VPG (VPG) Q3 2025: Sensor Segment Jumps 19.1% as Humanoid Robotics Orders Accelerate
VPG’s Q3 saw sensor segment revenue surge and humanoid robotics orders reach $3.6 million year-to-date, highlighting a strategic pivot toward emerging automation markets. Cost discipline and operational streamlining supported margin gains, but weighing solutions bookings softened further. With new C-suite hires and business development momentum, VPG is positioning for growth despite near-term defense and macro headwinds.
Summary
- Sensor Demand Strengthens: Precision resistor sales and humanoid robotics orders fueled a sharp rebound in the sensor segment.
- Margin Expansion Efforts: Cost reductions and price adjustments offset FX and mix headwinds, supporting record weighing solution margins.
- Strategic Talent and Pipeline Shift: New leadership roles and broad-based business development aim to accelerate growth into 2026 and beyond.
Performance Analysis
VPG delivered consolidated revenue growth of 6.1% sequentially and 5.3% year-over-year, driven by a pronounced rebound in the sensor segment and steady measurement systems sales. The sensor business, which includes precision resistors and strain gages, saw revenue jump 19.1% sequentially, propelled by demand in semiconductor test and advanced manufacturing systems (AMS) applications. This segment’s bookings rose 13.5% to a 12-quarter high, with a book-to-bill ratio of 1.07, reflecting both distributor restocking and early traction in humanoid robotics.
The weighing solutions segment, historically a stable cash generator for VPG, experienced a 6.4% sequential sales decline and a 10% drop in orders, with a book-to-bill of 0.89. Management attributed this to continued softness in transportation, construction, and ag equipment, partially offset by resilient general weighing demand. Measurement systems revenue climbed 7.3% sequentially, but bookings softened due to delays in defense projects linked to the U.S. government shutdown. Adjusted gross margin landed at 40.5%, as record weighing solution margins (40.3%) and tariff-related price actions counterbalanced unfavorable FX and product mix shifts.
- Sensor Segment Outperformance: Precision resistor demand and humanoid robotics orders drove the largest sequential revenue increase across segments.
- Weighing Solutions Under Pressure: OEM and industrial customers delayed orders, but cost actions kept margins at record highs.
- Measurement Systems Volatility: Steel market sales offset defense project delays, but order softness will persist into Q4.
Cash generation remained robust, with adjusted EBITDA of $9.2 million and free cash flow of $7.4 million, aided by cost discipline and the sale of a facility. VPG exited the quarter with $65.8 million net cash, providing ample flexibility for M&A and investment in growth initiatives.
Executive Commentary
"We are making organizational changes that align our reporting segment to accelerate top-line growth and strengthen our operational excellence. We are continuing to make progress with our business development initiatives, including supporting our humanoid customers."
Ziv Shoshani, CEO and President
"We continue to improve our operating margin, which reflect our cost reduction and efficiency programs. And we remain excited about the potential of our business development initiatives, particularly in humanoid robotics."
Bill Clancy, CFO
Strategic Positioning
1. Sensor Segment Reinvigoration
Sensor segment momentum is a clear highlight, with both volume and bookings growth fueled by semiconductor test and AMS applications. The segment’s book-to-bill above 1.0 for the fourth straight quarter signals sustained demand, while humanoid robotics orders ($3.6 million YTD) hint at a longer-term growth vector as automation and robotics markets mature.
2. Humanoid Robotics Pipeline
Humanoid robotics is emerging as a material business development pillar. VPG has secured prototype and production orders from two leading developers, with ongoing engineering discussions for higher-volume applications in 2026. Management sees strong fit for its high-performance sensors in this nascent market, positioning VPG as a value-added partner for next-generation automation.
3. Cost Optimization and Operational Excellence
Cost reduction remains central, with $4 million of the targeted $5 million in annualized savings already realized. Manufacturing streamlining—including a shift to India—has enabled record weighing solution margins even as volume softened. Further, the sale of a building provided capital for debt reduction, supporting a net cash position and future flexibility.
4. Organizational Realignment and Leadership Expansion
VPG is investing in leadership depth, appointing a Chief Business and Product Officer and a Chief Operating Officer to drive sales, product strategy, and operational efficiency. These hires aim to accelerate innovation, strengthen business development, and support scalable M&A, freeing the CEO to focus on culture and strategic direction.
5. Diversified Business Development Initiatives
Business development orders reached $26 million YTD, spanning humanoid robotics, ceramics, semiconductor back-end, and fiber optics. This broad pipeline reduces reliance on any single end market and underpins VPG’s goal of $30 million in new business for 2025.
Key Considerations
VPG’s Q3 reflects a business at an inflection point, balancing legacy market softness with emerging growth levers and organizational change.
Key Considerations:
- Sensor Segment as Growth Engine: Precision resistor and strain gage demand, plus robotics pipeline, are offsetting cyclical weighing solutions headwinds.
- Humanoid Robotics Orders as Early Signal: $3.6 million in YTD bookings provide tangible evidence of traction in a high-potential new market.
- Cost Actions Cushion Margin Volatility: Tariff pass-throughs and operational streamlining are sustaining margins despite FX and product mix drag.
- Leadership Restructuring for Scalability: New C-suite talent is aimed at driving execution and innovation as VPG pursues both organic and inorganic growth.
- Defense and Macro Headwinds Remain: Measurement systems bookings will be pressured by ongoing U.S. government shutdown impacts and slow OEM demand in weighing solutions.
Risks
VPG faces notable risks from end-market cyclicality, particularly in weighing solutions where OEM and construction demand remains weak. Measurement systems bookings are at risk due to U.S. government shutdown delays, with management flagging potential revenue impact in the hundreds of thousands of dollars. FX volatility and product mix shifts could further pressure margins, while the pace and scale of humanoid robotics adoption remain uncertain.
Forward Outlook
For Q4 2025, VPG guided to:
- Net revenues of $75 million to $81 million at constant Q3 exchange rates
For full-year 2025, management maintained:
- Operational tax rate forecast of approximately 28 percent
- CapEx plan of $10 million
Management highlighted several factors that will shape Q4:
- Continued momentum in sensor segment bookings, with distributor inventory replenishment
- Ongoing softness in weighing solutions and defense-related measurement systems
Takeaways
VPG’s Q3 underscores a pivot from legacy weighing solutions toward higher-growth sensor applications, particularly in automation and robotics. Margin discipline and cash generation provide a solid foundation for investment in new markets and leadership, but the company remains exposed to cyclical and policy-driven end-markets.
- Sensor and Robotics Opportunity: Early humanoid robotics wins and strong sensor bookings position VPG for above-market growth if adoption ramps as expected in 2026.
- Margin and Cash Strength: Cost actions and price adjustments are effectively cushioning volume and mix volatility, supporting financial flexibility.
- Execution Watchpoint: Investors should monitor the pace of robotics ramp, defense project recovery, and the impact of new leadership on growth and operational metrics.
Conclusion
VPG’s Q3 marks a strategic transition, with sensors and robotics business development offsetting legacy market softness. Execution on cost and organizational initiatives will be crucial as VPG seeks to capitalize on emerging automation trends while navigating macro and end-market headwinds.
Industry Read-Through
VPG’s results highlight a broader industrial pivot toward automation, with sensor and robotics content becoming a more material revenue driver across the sector. Humanoid robotics orders, though early, signal that industrial tech suppliers with differentiated sensing solutions may see outsized growth as automation adoption accelerates. End-market cyclicality and defense project delays remain a risk for peers with exposure to construction, ag, and government verticals, while cost discipline and operational realignment are table stakes for margin expansion in a mixed demand environment.