Good morning, and thank you for attending VPG's Third Quarter Fiscal 2022 Earnings Call. I would now like to pass the conference over to your host, Steve Cantor, Senior Director of Investor Relations with Vishay Precision Group. Thank you. You may proceed.

Thank you, operator. Good morning, everyone. Welcome to VPG's Third Quarter Earnings Conference Call. Our Q3 press release and accompanying slides have been posted on our website. An audio recording of today's call will be available on the internet for a limited time and can also be accessed on our 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. I'll now turn the call to Ziv for some prepared remarks. Please refer to Slide 3 of the quarterly presentation. Steve?

Thank you, Steve. I will begin with some commentary on VPG's consolidated financial results and sales trends for the third quarter. Bill will provide financial details about the quarter and our outlook for the fourth quarter of 2022. We achieved another solid quarter for VPG. We grew our revenue sequentially than from a year ago despite ongoing headwinds from foreign currency. We delivered $0.69 in adjusted EPS and achieved an adjusted EBITDA margin of 17.9%. Orders grew slightly from the second quarter, and we had a positive book-to-bill of 1.08. Our strong backlog positions us well for the fourth quarter. Compared to the first 9 months of 2021, our revenue year-to-date increased 16.9% or 22.7%, excluding the impact of currency. We generated $11.8 million of cash from operations and $5 million of free cash flow, which supports our capital allocation strategy to grow shareholders' value. We repurchased $1.1 million of our common stock during the third quarter, and we expect to continue to execute our share repurchase program in the fourth quarter, $1.1 million. Moving to Slide 4. Looking at the third quarter results in detail. We reported sales of $90.1 million, which was 9.9% higher than a year ago and 1.6% above the second quarter of 2022. Our sales performance was impacted by foreign exchange, which continued to be a significant headwind in the quarter, particularly in our Sensors and Weighing Solutions segment. FX impacted our total revenue by $5.3 million compared to a year ago and by $1.8 million when compared to the second quarter. Thus, excluding FX impact, revenue grew 17.5% from the prior year and 3.7% sequentially. Orders of $96.9 million grew sequentially, and we had a book-to-bill ratio of 1.08. This is our seventh sequential quarter of reporting book-to-bill above 1, which we accomplished in…

Thanks, Ziv. Referring to Slide 9 and the reconciliation tables of the slide deck. In the third quarter of 2022, we achieved revenues of $90.1 million, gross profit of $37.3 million or 41.4% of sales, operating income of $11.9 million or 13.2% of revenues and diluted net earnings per share of $0.74. On an adjusted basis, our gross profit was $37.6 million or 41.7% of sales, operating income was $12.3 million or 13.7% of sales and diluted net earnings per share was $0.69. Our third quarter revenues increased 1.6% compared to $88.6 million in the second quarter of 2022 and were 9.9% above the third quarter a year ago. Foreign exchange for the third quarter negatively impacted revenues by $5.3 million compared to a year ago and negatively impacted revenues by $1.8 million as compared to the second quarter of 2022. Gross margin in the third quarter was 41.4% compared to 42.1% in the second quarter of 2022, which benefited from higher volume and selling price increases, which was more than offset by a higher material cost, unfavorable foreign exchange rates and reduction in inventories. On an adjusted basis, third quarter gross margin was 41.7% as compared to 42.9% in the second quarter of 2022. Our operating margin was 13.2% for the third quarter. Adjusted operating margin in the third quarter was 13.7%, which was the same as in the second quarter of 2022. Selling, general and administrative expenses for the third quarter were $25.3 million or 28.1% of revenues compared to $24.6 million or 30% of revenues for the third quarter of 2021. The increase in SG&A of $700,000 mainly relates to $600,000 for head count and wage increases, $500,000 of fees, $400,000 for travel and $400,000 of other costs, partially offset by $1.2 million of positive foreign exchange…

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

I guess I could start with the really impressive order book that you registered in the quarter. I'm curious, how firm is the order backlog? In other downturns, could customers cancel orders? Or do they take delivery no matter what?

As you know, John, we are servicing many, many niche markets. In some cases, we have non-cancelable, non-returnable policy. At this point, the age backlog breakdown is around I would say -- give or take, it's around 50%, which is expected to be delivered within the next quarter, while the other part is early next year. The backlog itself is a breakdown of short-term orders and longer term projects, which is confirmed by our customers. Given the nature of our business and the products we deliver, we feel that the backlog is very firm. We don't expect cancellations.

What are your thoughts, Ziv, about what's going on in Europe? What are your customers telling you and how are you preparing for maybe potential manufacturing production disruptions this coming winter?

So looking at our global operational footprint, we have a very, very small footprint in Europe. All of our larger operations are based in North America, Asia and Israel. So therefore, the risk of losing manufacturing is very, very small because we have a very small footprint. Most of our technology centers are in Europe, but very little on the operational side. Regarding the customer sentiment, except some stabilization in the general industrial market, we still see good trends from our European customers.

Last quarter, you were having some success in the consumer products market. I wonder if that carried over into the third quarter. And are you still getting new kind of wins, branching out into different markets. What's the outlook there?

The consumer market is mainly around the Sensor segment and around Weighing Solutions. In the Sensors segment, we have seen stabilization in the consumer electronic market as well as the consumer market. And given the indication we have received from customers, we don't expect at this point in time any significant changes from the from the Q3 order run rate, which we see it as a level of stabilization or at the level of a baseline. At this point in time, we don't see any sign of recession for our business.

One last question. Your long-term goals include M&A. Can you just give us an update what you're seeing out there as far as targeted acquisitions? Any M&A the price is lofty or prices coming down? Just your overall thoughts would be great.

Given the market volatility, we definitely see more opportunities. We have been in dialogue, and we are all the time exploring M&A opportunities as part of our capital allocation strategy. I do believe that there are already some signs of lower valuations, if I may say, more reasonable valuations. At this point in time, I have nothing tangible to report, but no doubt that M&A is very high on our capital allocation strategy.

[Operator Instructions]. The next question is from the line of Bill Dezellem with Tieton Capital Management.

How would you characterize the price increases that you have achieved so far compared to your ultimate need to recapture cost increases, please?

Bill, if you can recall, we started the price increase a while ago, given the size of the backlog. We have started that already more than a year ago. We believe that we have seen that those prices has been offsetting the higher pandemic-driven cost. And we are not alone. We are not alone in raising prices in our market. Our approach to pricing is to realize value from our product and technologies without damaging our customer relationship. And this was the policy all along. And I do believe that so far, it was quite a success. It's never easy or it's never trivial, but I think that if you approach it correctly and if you have the right stickiness, relationship with your customers, this is something that we have been able to execute. And as I said, for us, the most important without damaging our customer relationship.

Fourth quarter, are you anticipating additional price increases that will flow through? Or are you largely complete at that point?

As I indicated before, the run rate for price increase for the first 9 months was around $6.3 million for the first 9 months of this year in respect to last year. The momentum will continue, and we are definitely going to achieve our target $6 million to $8 million. We will be on the higher end to the $8 million in Q4, which means we will see an additional price increases flowing into the Q4, which is a continuation of the momentum during the last few quarters.

Moving to point 3, I guess, was really more my focus. Are you anticipating that run rate to increase further? Or does that largely capture what you have done?

Regarding additional price increases or I would say, reassessing our pricing strategy, we are in the midst of looking or reviewing during this budget process also our strategy into 2023, given all the moving parts, the additional post-pandemic costs, the higher logistics, the labor cost increase and we are in the stages of reassessing our price policy. I would say that all-in-all, we should expect to see a positive momentum moving to 2023 regarding price increases, but at this point in time, it will be hard to tell at what magnitude. But I do believe that the positive momentum will continue into next year.

That is helpful. And one additional question, if I may, relative to the TruckWeigh and VanWeigh market. Would you give us an update in terms of the activity level that you were seeing there and how you anticipate that market?

Sure, absolutely. The sales for TruckWeigh and VanWeigh were flattish sequentially, reflecting continued tight supply of vehicles in Europe and weaker economic factors in the U.K. While shortages of some microchips has eased, availability of new vehicles for our customers remain tight, while we are hopeful to see improvement in 2023. At this point in time, given the economic headwinds in Europe, it is difficult to predict the exact timing. But to summarize, we still see an effect regarding the supply of vehicles, which is affecting our ability to sell many more units of TruckWeigh and VanWeigh.

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

Thank you all for joining our call today. We look forward to meeting some of you at the Baird Industrial Conference this week in Chicago and to updating you again at our next earnings conference call. Have a great day. Thanks.

That concludes today's conference call. Thank you for joining, and please enjoy the rest of your day.