Vishay Precision Group Inc

Previous wording

VPG is a global, diversified company focused on 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, and we employ an operationally diversified structure to manage our businesses.

Current wording

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, and we employ an operationally diversified structure to manage our businesses.

Previous wording

Driven by the continued proliferation of data generated by the expanding use of sensors across a widening array of industrial and non-industrial 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 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 test and measurement, industrial, transportation, steel, avionics, military and space, as well as other markets such as agriculture, consumer, and medical. 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.

Current wording

Driven by the continued proliferation of data generated by the expanding use of sensors across a widening array of industrial and technology-driven 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 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 test and measurement, industrial, transportation, steel, avionics, military and space, as well as other markets such as agriculture, consumer, and medical. 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.

Previous wording

As of February 29, 2024 (the date of this filing), our operations in Israel have operated at near normal levels. The extent and duration of the current war, as well as the possibility of further spread of the conflict to other countries in the region as well as involving other political and military entities in the Middle East, poses risks to our operations and may lead to disruptions which could adversely affect our business, prospects, financial condition and results of operations.

Current wording

As of February 25, 2025 (the date of this filing), our operations in Israel have operated at normal levels. The extent and duration of the current war, as well as the possibility of further spread of the conflict to other countries in the region as well as involving other political and military entities in the Middle East, poses risks to our operations and may lead to disruptions which could adversely affect our business, prospects, financial condition and results of operations.

Previous wording

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 which manufacture products representing approximately 25 percent of our total worldwide revenues. As of February 29, 2024, these facilities remain open and operational. We have implemented a contingency plan that we believe will secure supply of materials and logistics, build safety stock of finished goods and transfer these goods to our distribution centers outside of Israel, and we continue 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 war, 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.

Current wording

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 which manufacture products representing approximately 26 percent of our total worldwide revenues. As of February 25, 2025, these facilities remain open and operational. We have implemented a contingency plan that we believe will secure supply of materials and logistics, build safety stock of finished goods and transfer these goods to our distribution centers outside of Israel, and we continue 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 war, 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.

Previous wording

Net revenues for the year ended December 31, 2023 were $355.0 million compared to net revenues of $362.6 million for the year ended December 31, 2022. Net earnings attributable to VPG stockholders for the year ended December 31, 2023 were $25.7 million, or $1.88 per diluted share, compared to $36.1 million, or $2.63 per diluted share, for the year ended December 31, 2022.

Current wording

Net revenues for the year ended December 31, 2024 were $306.5 million compared to net revenues of $355.0 million for the year ended December 31, 2023. Net earnings attributable to VPG stockholders for the year ended December 31, 2024 were $9.9 million, or $0.74 per diluted share, compared to $25.7 million, or $1.88 per diluted share, for the year ended December 31, 2023.

Previous wording

The results of operations for the years ended December 31, 2023 and 2022 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. 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.

Current wording

29 - 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. 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.

Previous wording

Net revenues for the fourth quarter of 2023 increased 4.3% from the net revenues of $85.9 million reported in the third quarter of 2023, and decreased 7.0% from $96.2 million for the comparable prior year period.

Current wording

Net revenues of $72.7 million for the fourth quarter of 2024 decreased 4.1% from the net revenues of $75.7 million reported in the third quarter of 2024, and decreased 18.8% from $89.5 million for the comparable prior year period.

Previous wording

Net revenues in the Sensors segment of $34.3 million in the fourth quarter of 2023 increased 5.3% from $32.5 million in the third quarter of 2023, and decreased 5.7% from $36.3 million in the fourth quarter of 2022. Sequentially, the increase in revenues primarily reflected higher precision resistor sales in the Test and Measurement market. The year-over-year decrease in revenues was primarily attributable to lower sales of advanced sensors in our Other markets for consumer applications, and in our Avionics, Military and Space ("AMS") market, and in our General Industrial market, which offset higher sales of precision resistors in the Test and Measurement market.

Current wording

Net revenues in the Sensors segment of $25.8 million in the fourth quarter of 2024 decreased 8.7% from $28.2 million in the third quarter of 2024, and decreased 24.8% from $34.3 million in the fourth quarter of 2023. Sequentially, the decline in revenues primarily reflected lower sales of advanced sensors in our Other markets for consumer applications and lower precision resistor sales in the Test and Measurement market. The year-over-year decrease in revenues was primarily attributable to lower sales of precision resistors in the Test & Measurement market and lower sales of advanced sensors in our Other markets for consumer applications.

Previous wording

Net revenues in the Weighing Solutions segment of $30.4 million in the fourth quarter of 2023 increased 5.1% compared to revenues of $29.0 million in the third quarter of 2023. The sequential increase in revenues was primarily attributable to increased revenues from OEM customers for precision agriculture and construction applications in our Other market segment and higher revenue in our General Industrial market, partially offset by lower sales in the Transportation market. Net revenues in the fourth quarter of 2023 decreased 8.0% compared to $33.1 million in the fourth quarter of 2022 mainly due to lower revenues in our Industrial Weighing market and lower revenues from OEM customers for precision agriculture applications in our Other market segment.

Current wording

Net revenues in the Weighing Solutions segment of $25.7 million in the fourth quarter of 2024 increased 2.2% compared to revenues of $25.2 million in the third quarter of 2024. The sequential increase in revenues reflected higher revenue in our Industrial Weighing market and in our Other markets, which offset lower revenue in the Transportation market. Net revenues in the fourth quarter of 2024 decreased 15.4% compared to $30.4 million in the fourth quarter of 2023 mainly due to lower revenues in our Other markets from OEM customers for precision agriculture and construction applications and lower revenues in the Transportation and General Industrial markets.

Previous wording

Net revenues in the Measurement Systems segment of $24.8 million in the fourth quarter of 2023 increased 2.0% from $24.4 million in the third quarter of 2023 and decreased 7.5% from $26.8 million in the fourth quarter of 2022. The sequential increase in revenue was primarily attributable to higher sales of Diversified Technical Systems, Inc. ("DTS") products to the AMS market, which was partially offset by lower sales of Dynamic Systems Inc. ("DSI") and KELK products to the Steel market. The year-over-year decline in revenues was primarily attributable to lower sales of DSI and KELK products to the steel market and lower sales of DTS products to the Transportation market, which was partially offset by higher sales of DTS products to the AMS market.

Current wording

Net revenues in the Measurement Systems segment of $21.2 million in the fourth quarter of 2024 decreased 5.3% from $22.4 million in the third quarter of 2024 and decreased 14.8% from $24.8 million in the fourth quarter of 2023. The sequential decline in revenue was primarily attributable to lower sales of DSI products, which was partially offset by the added revenues related to the acquisition of Nokra on September 30, 2024. The year-over-year decline in revenues was primarily attributable to lower sales of DTS products, which offset the added revenue related to the acquisition of Nokra on September 30, 2024.

Previous wording

The gross profit marginfor the fourth quarter of 2023 increased 1.1% compared to the third quarter of 2023, and increased 1.8% from the fourth quarter of 2022.

Current wording

The gross profit marginfor the fourth quarter of 2024 decreased 1.8% compared to the third quarter of 2024, and decreased 4.8% from the fourth quarter of 2023.

Previous wording

Sequentially, gross profit margins improved in the Sensors segment, decreased in the Weighing Solutions segment, and improved in the Measurement Systems segments. The increase in the Sensors segment gross profit margin was primarily due to higher volume and improved manufacturing efficiencies. In the Weighing Solutions segment, gross profit margin decreaseddue to a reduction in inventory and unfavorable product mix, partially offset by higher volume. In the Measurement Systems segment, gross profit margin increased reflecting higher volume and favorable product mix.

Current wording

Sequentially, gross profit margins improved in the Sensors segment, decreased in the Weighing Solutions segment, and decreased in the Measurement Systems segments. Sequentially, the increase in gross profit margin in the Sensors segment was primarily due to improved manufacturing efficiencies, which offset the impact of lower volume. The decrease in gross margin for the Weighing Solutions segment was primarily due to higher material costs and the reduction in inventory which offset higher volume. In the Measurement Systems segment, the lower adjusted gross profit margin in the fourth quarter of 2024 reflected lower volume and unfavorable product mix.

Previous wording

Compared to the fourth quarter of 2022, gross profit margins increased in all of the reporting segments. In the Sensors segment, the increase in gross profit margin wasprimarily due to favorable foreign exchange rates and improved manufacturing efficiencies, which offset the impact of lower volume. In the Weighing Solutions segment, the increase in gross profit marginwas primarily due to increased selling prices, favorable foreign currency exchange rates, and manufacturing efficiencies, partially offset by lower volume. In the Measurement Systems segment, gross profit margin increased reflecting higher volume and favorable product mix.

Current wording

Compared to the fourth quarter of 2023, gross profit margins decreased in all of the reporting segments. In the Sensors segment, thedecreased in gross profit margin wasprimarily due to lower volume and unfavorable product mix, which was partially offset by improved manufacturing efficiencies. In the Weighing Solutions segment, the decreased in gross profit marginwas primarily due to lower volume. In the Measurement Systems segment, gross profit margin decreased reflecting lower volume and unfavorable product mix.

Previous wording

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 fully transitioned to this facility in the third quarter of fiscal 2021.

Current wording

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 and fully transitioned to this facility in the third quarter of fiscal 2021.

Previous wording

We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments. Our acquisition strategy is focused on identifying and acquiring high-value, growing technology-driven businesses that augment, expand and/or leverage our current offering in precision measurement and sensor markets. We expect to expand our expertise and our acquisition focus 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.

Current wording

We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments. Our acquisition strategy is focused on identifying and acquiring high-value, growing technology-driven businesses that augment, expand and/or leverage our current offering in precision measurement and sensor markets. We expect to expand our expertise and acquisition focus 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.

Previous wording

Research and development 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. The amount charged to expense for research and development aggregated $20.4 million, $19.8 million, and $17.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Current wording

Research and development 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. The amount charged to expense for research and development was $20.0 million, $20.4 million, and $19.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Previous wording

The Company recorded restructuring costs of $1.6 million, $1.5 million, and $0.1 million during the years ended December 31, 2023, 2022, and 2021, respectively, which were comprised primarily of employee termination costs, including severance and statutory retirement allowances.

Current wording

The Company recorded restructuring costs of $1.1 million, $1.6 million, and $1.5 million during the years ended December 31, 2024, 2023, and 2022, respectively, which were comprised primarily of employee termination costs, including severance and statutory retirement allowances.

Previous wording

For the year ended December 31, 2023, exchange rate impacts decreased net revenues by $2.2 million and decrease costs of products sold and selling, general, and administrative expenses by $9.1 million. For the year ended December 31, 2022, exchange rate impacts decreased net revenues by $16.1 million and decreased costs of products sold and selling, general, and administrative expenses by $13.3 million.

Current wording

For the year ended December 31, 2024, foreign exchange rate impacts decreased net revenues by $0.9 million and decrease costs of products sold and selling, general, and administrative expenses by $1.1 million. For the year ended December 31, 2023, foreign exchange rate impacts decreased net revenues by $2.2 million and decreased costs of products sold and selling, general, and administrative expenses by $9.1 million.

Previous wording

For the DSI and DTS goodwill reporting units, the Company performed the quantitative impairment test. In estimating the fair value of our DSI and DTS reporting units the Company used the income approach. The income approach to valuation requires management to make significant estimates and assumptions related to future revenues, profitability, working capital requirements and selection of discount rate and long term growth rate. Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting units. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. An impairment charge would be recognized to the extent the carrying value of goodwill exceeds the reporting unit fair value.

Current wording

The Company has four reporting units to which goodwill was allocated: steel, on-board weighing, DSI, and DTS. In 2024 the Company performed a quantitative impairment test for all its reporting units. In estimating the fair value of our reporting units the Company used the income approach. The income approach to valuation requires management to make significant estimates and assumptions related to future revenues, profitability, working capital requirements and selection of discount rate and long term growth rate. Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting units. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. An impairment charge would be recognized to the extent the carrying value of goodwill exceeds the reporting unit fair value.

Previous wording

Accounting for defined benefit pension and other postretirement plans involves numerous assumptions and estimates. The discount rate at which obligations could effectively be settled and the expected long-term rate of return on plan assets are two critical assumptions in measuring the cost and benefit obligations of our pension and other postretirement benefit plans. Other important assumptions include the anticipated rate of future increases in compensation levels, estimated mortality, and for

Current wording

Accounting for defined benefit pension and other postretirement plans involves numerous assumptions and estimates. The discount rate at which obligations could effectively be settled and the expected long-term rate of return on plan assets are two critical assumptions in measuring the cost and benefit obligations of our pension and other postretirement benefit plans. Other important assumptions include the anticipated rate of future increases in compensation levels, estimated mortality, and for postretirement medical plans, increases or trends in health care costs. Management reviews these assumptions at least annually. We use independent actuaries to assist us in formulating assumptions and making estimates. These assumptions are updated periodically to reflect the actual experience and expectations on a plan-specific basis, as appropriate.

Previous wording

Our defined benefit plans are concentrated in the United States, Japan and the United Kingdom. Plans in these countries comprise approximately 87% of our retirement obligations at December 31, 2023. We utilize published long-term high-quality bond indices to determine the discount rate at the measurement date. We utilize bond yields at various maturity dates to reflect the timing of expected future benefit payments. We believe the discount rates selected are the rates at which these obligations could effectively be settled.

Current wording

Our defined benefit plans are concentrated in the United States, Japan and the United Kingdom. Plans in these countries comprise approximately 86% of our retirement obligations at December 31, 2024. We utilize published long-term high-quality bond indices to determine the discount rate at the measurement date. We utilize bond yields at various maturity dates to reflect

Previous wording

We consider the earnings of most of our non-U.S. subsidiaries to be indefinitely invested outside the United States based on our estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our plans for reinvestment of foreign subsidiary earnings. As of December 31, 2023, the Company had provided for a deferred tax liability of $2.1 million of withholding tax associated with unremitted, non-permanently reinvested earnings, including planned cash distributions of $16.6 million. Additional withholding taxes of approximately $29.2 million are estimated to be payable upon the distribution of the remaining unremitted earnings at December 31, 2023. If we decide to distribute any portion of the balance of our unremitted earnings to the United States from a foreign country, we would adjust our income tax provision in the period we determine that the earnings are no longer indefinitely invested outside the United States.

Current wording

We consider the earnings of most of our non-U.S. subsidiaries to be indefinitely invested outside the United States based on our estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our plans for reinvestment of foreign subsidiary earnings. As of December 31, 2024, the Company had provided for a deferred tax liability of $2.3 million of withholding tax associated with $25.3 million of unremitted, non-permanently reinvested earnings. Additional withholding taxes of approximately $32.0 million are estimated to be payable upon the distribution of the remaining unremitted earnings at December 31, 2024. If we decide to distribute any portion of the balance of our unremitted earnings to the United States from a foreign country, we would adjust our income tax provision in the period we determine that the earnings are no longer indefinitely invested outside the United States.

Previous wording

The gross profit margin for the year ended December 31, 2023 increased 1.0% over the prior year. The increase in gross profit margin was primarily due to improved gross profit margins in the Weighing Solutions and Measurement Systems reporting segments partially offset by decreased gross profit margin in the Sensors reporting segment.

Current wording

The gross profit margin for the year ended December 31, 2024 decreased 1.3% over the prior year. The decrease in gross profit margin was primarily due to decreased gross profit margins in the Weighing Solutions and Sensors reporting segments partially offset by increased gross profit margin in the Measurement Systems reporting segment.

Previous wording

For the year ended December 31, 2023, net revenues decreased 8.2% as compared to the prior year, due to lower sales of precision resistors in the Test and Measurement market, and lower sales of advanced sensors products primarily in our Other markets (mainly for consumer applications), partially offset by increases in precision resistor sales in the AMS market.

Current wording

For the year ended December 31, 2024, net revenues decreased 19.7% as compared to the prior year, due to lower sales of precision resistors in the Test and Measurement and the AMS markets, and lower sales of advanced sensors products primarily in the AMS market.

Previous wording

For the year ended December 31, 2023, the gross profit margin decreased 0.7% as compared to the prior year primarily due to volume decreases and manufacturing inefficiencies, which were partially offset by favorable foreign currency exchange rates.

Current wording

For the year ended December 31, 2024, the gross profit margin decreased 4.9% as compared to the prior year primarily due to lower volume.

Previous wording

The Company recorded restructuring costs of $1.6 million and $1.5 million during the years ended December 31, 2023 and 2022, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs.

Current wording

The Company recorded restructuring costs of $1.1 million and $1.6 million during the years ended December 31, 2024 and 2023, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs.

Previous wording

There were no acquisition costs recorded in our consolidated statements of operations for the year ended December 31, 2023 or December 31, 2022.

Current wording

For the year ended December 31, 2024, we recorded acquisition costs in our consolidated statements of operations of $0.1 million in connection with the acquisition of Nokra. There were no acquisition costs recorded in our consolidated statements of operations for the year ended December 31, 2023.

Previous wording

The Company recorded interest expense of $4.0 million, and $2.3 million for the years ended December 31, 2023 and 2022, respectively. Interest expense was higher in 2023 compared to 2022 mainly due to higher borrowing rates during 2023.

Current wording

The Company recorded interest expense of $2.5 million, and $4.0 million for the years ended December 31, 2024 and 2023, respectively. Interest expense was lower in 2024 compared to 2023 mainly due to partial repayment of loans that occurred in the second half of 2023 and lower borrowing rates during 2024.

Previous wording

Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. The change in foreign exchange gains / (losses) for the year ended December 31, 2023, as compared to the prior year period, is primarily due to fluctuations in the Israeli shekel, the Canadian dollar and the British pound. The change in the dollar-shekel exchange rate resulted in a unfavorable currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors facility in Israel.

Current wording

Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. The change in foreign currency exchange gains / (losses) for the year ended December 31, 2024, as compared to the prior year period, is primarily due to fluctuations in the Japanese Yen, Israeli shekel and the Canadian dollar.

Previous wording

Our effective tax rate for the year ended December 31, 2023 was 32.3%, as compared to 18.9% for the year ended December 31, 2022. Our effective tax rate was higher in 2023 compared to 2022 primarily due to increases in valuation allowances, increases in reserves for uncertain tax positions and changes in our geographical mix of income.

Current wording

Our effective tax rate for the year ended December 31, 2024 was 44.0%, as compared to 32.3% for the year ended December 31, 2023. Our effective tax rate was higher in 2024 compared to 2023 primarily due to increases in valuation allowances and changes in our geographical mix of income.

Previous wording

•2.8% increase related to the effects of foreign operations primarily related to the difference between the U.S. statutory rate and foreign tax rates

Current wording

•15.3% increase related to the effects of foreign operations primarily related to the difference between the U.S. statutory rate and foreign tax rates

Previous wording

•1.4% decrease related to specialty tax credits, such as research credits

Current wording

•2.9% decrease related to specialty tax credits, such as research credits

Previous wording

On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit Agreement”) among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank, National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders (the “Agent”), pursuant to which the terms of the Company’s multi-currency, secured credit facility were revised to provide a secured revolving facility (the “2020 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 Credit Agreement. The proceeds of the 2020 Revolving Facility may be used on an ongoing basis for working capital and general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of $25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement terminates on March 20, 2025.

Current wording

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 (the “Agent”), pursuant to which the Company’s existing credit facility 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 existing revolving credit facility. The aggregate principal amount of the 2024 Revolving Facility may be increased by a maximum of $25.0 million upon the request of the Company, subject to the terms of the 2024 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.

Previous wording

On May 5, 2023, the Company entered into Amendment No. 1 to Third Amended and Restated Credit Agreement (the “Credit Agreement Amendment”) amending the Third Amended and Restated Credit Agreement, dated March 20, 2020. The primary purpose of the changes made in the Credit Agreement Amendment were to update the interest rate provisions to replace LIBOR with SOFR for U.S. dollar denominated loans as well as update the other applicable reference borrowing rates for foreign currency loans which took effect on June 15, 2023. Interest payable on amounts borrowed under the 2020 Revolving Facility, taking into account the effect of the Credit Agreement Amendment, is based upon the following: (a) for revolving credit loans denominated in US Dollars, the SOFR rate plus applicable credit spread; and (b) for revolving credit loans denominated in foreign currencies, at other applicable local reference rates plus an interest margin. Depending upon the Company’s leverage ratio, an interest rate margin ranging from 1.50% to 2.75% per annum is added to the applicable SOFR rate to determine the interest payable on the SOFR loans. The Company is required to pay a quarterly fee of 0.25% per annum to 0.40% per annum on the unused portion of the 2020 Revolving Facility, which is determined based on the Company’s leverage ratio each quarter. Additional customary fees apply with respect to letters of credit.

Current wording

The specified interest margin for US Base Rate Loans and Canadian Base Rate Loans is 0.25%. Depending upon the Company’s leverage ratio, the interest rate margin for loans based on SOFR, CORRA, SONIA, EURIBOR and TIBOR ranges from 1.75% to 3.00% per annum. The Company is required to pay a quarterly fee of 0.20% per annum to 0.40% per annum on the unused portion of the 2024 Revolving Facility, which is also determined based on the Company’s leverage ratio. Additional customary fees apply with respect to letters of credit.

Previous wording

The obligations of the Company under the 2020 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 2020 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such guarantors. The 2020 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 December 31, 2023. 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.

Current wording

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 a specified interest coverage ratio and a leverage ratio, each tested as of the last day of each fiscal quarter. If the Company is not in compliance with any of these covenant restrictions, the 2024 Revolving Facility could be terminated by the lenders, and all amounts outstanding pursuant to the 2024 Credit Agreement could become immediately payable.

Previous wording

Our business has historically generated significant cash flow. Our cash provided by operating activities for the year ended December 31, 2023 was $45.9 million as compared to $33.0 million for the year ended December 31, 2022. Our net cash used in investing activities for the year ended December 31, 2023 was $15.1 million, compared to $20.8 million for the year ended December 31, 2022. Our net cash used in financing activities for the year ended December 31, 2023 was $35.9 million, which included a pay down on the 2020 credit facility of $29.0 million, as compared to $3.6 million for the year ended December 31, 2022.

Current wording

Our business has historically generated significant cash flow. Our cash provided by operating activities for the year ended December 31, 2024 was $19.8 million as compared to $45.9 million for the year ended December 31, 2023. Our net cash used in investing activities for the year ended December 31, 2024 was $12.9 million, compared to $15.1 million for the year ended December 31, 2023. Our net cash used in financing activities for the year ended December 31, 2024 was $9.4 million, which included a pay down on the 2020 credit facility of $0.0 million, as compared to $35.9 million for the year ended December 31, 2023.

Previous wording

Approximately 92% and 83% of our cash and cash equivalents balance at December 31, 2023 and 2022, respectively, was held by our non-U.S. subsidiaries. See the following table for the percentage of cash and cash equivalents, by region, at December 31, 2023 and December 31, 2022:

Current wording

Approximately 94% and 92% of our cash and cash equivalents balance at December 31, 2024 and 2023, respectively, was held by our non-U.S. subsidiaries. See the following table for the percentage of cash and cash equivalents, by region of subsidiary, at December 31, 2024 and December 31, 2023:

Previous wording

For the year ended December 31, 2023, we generated adjusted free cash flow of $30.8 million. We define “adjusted free cash flow,” a measure which management uses to evaluate our ability to fund acquisitions, as the amount of cash provided by operating activities ($45.9 million) in excess of our capital expenditures ($15.2 million) and net of proceeds from the sale of assets ($0.1 million).

Current wording

For the year ended December 31, 2024, we generated adjusted free cash flow of $11.3 million. We define “adjusted free cash flow,” a measure which management uses to evaluate our ability to fund acquisitions, as the amount of cash provided by operating activities ($19.8 million) in excess of our capital expenditures ($9.2 million) and net of proceeds from the sale of assets ($0.7 million).

Previous wording

Our financial condition as of December 31, 2023 is strong, with a current ratio (current assets to current liabilities) of 3.9 to 1.0, as compared to a current ratio of 3.9 to 1.0 at December 31, 2022.

Current wording

Our financial condition as of December 31, 2024 is strong, with a current ratio (current assets to current liabilities) of 4.5 to 1.0, as compared to a current ratio of 3.9 to 1.0 at December 31, 2023.

Previous wording

Cash paid for property and equipment for the year ended December 31, 2023 and December 31, 2022 was $15.2 million and $21.3 million, respectively. Capital spending for 2023 was comprised of building projects related to capacity expansion in Israel and Asia, and other projects related to the normal maintenance of business. Capital expenditures for 2024 are expected to be approximately $15.0 million.

Current wording

Cash paid for property and equipment for the year ended December 31, 2024 and December 31, 2023 was $9.2 million and $15.2 million, respectively. Capital spending for 2024 was comprised of building projects related to capacity expansion in Israel and Asia, and other projects related to the normal maintenance of business. Capital expenditures for 2025 are expected to be approximately $12.4 million.