VPG Fiscal Q2 2026 Earnings: Revenue Growth Meets Currency-Driven Profit Pressure

Vishay Precision Group (NYSE: VPG) reported fiscal Q2 2026 net revenue of $83.9 million, up 11.7% from $75.2 million a year earlier, while diluted EPS shifted to a $0.13 loss from earnings of $0.02. Gross margin narrowed to 38.6%, and VPG recorded a $1.7 million net loss attributable to stockholders despite revenue growth across all three segments. Bookings of $95.5 million and a 1.14 book-to-bill ratio indicated that demand was running ahead of recognized revenue.

Core earnings data

Revenue growth did not translate into higher earnings. Gross profit increased by approximately 6.0%, but costs of products sold rose faster than revenue, reducing gross margin by 2.1 percentage points.

Profitability was also affected by $3.3 million of unfavorable year-over-year foreign exchange movements, approximately $3.0 million of delayed steel-related systems shipments, unfavorable product mix, and continued investment in growth initiatives.

Adjusted operating margin fell to 1.7% from 5.4%, while adjusted EBITDA margin declined to 6.5% from 11.1%. Beginning in fiscal 2026, VPG changed certain non-GAAP definitions to exclude share-based compensation; prior-period figures were recast for comparability.

Business and segment performance

All three segments generated year-over-year revenue growth, led by Sensors. However, each segment reported a lower gross margin than a year earlier, showing that currency, costs, and product mix limited the benefit from higher volume.

Sensors benefited from higher precision-resistor sales in Test and Measurement and aerospace, military, and space applications, along with increased strain-gage sensor sales. Its gross margin declined because unfavorable currency movements offset the benefit of higher volume; compared with the preceding quarter, materials costs and wage increases also weighed on the margin.

Weighing Solutions growth was mainly driven by process-weighing applications in the General Industrial market. Its year-over-year margin decline reflected unfavorable product mix and higher manufacturing costs, partly offset by volume. Measurement Systems benefited from aerospace, military, space, and Steel market revenue, but unfavorable product mix kept its margin below the prior-year level.

Profitability, cash flow, and the balance sheet

Selling, general, and administrative expenses increased to $32.0 million from $27.7 million, outpacing revenue growth. Together with the lower gross margin and $0.8 million of restructuring costs, this moved VPG from a $2.7 million operating profit to a $0.3 million operating loss.

Quarterly operating cash flow was $0.3 million. After $2.0 million of capital expenditures and $0.3 million of asset-sale proceeds, adjusted free cash flow was approximately negative $1.4 million under the company’s disclosed calculation. For the first six months of fiscal 2026, operating cash flow was negative $0.3 million, compared with positive $11.2 million in the prior-year period, as accounts receivable and inventories used cash.

Cash and cash equivalents declined to $75.7 million from $87.4 million at the end of fiscal 2025. Long-term debt decreased to $15.6 million from $20.6 million, reflecting a $5.0 million revolving-facility repayment. Inventory increased to $84.2 million from $82.8 million, while accounts receivable rose to $62.2 million from $56.3 million.

Order momentum is outpacing current earnings conversion

Bookings reached $95.5 million, producing a book-to-bill ratio of 1.14. VPG reported record quarterly precision-resistor orders tied to AI-related semiconductor, data center, aerospace, and defense applications. The company also received a vendor nomination from its initial humanoid robotics customer to support a planned production ramp in the second half of 2026.

The demand indicators contrast with the quarter’s weaker earnings and cash conversion. Approximately $3.0 million of steel-related systems shipments were delayed by supply-chain issues associated with a new ERP implementation. These orders remain in backlog, and VPG expects to complete the shipments by year-end, making execution at that facility important to converting demand into reported revenue and cash flow.

Guidance

VPG issued fiscal Q3 revenue guidance and raised its fiscal 2026 organic growth outlook relative to the range previously included in its three-year model. The quarterly outlook incorporates seasonal effects in Europe and assumes constant fiscal Q2 foreign exchange rates.

The Q3 revenue range excludes tariff refunds to customers, which management said would have no effect on profit. VPG also said it remains on track for approximately $6 million of cost savings in 2026 as part of its three-year target of $20 million in reductions.

Risks investors should watch

• Foreign exchange exposure: Currency movements reduced quarterly profit by $3.3 million from the prior-year period and by $0.9 million sequentially. Continued unfavorable movements could constrain margins even if revenue grows.
• ERP and supply-chain execution: Implementation issues delayed approximately $3.0 million of steel-related systems shipments. Further delays could affect revenue recognition, backlog conversion, and cash collection.
• Margin pressure: Unfavorable product mix, materials costs, wage increases, and manufacturing costs reduced segment margins and limited the benefit from higher sales volume.
• Cash conversion: Six-month operating cash flow fell from positive $11.2 million to negative $0.3 million as receivables and inventories consumed cash.
• Growth and cost-saving execution: The raised organic growth outlook depends on converting backlog and emerging demand, including the planned humanoid robotics ramp, while delivering the targeted 2026 cost savings.

Summary

VPG’s fiscal Q2 revenue increased across every segment, with Sensors providing the largest contribution and orders remaining ahead of sales. However, foreign exchange pressure, delayed shipments, product mix, and higher operating expenses pushed the company into a GAAP loss and weakened cash flow. The next points to monitor are backlog conversion, margin recovery, execution of cost reductions, and whether Q3 revenue lands within the new $84 million to $89 million range.