VPG Q3 Revenue Hits Three-Year High on Sensor Orders

VPG reported its highest quarterly adjusted revenue in three years in the third quarter of 2026, supported by strong demand for Sensors products used in AI infrastructure and other markets. Record Sensors orders lifted total adjusted bookings to $102.6 million, giving the company a 1.17 book-to-bill ratio and a larger backlog that management said could support potential growth of 10% to 12% in 2027.

For the quarter ended October 3, adjusted net revenue was $87.4 million, up 4% sequentially and 10% from a year earlier. GAAP revenue was $85.1 million and included a $2.3 million reduction for tariff refunds passed through to customers. The refunds were also recorded as a reduction in cost of products sold and therefore had no effect on gross profit.

Adjusted bookings increased 7% from the second quarter and 29% year over year to $102.6 million. All three operating segments reported book-to-bill ratios of at least 1.00, indicating that quarterly orders matched or exceeded sales across the business.

Adjusted gross margin rose to 39.3% from 38.6% in the second quarter. Adjusted operating income was $4.2 million, representing a 4.9% margin, while adjusted net earnings were $1.8 million, or $0.14 per diluted share. VPG said adjusted earnings per share were reduced by $0.03 because its adjusted tax rate increased to 47.8%, reflecting the geographic mix of income.

Cash from operations totaled $11.1 million, while adjusted free cash flow was $5.5 million after $5.6 million of purchased capital expenditures. VPG ended the quarter with $80.9 million in cash and cash equivalents and $15.7 million in long-term debt.

Sensors drives order growth

Sensors was the principal growth contributor. Segment revenue increased 15% sequentially and 21.3% year over year to $38.4 million, primarily because of higher sales of precision resistors and strain gages to the Test & Measurement market.

Bookings reached a record $51.7 million, up 7.5% from the second quarter and 53% from the prior-year period. The segment’s book-to-bill ratio was 1.35. VPG attributed demand to AI-related semiconductor testing and data center and fiber-optic applications, as well as aerospace and defense.

The anticipated production schedule for VPG’s lead humanoid robotics customer shifted, with production orders now expected to begin in the fourth quarter of 2026 and ramp during 2027. The customer provided an investment to support capacity expansion, while VPG broadened marketing efforts to other potential humanoid customers. The company said additional staffing and equipment at key Sensors facilities, along with its manufacturing and supply-chain capabilities, are in place to support the initial ramp.

Weighing Solutions softens seasonally

Adjusted revenue in Weighing Solutions declined 11% sequentially to $26.9 million, reflecting seasonal weakness in Europe, mainly for process-weighing products. Adjusted bookings were unchanged from the second quarter at $28.6 million but increased 17% year over year, producing a book-to-bill ratio of 1.06.

Industrial weighing and medical demand remained mostly stable. Lower orders for consumer e-bike applications were offset by stronger Transportation demand. Orders for mining trucks and equipment were also strong, and VPG’s solution was selected as an available equipment option by a major European heavy-duty vehicle manufacturer.

Measurement Systems benefits from Steel demand

Measurement Systems revenue rose 10% sequentially and 8% year over year to $22.1 million, primarily due to higher Steel market sales. Orders increased 19% from the second quarter to $22.2 million, driven by Steel and Transportation, for a book-to-bill ratio of 1.01.

The segment recorded its strongest 2026 bookings quarter for automotive crash-safety testing and reported solid aerospace and defense testing demand. VPG also noted pockets of strength in steel-related orders despite a soft global steel market. Production at KELK increased as the operation continued to recover from the second quarter.

Measurement Systems gross margin improved to 56.5% from 52.5% in the prior quarter, reflecting higher volume and a favorable product mix. Sensors’ adjusted gross margin increased to 32.6% from 31.5%, while the adjusted margin in Weighing Solutions declined to 34.6% from 37.3% because of lower volume.

Growth and cost initiatives

VPG said it had achieved $4.2 million of its targeted $6 million in cost savings for 2026. The company continues to optimize and relocate manufacturing for selected products as part of its longer-term cost and productivity plans.

Commercial initiatives included deploying customer relationship management and lead-to-opportunity processes across Sensors, beginning go-to-market programs for humanoid robotics and starting an initial effort to streamline new-product development processes.

Management’s potential 10% to 12% growth outlook for 2027 depends on order momentum and the expanding backlog. The presentation also identified uncertainties including tariffs and trade regulation, inflation, labor and supply-chain challenges, foreign-exchange movements, geopolitical instability, manufacturing relocation and cost-reduction execution, acquisition integration, export-control compliance, competition, technology changes and new-product development. The revised timing of the humanoid customer’s production ramp also remains an execution and scheduling consideration.