Good morning. Thank you for attending today's VPG First Quarter 2022 Earnings Call. My name is Hannah, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Steve Cantor, Senior Director of Investor Relations. Please go ahead.

Thank you, Hannah, and good morning, everyone. Welcome to VPG's 2022 First Quarter Earnings Conference Call. Our Q1 press release and accompanying slides have been posted on our website, and an audio recording of today's call will be available on the Internet for a limited time and can also be accessed on the VPG website. Today's remarks are governed by the safe harbor provisions of the 1995 Private Securities Litigation Reform Act. Our actual results may vary from forward-looking statements. For a discussion of the risks associated with VPG's operations, we encourage you to refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2021, and our other recent SEC filings. On the call today are Ziv Shoshani, CEO and President; and Bill Clancy, CFO. And now I'll turn the call to Ziv for some prepared remarks. Please refer to Slide 3 of the quarterly presentation. Ziv?

Thank you, Steve. I will begin with some commentary on VPG's consolidated financial results and sales trends for the first quarter. Bill will provide financial details and our outlook for the second quarter of 2022. Moving to Slide 3. I am pleased to report that VPG achieved solid performance in the first quarter, which included record of orders and backlog as we navigated well to the supply chain and labor challenges impacting companies around the world. Before providing additional color on the Q1 results, I want to review the long-term strategy and priorities we laid out in February, which we believe will accelerate our long-term growth and profitability. As a leader in precision measurement sensing technologies, we are focusing on an expanding array of applications in which accuracy, reliability and repeatability makes the difference. Our deep engineering and application expertise enable our customers to make their product safer, smarter and more productive. The need for precision measurement sensing solutions is evolving and expanding into new markets and applications requiring level of precision that were not needed before. Moving to Slide 4. In the first quarter of 2022, we reported sales of $87.7 million, which was 24.2% higher than a year ago. Fourth quarter of 2021, sales declined 2.6% as lower Measurement Systems revenue offset growth in our Sensors and Weighing Solution segments. The decline in Measurement Systems revenue was expected due to the timing of shipments for these project-driven systems. Record orders of $109.6 million grew 15.3% sequentially, reflecting growth across all 3 segments. The strong order performance contributed to our book-to-bill of 1.25 and a record backlog of $170.6 million. This represents a strong start and underscores the strength of our business model and our strategy. We improved our adjusted gross margin to 41.0% as compared to the fourth…

Thanks, Ziv. Referring to Slide 8, and the reconciliation tables of the slide deck. In the first quarter of 2022, we achieved revenues of $87.7 million, gross profit of $35.3 million or 40.2% of sales, operating income of $8.3 million or 9.5% of revenues and diluted net earnings per share of $0.46. On an adjusted basis, our gross profit was $35.9 million or 41.0% of sales. Operating income was $9.2 million or 10.5% of sales and diluted net earnings per share was $0.49. Our first quarter 2022 revenues decreased 2.6% compared to $90 million in the fourth quarter of 2021 and were 24.2% above the first quarter a year ago. Foreign exchange for the first quarter of 2022 negatively impacted revenues by $1.5 million compared to a year ago and negatively impacted revenues by $500,000 as compared to the fourth quarter of 2021. Gross margin in the first quarter was 40.2% compared to 38.7% in the fourth quarter, which benefited from higher inventory and higher selling prices, offset by lower volume, higher material costs and manufacturing inefficiencies related to new higher learning curve. On an adjusted basis, first quarter gross margin was 41% as compared to 40.3% in the fourth quarter of 2021 and exclude $400,000 of acquisition purchase accounting adjustments, $200,000 of facility startup costs for Advanced Sensors and $138,000 of COVID-19 related costs. Our operating margin was 9.5% for the first quarter of 2022. Our first quarter adjusted operating margin was 10.5% and exclude the adjustments I just mentioned. Selling, general, and administrative expenses for the first quarter of 2022 were $26.7 million or 30.4% of revenues as compared to $22.2 million with 31.4% of revenues for the first quarter of 2021. The increase in SG&A of $4.5 million mainly relates to $4 million for the DTS acquisition,…

[Operator Instructions] The first question is from the line of John Franzreb with Sidoti & Company.

I'd like to start with the revenue profile in the quarter. Could you talk a little bit about which end markets were the biggest drivers on a year-over-year basis overall for the quarter?

If we are looking on a year-over-year basis for the quarter, the increase came from -- the largest increase came from precision resistors as test and measurement mainly for semiconductor is a very strong market then followed by micro measurement, which is headed by Advanced Sensors, also consumer electronics and consumer goods. In fact, I have to say that in addition to the DTS acquisitions that we have not accounted for a year ago, we have seen increase in volume in all our reporting segments.

Okay. And as we pivot and look at the June quarter, okay, are there any new markets that you expect to improve? Or do you expect these existing markets will continue to be the drivers in June versus March quarter?

I would say at this point in time, we see a very -- I would say, a solid and strong tailwind in respect to demand since we are also running at record backlog in all our reporting segments. So I would say that we may see some -- we may see some inventory in the industrial weighing part of the 4 sensors. And as you know, we already indicated that in the prior quarters due to the lack of microchips in the market. There was a slowdown, which already started a few quarters ago in respect to the transportation. But all-in-all, I would say, we see a continuation of the good momentum moving forward.

Okay. And how much did DTS contribute to revenue in the quarter and profitability either on a gross or op income line?

DTS revenues for the first quarter was around -- I guess revenues for the quarter were $7.7 million and with the gross margin over 50%.

Okay. And then just shifting to the Advanced Sensor business. I think you mentioned it's running at a $50 million annual run rate. Bill mentioned that CapEx was going to go up sizably this year. But I don't think I heard him say that any of it's being targeted towards the Advanced Sensor line. Are you -- do you have ample capacity in the Advanced Sensor business right now? And also, your last quarter, we had some inefficiency costs of $3 million to what impact was inefficiency on the Advanced Sensor in the quarter.

Yes, John. So as we indicated this quarter, the $900,000 of start-up costs, which we have booked in prior quarter for Advanced Sensors due to the learning curve and moving to the new facility has dropped to $200,000 in Q1 and is expected to drop to a very, I would say, sub-$100,000 in the coming quarter, and then there will be no startup cost. So we see the decline in a quick way in regard to the capital spending. As Bill indicated, 50% goes -- 50% of the expected investment is expected to go for precision resistors and our facility in India in order to support or to optimize the cost structure for weighing solutions in addition to support future designs. Now the other part, which is equipment related, mostly related to the sensor segment. And in the Sensor segment, it's a combination of precision resistors and Advanced Sensors. So there is further investments, equipment investments which we are intending to make this year for expanding further Advanced Sensor capacity.

Got it. Got it. And one last question, I'll get back into queue. Can you just talk a bit about your exposure to China and the impact the shutdowns may or may not be having on you?

Sure. Absolutely. So as we indicated in the past, the strategy was -- I mean -- okay, let me take a step back. Our operational footprint in China is extremely -- is fairly limited. We had in 5 years, 3 facilities. We have shut down 2 facilities consolidated to India, and we are left with one facility, a fairly smaller facility in Tianjin, China, just for 4 sensors. So our operational capacity -- operational footprint is very limited in China. Fortunately, we have not seen due to the very recent lockdown, it did not happen in our vicinity. Therefore, we have not been impacted. But if something would come, we would expect fairly limited exposure.

[Operator Instructions] There are no additional questions waiting at this time. So I will turn the call back over to Steve Cantor for closing remarks.

Before closing the call, I want to note that we will be participating in the B. Riley Conference this month and the Stifel Conference in June. And with that, thank you for joining our call this morning, and have a great day.

That concludes today's call. Thank you for your participation. You may now disconnect your lines.