[Management View]
Vishay Precision Group (VPG) management highlighted continued momentum in the Sensors segment, with strong precision resistor demand for semiconductor testing and AMS. The call emphasized customer diversification in new applications such as ceramics and fiber optics, supporting business development progress beyond the humanoid robotics opportunity. The company noted enduring cost discipline, further operational streamlining, and reaffirmed strategic M&A as a growth lever.

[Outlook]
Management expects next quarter net revenues between $75 million and $81 million at constant currency. The company is optimistic about the long-term potential in the emerging humanoid robotics market, with initial real-world deployment expected in 2026. VPG is also targeting $5 million in annualized cost reductions by year-end.

[Financial Performance]
- Q3 revenue: $79.7 million, up 6.1% QoQ and 5.3% YoY.
- Adjusted gross margin: 40.5%, impacted by unfavorable FX and product mix.
- Adjusted operating margin: 6.2%, improved from 4.8% in the prior year.
- Adjusted free cash flow: $7.4 million.
- Net cash position: $65.8 million at quarter-end.

[Q&A Highlights]
Question 1: Ziv, I guess I'm kind of curious firstly about maybe the disconnect that we're seeing in the solutions business. And by that, I mean, the book-to-bill has been below one for a couple quarters, but the revenue's kind of held up relatively well. Is that becoming your shorter cycle business or maybe you could provide some color there?
Answer: Regarding weighing solutions, the business relies on a few pillars. The OEM business, which consists of precision ag and construction, is seeing a significant slowdown due to interest rates and the environment. The general industrial or general weighing business is linked to the industrial sector, which is stable. The European economy is improving, but there is a seasonal effect for Q3. Overall, the booking for this segment is stable, but larger companies do not see significant demand upside.

Question 2: And the record gross margin of 40.3%, is that a sustainable number on an annualized basis? I get there should be some seasonality in Q4. But how should we think about that going forward into 2026?
Answer: The significant cost reduction initiative in this segment, as we continue to streamline our manufacturing, supports the sustainability of this gross margin at a similar revenue level.

Question 3: Do you expect $5 million to be realized by the end of the year? And I assume that's on an annualized basis. But what's the year to date? How much of that $5 million has been realized?
Answer: We do expect to meet the $5 million by the end of the year, and this is an annualized number. By now, we have already reached $4 million.

Question 4: On the humanoid robotics topic, you mentioned that you expect more shipments in 2026. Do you have the manufacturing square footage to meet that demand?
Answer: We have received $3.6 million of orders from two humanoid suppliers. We are in discussions regarding higher volume production and VPG's capability to support higher volume manufacturing. We do not know the ramp-up time, but we are preparing for higher volume applications.

Question 5: You mentioned briefly on the call that you're in discussions with other potential customers as well. Do you think there's an opportunity to bring at least one new customer into the fold over the next couple of quarters? Or where are you in those early additional customer discussions today?
Answer: We are in the engineering dialogue, discussing certain sensing solutions for their humanoid. It is hard to tell when they would approve the design, but our customers see value in VPG's solutions, which is why they approach us.

Question 6: These new business development initiatives, $26 million for the first nine months. On track to hit $30 million. Does that imply some additional expected humanoid orders in the fourth quarter? Is that coming from other new areas of the business like ceramics overall?
Answer: The $26 million comes from various applications, including humanoid, ceramics, semiconductor back-end testing, and fiber optics.

Question 7: There's a little bit of softness related to defense associated with the US government shutdown, and that is likely to continue into April. Could you quantify the impact to 3Q? Or what type of impact do you expect that to have based on the guidance you laid out?
Answer: The effect is mainly on our Measurement Systems division, specifically the DPS product line. The impact is expected to be at least in the hundreds of thousands of dollars.

[Sentiment Analysis]
Analysts were generally positive, focusing on the sustainability of gross margins and the potential in the humanoid robotics market. Management expressed confidence in their cost structure and growth initiatives.

[Quarterly Comparison]
| Metric | Q3 2025 | Q2 2025 | Q3 2024 |
|---------------------------------|---------|---------|---------|
| Revenue | $79.7M | $75.1M | $75.7M |
| Adjusted Gross Margin | 40.5% | 41.0% | 39.8% |
| Adjusted Operating Margin | 6.2% | 5.8% | 4.8% |
| Adjusted Free Cash Flow | $7.4M | $4.7M | $5.2M |
| Net Cash Position | $65.8M | $58.4M | $60.1M |

[Risks and Concerns]
- Impact of the US government shutdown on the Measurement Systems division, particularly the DPS product line.
- Macroeconomic factors, including higher interest rates affecting large OEM demand.
- Uncertainty in the timing and scale-up of humanoid robotics orders.

[Final Takeaway]
Vishay Precision Group (VPG) delivered a solid Q3 2025 performance, driven by strong growth in the Sensors segment. The company is optimistic about its long-term potential in the emerging humanoid robotics market and is on track to achieve its cost reduction goals. However, challenges remain due to macroeconomic factors and the US government shutdown's impact on the Measurement Systems division. Overall, VPG is well-positioned for future growth with a focus on operational excellence and strategic M&A opportunities.