8	%		39.6	%		40.3	%		33.0	%		34.2	%
End-of-period backlog		$ 28,241			$ 26,734			$ 23,639			$ 24,163			$ 26,568
Book-to-bill ratio		0.99			0.92			0.89			1.02			1.09
Inventory turnover		2.50			2.62			2.25			2.44			2.66
Measurement Systems
Net revenues		$ 18,247			$ 19,170			$ 20,566			$ 22,431			$ 20,803
Gross profit margin		50.3	%		54.6	%		50.5	%		52.8	%		52.6	%
End-of-period backlog		$ 30,010			$ 34,805			$ 35,482			$ 31,392			$ 34,434
Book-to-bill ratio		1.07			1.20			1.04			0.81			1.15
Inventory turnover		1.41			1.33			1.58			1.72			1.67

Net revenues for the first fiscal quarter of 2026 increased 4.7% from the fourth fiscal quarter of 2025 primarily due to increases in the Sensors and Weighing Solutions reporting segments which were partially offset by a decrease in revenues in the Measurement Systems reporting segment. Net revenues for the first fiscal quarter of 2026 increased 17.6% from the first fiscal quarter of 2025 due to increases in all reporting segments.

Net revenues in the Sensors reporting segment increased 9.6% compared to $30.4 million in the fourth fiscal quarter of 2025 and increased 23.1% from $27.1 million in the first fiscal quarter of 2025. The year-over-year increase in revenues was primarily attributable to higher sales of precision resistors in the Test and Measurement and higher sales of strain gage sensors in the AMS and Other markets. Sequentially, the increase primarily reflected higher sales of precision resistors in the Test and Measurement and AMS markets and higher sales of strain gages in the General Industrial market.

Net revenues in the Weighing Solutions reporting segment increased 9.0% from the fourth fiscal quarter of 2025 and increased 14.4% from the first fiscal quarter of 2025. The year-over-year increase in revenues was mainly attributable to higher sales in the Other markets for medical applications and the Industrial weighing market. Sequentially, the increase in revenues was primarily due to higher sales in the Other Markets and in our Transportation market.

Net revenues in the Measurement Systems reporting segment decreased 7.3% from the fourth fiscal quarter of 2025 and increased 14.0% from the first fiscal quarter of 2025. The year-over-year increase was primarily attributable to higher revenue in the AMS market, which offset lower sales in the Steel and Transportation markets. Sequentially, the decrease in revenue was primarily due to lower sales in the Steel Market, which offset higher sales to the AMS market.

Overall gross profit margin in the first fiscal quarter of 2026 increased 2.2% as compared to the fourth fiscal quarter of 2025 mainly due to the Sensors and Weighing Solutions reporting segment and increased 1.3% from the first fiscal quarter of 2025 primarily due to the Sensors and Measurement system reporting segments which were partially offset by Weighing Solutions reporting segment.

Optimize Core Competence

The Company's core competencies include our innovative deep technical and applications-specific expertise, our strong brands and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and our proven M&A strategy. We continue to optimize all aspects of our development, manufacturing and sales processes, including by increasing our technical sales efforts; continuing to innovate in product performance and design; and refining our manufacturing processes.

Our Sensors segment research group developed innovations that enhance the capability and performance of our strain gages, while simultaneously reducing their size and power consumption as part of our advanced sensors product line. We believe this unique foil technology will create new markets as customers "design in" these next generation products in existing and new applications. Our development engineering team is also responsible for creating new processes to further automate manufacturing and improve productivity and quality. Our advanced sensors manufacturing technology also offers us the capability to produce high-quality foil strain gages in a highly automated environment, which we believe results in reduced manufacturing and lead times, improved quality and increased margins. As a sign of our commitment to these businesses, we signed a long-term lease for a state-of-the-art facility that has been constructed in Israel.

We also seek to achieve significant production cost savings through the transfer, expansion, and construction of manufacturing operations in countries such as India, Japan, and Israel, where we can benefit from improved efficiencies or available tax and other government-sponsored incentives. In the past several years, we incurred restructuring expense related to closing and downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India and China, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.

Growth-Focused Strategy

Each of VPG's business segments maintains and deploys distinct go-to-market strategies, technical expertise, capital requirements, and acquisition opportunities. In the fourth quarter of 2025, we refined our business strategy to support the next phase on our path to achieve accelerated growth. This strategic shift follows significant investments over the past several years to streamline and improve our operational and functional efficiencies and capabilities, positioning us to pursue fast growing, higher-volume opportunities driven by macro technological and industrial trends.

As part of this change in strategy, on November 4, 2025, we announced the expansion of our senior management team with two newly created executive positions: Chief Business and Product Officer and Chief Operating Officer, both reporting to the Chief Executive Officer. We believe these roles, along with related organizational changes, will enable us to accelerate growth by leveraging sales and operational capabilities across our business units through increased standardization of business processes, systems, and oversight. We believe that these changes, combined with a company culture that emphasizes business execution, accountability and operational excellence, will lead to the development of higher added value products, faster time to market, and improved customer service, which in turn will contribute to growth in revenue and profitability.

Acquisition Strategy

We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments. Historically, our growth and acquisition strategy had been largely focused on vertical product integration, using our foil strain gages in our load cell products, and incorporating those products into our weighing solutions. In recent years, we widened our acquisition strategy to include a broader set of precision measurement systems and product companies.

We expect to expand our expertise, and our acquisition focus, outside our traditional vertical approach to other precision measurement solutions, including in the fields of measurement of force, weight, pressure, torque, tilt, motion, and acceleration. We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing and distribution footprint.

Research and Development

Research and development ("R&D") will continue to play a key role in our efforts to introduce innovative products to generate new sales and to improve profitability. We expect to continue to expand our position as a leading supplier of precision foil technology products. We believe our R&D efforts should provide us with a variety of opportunities to leverage technology, products, and our manufacturing base in order to ultimately improve our financial performance.

Cost Management

To be successful, we believe we must seek new strategies for controlling operating costs. Through automation in our plants, we believe we can optimize our capital and labor resources in production, inventory management, quality control, and warehousing. We are in the process of moving some manufacturing to more cost-effective locations. This may enable us to become more efficient and cost competitive and also maintain tighter controls of the operation.

Production transfers, facility consolidations, and other long-term cost-cutting measures require us to initially incur significant severance and other exit costs. We are realizing the benefits of our restructuring through lower labor costs and other operating expenses and expect to continue reaping these benefits in future periods. However, these programs to improve our profitability also involve certain risks which could materially impact our future operating results, as further detailed in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2026.

We are evaluating plans to further reduce our costs by consolidating additional manufacturing operations. These plans may require us to incur restructuring and severance costs in future periods. While streamlining and reducing fixed overhead, we are exercising caution so that we will not negatively impact our customer service or our ability to further develop products and processes.

Goodwill

We test the goodwill in each of our reporting units for impairment at least annually, as of the first day of our fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred. Determining whether to test goodwill for impairment, and the application of goodwill impairment tests, require significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Changes in these estimates could materially affect the determination of fair value for each reporting unit. A slowdown or deferral of orders for a business, with which we have goodwill associated, could impact our valuation of that goodwill.

Foreign Currency

We are exposed to foreign currency exchange rate risks, particularly due to transactions in currencies other than the functional currencies of certain subsidiaries. U.S. GAAP requires that entities identify the "functional currency" of each of their subsidiaries and measure all elements of the financial statements in that functional currency. A subsidiary's functional currency is the currency of the primary economic environment in which it operates. In cases where a subsidiary is relatively self-contained within a particular country, the local currency is generally deemed to be the functional currency. However, a foreign subsidiary that is a direct and integral component or extension of the parent company's operations generally would have the parent company's currency as its functional currency. We have subsidiaries that fall into each of these categories.

Foreign Subsidiaries which use the Local Currency as the Functional Currency

Our operations in Europe, Canada, and certain locations in Asia primarily generate and expend cash using local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency. For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated condensed balance sheets have been translated at the rate of exchange as of the balance sheet date. Translation adjustments do not impact the results of operations and are reported as a separate component of equity.

For those subsidiaries where the local currency is the functional currency, revenues and expenses are translated at the average exchange rate for the period. While the translation of revenues and expenses into U.S. dollars does not directly impact the consolidated condensed statement of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies.

Foreign Subsidiaries which use the U.S. Dollar as the Functional Currency

Our operations in Israel and certain locations in Asia primarily generate cash in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly related to payroll, which are incurred in the local currency and significant lease assets and liabilities.

Effects of Foreign Currency Exchange Rate on Operations

For the fiscal quarter ended April 4, 2026, the effect of foreign currency exchange rates increased net revenues by $2.4 million, and increased costs of products sold and selling, general, and administrative expenses by $3.7 million, when compared to the comparable prior year period.

Results of Operations

Statement of operations' captions as a percentage of net revenues and the effective tax rates were as follows:

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Costs of products sold			61.0	%			62.3	%
Gross profit			39.0	%			37.7	%
Selling, general, and administrative expenses			38.0	%			37.2	%
Operating income (loss)			0.4	%			(0.1	)%
Loss before taxes			(0.2	)%			(1.8	)%
Net loss			(0.3	)%			(1.3	)%
Net loss attributable to VPG stockholders			(0.4	)%			(1.3	)%
Effective tax rate			(81.4	)%			25.8	%

Net Revenues

Net revenues were as follows (dollars in thousands):

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Net revenues		$	84,353			$	71,741
Change versus comparable prior year period		$	12,612
Percentage change versus prior year period			17.6	%

Changes in net revenues were attributable to the following:

		vs. prior year
		quarter
Change attributable to:
Change in volume			10.8	%
Change in average selling prices			2.4	%
Foreign currency effects			4.4	%
Net change			17.6	%

During the fiscal quarter ended April 4, 2026 net revenues increased by 17.6% as compared to the comparable prior year period, mainly due to higher volume on all segments primarily attributable to Test and Measurement, AMS and Other markets.

Gross Profit Margin

Gross profit as a percentage of net revenues was as follows:

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Gross profit margin			39.0	%			37.7	%

The gross profit margin for the fiscal quarter ended April 4, 2026 increased by 1.3% as compared to the comparable prior year period mainly on Sensors and Measurement Systems reporting segments due to high volume.

Segments

Analysis of revenues and gross profit margins for each of our reportable segments is provided below.

Sensors

Net revenues of the Sensors segment were as follows (dollars in thousands):

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Net revenues		$	33,314			$	27,055
Change versus comparable prior year period		$	6,259
Percentage change versus prior year period			23.1	%

Changes in Sensors segment net revenues were attributable to the following:

		vs. prior year
		quarter
Change attributable to:
Change in volume			16.4	%
Change in average selling prices			2.5	%
Foreign currency effects			4.2	%
Net change			23.1	%

The Sensors segment revenue of $33.3 million in the first fiscal quarter of 2026 increased 23.1% from $27.1 million in the first fiscal quarter of 2025. The year-over-year increase in revenues was primarily attributable to higher sales of precision resistors in the Test and Measurement and higher sales of strain gage sensors in the AMS and Other markets.

Gross profit as a percentage of net revenues for the Sensors segment was as follows:

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Gross profit margin			34.8	%			30.1	%

Gross profit margin for the Sensors segment was 34.8% for the first fiscal quarter of 2026, as compared to 30.1% in the first fiscal quarter of 2025. The year-over-year increase in gross profit margin was primarily due to higher sales volume, partially offset by unfavorable foreign exchange rates.

Weighing Solutions

Net revenues of the Weighing Solutions segment were as follows (dollars in thousands):

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Net revenues		$	30,236			$	26,439
Change versus comparable prior year period		$	3,797
Percentage change versus prior year period			14.4	%

Changes in Weighing Solutions segment net revenues were attributable to the following:

		vs. prior year
		quarter
Change attributable to:
Change in volume			4.2	%
Change in average selling prices			4.0	%
Foreign currency effects			6.3	%
Net change			14.4	%

The Weighing Solutions segment revenue of $30.2 million in the first fiscal quarter of 2026 increased 14.4% compared to $26.4 million in the first fiscal quarter of 2025. The year-over-year increase in revenues was mainly attributable to higher sales in the Other markets for medical applications and the Industrial weighing market.

Gross profit as a percentage of net revenues for the Weighing Solutions segment was as follows:

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Gross profit margin			34.2	%			36.8	%

Gross profit margin for the Weighing Solutions segment was 34.2% for the first fiscal quarter of 2026, which decreased compared to 36.8% in the first fiscal quarter of 2025. The year-over-year decrease in gross profit margin was primarily due to unfavorable product mix, higher manufacturing fixed costs, partially offset by higher volume and favorable foreign exchange rates.

Measurement Systems

Net revenues of the Measurement Systems segment were as follows (dollars in thousands):

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Net revenues		$	20,803			$	18,247
Change versus comparable prior year period		$	2,556
Percentage change versus prior year period			14.0	%

Changes in Measurement Systems segment net revenues were attributable to the following:

		vs. prior year
		quarter
Change attributable to:
Change in volume			12.6	%
Change in average selling prices			-	%
Foreign currency effects			1.4	%
Net change			14.0	%

The Measurement Systems segment revenue of $20.8 million in the first fiscal quarter of 2026 increased by 14.0% compared to $18.3 million in the first fiscal quarter of 2025. The year-over-year increase was primarily attributable to higher revenue in the AMS market, which offset lower sales in the Steel and Transportation markets.

Gross profit as a percentage of net revenues for the Measurement Systems segment were as follows:

		Fiscal quarter ended
		April 4, 2026				March 29, 2025
Gross profit margin			52.6	%			50.3	%

Gross profit margin for the Measurement Systems segment was 52.6% for the first fiscal quarter of 2026, as compared to 50.3% in the first fiscal quarter of 2025. The year-over-year increase in gross profit margin was primarily due to higher sales volume and unfavorable product mix.

Selling, General, and Administrative Expenses

Selling, general, and administrative ("SG&A") expenses are summarized as follows (dollars in thousands):

		Fiscal Quarter Ended
		April 4, 2026				March 29, 2025
Total SG&A expenses		$	32,085			$	26,710
As a percentage of net revenues			38.0	%			37.2	%

SG&A expenses for the three fiscal months ended April 4, 2026 increased $5.4 million compared to the comparable prior year period, primarily due to the impact of foreign exchange differences, as well as investments in building organizational infrastructure and strategic programs aimed at supporting the company's revenue growth, including the recently announced organizational changes and the establishment of the Chief Business and Product Officer and Chief Operating Officer functions.

Restructuring Costs

Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required either to record additional expense in future periods or to reverse part of the previously recorded charges.

The Company recorded $0.4 million of restructuring costs during the fiscal quarter ended April 4, 2026 and March 29, 2025, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, in connection with various cost reduction programs.

Other Expense

The following table analyzes the components of the line "Other" on the consolidated condensed statements of operations (in thousands):

		Fiscal Quarter Ended
		April 4, 2026				March 29, 2025				Change
Foreign currency exchange loss		$	(243	)		$	(972	)		$	729
Interest income			230				320				(90	)
Pension expense			(43	)			(11	)			(32	)
Other			(113	)			(14	)			(99	)
		$	(169	)		$	(677	)		$	508

Foreign currency exchange gain or loss are due to volatility in the global currency markets. For the fiscal quarter ended April 4, 2026 the foreign currency exchange loss was largely due to the fluctuation of the Israeli Shekel and the British pound against the U.S. dollar.

Income Taxes

The Company reported tax expenses, and its effective tax rate was (81.4%) for the first fiscal quarter of 2026, compared to the first fiscal quarter of 2025, where the Company reported tax benefits, and its effective tax rate was 25.8%. The effective tax rate for the fiscal quarter ended April 4, 2026, was mainly influenced by foreign income taxed at varying statutory rates and changes in the valuation allowance on deferred tax assets

On July 4, 2025, the OBBBA was enacted into law, extending key provisions of the 2017 Tax Cuts and Jobs Act. The OBBBA restores expensing of domestic research expenditures for years beginning after December 31, 2024. Additionally, the OBBBA restores the EBITDA-based interest expense limitation and includes changes related to the U.S. taxation of the income of our foreign subsidiaries and certain foreign derived income, and the base erosion and anti-abuse tax, and provides for accelerated depreciation for property acquired and placed in service after January 19, 2025. Due to the OBBBA provisions, the Company recorded tax benefit for the quarter as a decrease in valuation allowance on part of our deferred tax assets.

The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company's best estimate of the potential tax exposures in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company's tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties.

Financial Condition, Liquidity, and Capital Resources

We believe that our current cash and cash equivalents, credit facilities and projected cash from operations will be sufficient to meet our liquidity needs for at least the next 12 months.

On August 15, 2024, the Company entered into a Fourth Amended and Restated Credit Agreement (the "2024 Credit Agreement") among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and HSBC as joint lead arrangers and joint bookrunner, and JPMorgan Chase Bank, N.A, as agent for such lenders, pursuant to which the 2020 Credit Agreement, as amended, was amended and restated to, among other things, extend the maturity date from March 20, 2025 to August 15, 2029 and adjust the interest rate and commitment fee. The 2024 Credit Agreement provides for a multi-currency, secured credit facility (the "2024 Revolving Facility") in an aggregate principal amount of $75.0 million, with a sublimit of $10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the 2024 Credit Agreement, the proceeds of which may be used for working capital and general corporate purposes, and a portion of which were used to refinance the Company's previously existing credit agreement. The Company may elect to make loans under the 2024 Revolving Facility in US Dollars, Euros, Canadian Dollars, Sterling, Japanese Yen or such other freely convertible foreign currency.

On July 17, 2025, the Company made a partial repayment of its revolving debt in the amount of $11.0 million, using proceeds from the sale of manufacturing facility. The repayment was made in accordance with the terms of the Credit Agreement and resulted in a corresponding reduction in the outstanding balance under the revolving credit facility. This repayment is expected to reduce annual interest expense by approximately $660,000.

As of April 4, 2026, the outstanding balance under the revolving credit facility was $21.0 million, bearing interest at variable rates based on the Credit Agreement.

The obligations of the Company under the 2024 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company's domestic subsidiaries. The obligations of the Company and the guarantors under the 2024 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such guarantors. The 2024 Credit Agreement restricts the Company from paying cash dividends and requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of specific financial ratios. The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The Company was in compliance with its financial maintenance covenants at April 4, 2026. If the Company is not in compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable.

Our business has historically generated significant cash flow. For the three fiscal months ended April 4, 2026, cash provided by operating activities was $(0.6) million compared to $5.2 million in the comparable prior year period. Our net cash used in investing activities for the three fiscal months ended April 4, 2026 was higher compared to the prior year period mainly due to higher capital spending.

Approximately 91% of our cash and cash equivalents balance at April 4, 2026 and December 31, 2025 were held by our non-U.S. subsidiaries.

See the following table for the percentage of cash and cash equivalents, by region, at April 4, 2026 and December 31, 2025:

		April 4, 2026				December 31, 2025
Asia			28	%			22	%
United States			9	%			9	%
Israel			23	%			31	%
Europe			31	%			30	%
Canada			9	%			8	%
			100	%			100	%

We earn a significant amount of our operating income outside the United States, the majority of which is deemed to be indefinitely reinvested in foreign jurisdictions. As a result, as discussed above, a significant portion of our cash and short-term investments are held by foreign subsidiaries. The Company will continue to evaluate its cash needs, however we currently do not intend, nor do we foresee a need, to repatriate funds in excess of what is already planned. The Company will evaluate the possibility of repatriating future cash provided such repatriation can be accomplished in a tax efficient manner. In addition, we expect existing domestic cash, short-term investments, and cash flows from operations to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as debt repayment and capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.

If we should require more capital in the United States than is generated by our domestic operations, for example, to fund significant discretionary activities, such as business acquisitions, we could elect to repatriate future earnings from foreign jurisdictions or raise capital in the United States through debt or equity issuances. These alternatives could result in higher tax expense, increased interest expense, or dilution of our earnings. We consider the majority of the undistributed earnings of our foreign subsidiaries, as of April 4, 2026, to be indefinitely reinvested.

Adjusted free cash flow generated during the three fiscal months ended April 4, 2026, was $(3.7) million. We refer to the amount of cash provided by operating activities ($(0.6) million) in excess of our capital expenditures ($3.1 million), net of proceeds from the sale of assets, if any, as "adjusted free cash flow."

The following table summarizes the components of net cash at April 4, 2026 and December 31, 2025 (in thousands):

		April 4, 2026				December 31, 2025
Cash and cash equivalents		$	82,486			$	87,366
Third-party long-term debt:
Revolving debt			21,000				32,000
Repayment of credit facility			-				(11,000	)
Deferred financing costs			(388	)			(417	)
Total third-party debt			20,612				20,583
Net cash		$	61,874			$	66,783

Measurements such as "adjusted free cash flow" and "net cash" do not have uniform definitions and are not recognized in accordance with U.S. GAAP. Such measures should not be viewed as alternatives to GAAP measures of performance or liquidity. However, management believes that "adjusted free cash flow" is a meaningful measure of our ability to fund acquisitions, and that an analysis of "net cash" assists investors in understanding aspects of our cash and debt management. These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies.

Our financial condition as of April 4, 2026 remains strong, with a current ratio (current assets to current liabilities) of 4.5 to 1.0, as compared to a current ratio of 4.5 to 1.0 at December 31, 2025.

Cash paid for property and equipment for the three fiscal months ended April 4, 2026 was $3.1 million compared to $1.5 million in the comparable prior year period. The increase reflects the Company's continued investment in equipment as part of its strategic focus on expanding operational infrastructure. These investments are intended to enhance capacity and support the Company's long-term revenue growth and business expansion plans.

As of April 4, 2026 and December 31, 2025, we did not have any off-balance sheet arrangements.

Safe Harbor Statement

From time to time, information provided by us, including, but not limited to, statements in this report, or other statements made by or on our behalf, may contain or constitute "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those anticipated.

Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; significant developments from the recent and potential changes in tariffs and trade regulation; impact of inflation; potential issues respecting the United States federal government debt ceiling; global labor and supply chain challenges; difficulties or delays in identifying, negotiating and completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; political, economic, and health (including pandemics) instabilities; instability or disruption caused by military hostilities in the regions or countries in which we operate (including Israel); difficulties in implementing our cost reduction strategies, such as underutilization of production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to difficulties in transferring production to achieve efficiencies; compliance issues under applicable laws, such as export control laws, including the outcome of our voluntary self-disclosure of export control non-compliance; our ability to execute our new corporate strategy and business continuity, operational and budget plans; and other factors affecting our operations, markets, products, services, and prices that are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this report or as of the dates otherwise indicated in such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.