Wendy Wilson - Senior Director Investor Relations and Corporate Communications Ziv Shoshani - President, CEO Bill Clancy - EVP, CFO.

John Franzreb - Sidoti & Company Sarkis Sherbetchyan - B. Riley & Company Saidal Mohmand - Grizzly Rock Capital Wess Cummins - Nokomis Capital.

Good morning, everyone and welcome to the VPG Fiscal Third Quarter Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please also note that today's event is being recorded.

At this time, I would like to turn the conference call over to Wendy Wilson. Ma'am, please go ahead..

Thank you, Jamie. Good morning, everyone. Welcome to VPG's 2015 fiscal third quarter earnings conference call. An audio recording will be made of the conference call today, including any questions or comments that you may contribute.

By now you all should have received the earnings press release and we hope you have taken the time to read through it, as it does contain important information. You can find it including relevant non-GAAP reconciliations on our Web site at www.vpgsensors.com.

An audio recording will be available on the Internet for a limited time and can be accessed on the Web site. The content of this conference call is owned by VPG and is protected by U.S. and International Copyright Law.

You may not make any recordings or other copies of this call and you may not reproduce, distribute, adapt, transmit, display or perform the contents of this conference call in whole or in part without our permission. Moving on to Slide 2, today's remarks are governed by the Safe Harbor provisions of the 1995 Private Securities Litigation Reform Act.

Actual results may turn out significantly better or worse than indicated by any forward-looking statements that we may make today. For a more complete discussion of the risks associated with VPG's operations, please refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2014.

And now, it's my pleasure to introduce the host for today's call, Ziv Shoshani, CEO and President; and Bill Clancy, CFO.

Bill?.

Thanks, Wendy. Good morning, everyone, and thank you for joining us on our call today. I'd like to start by reviewing a few highlights, and then summarizing the financials on Slide 3. Following that, Ziv will provide his view of results and the global business environment.

Third quarter revenues came in at $57.1 million, a $6.3 million or a 9.9% decrease from $63.4 million for the prior year period. The overall negative impact of foreign exchange rates to revenues in the quarter was $4.5 million compared to the third quarter of 2014.

Comparing sequential results, net revenues for the third quarter of 2015 decreased by $2.4 million or 4% from the $59.5 million in the second quarter of 2015. This decrease includes the result of the normal seasonality in our business. Adjusted diluted earnings per share were $0.18 versus $0.24 in the third quarter of fiscal 2014.

The overall negative impact of foreign exchange rates to net income for the quarter as compared to the third quarter of 2014 was $700,000 or $0.05 per diluted share. Revenues for the nine months are $173.3 million, a $16.5 million or 8.7% decrease from $189.8 million for the prior year period.

The overall negative impact of foreign exchange rates to revenues in the nine months are $14 million compared to the first nine months of 2014.

Adjusted net earnings for the nine months of 2015 were $5 million or $0.36 per diluted share versus adjusted net earnings attributable to VPG's stockholders of $8.4 million or $0.60 per diluted share for the nine months of 2014.

Foreign exchange rates for the nine months of 2015 as compared to the prior year period had a negative impact to negative income of $1.2 million or $0.08 per diluted share. During the third quarter, we repurchased 185,000 of VPG's shares at cost of $2.6 million and for the year, we have repurchased 618,000 shares at cost of $8.7 million.

Assuming those similar exchange rate impact to our revenues, we are setting our fourth quarter guidance range at $56 million to $61 million for reason Ziv will discuss further.

As we move on to Slide 4, the year-over-year decrease in gross margins for Q3 2015 is attributable to the negative effect of exchange rates of $1.9 million, lower volume of $1.1 million offset by $900,000 of cost reduction programs.

Selling, general and administrative expenses for the quarter were $17.8 million were 31.2% of revenues compared to $19.6 million with 30.9% for last year's third quarter. This decrease is primarily due to the positive impact of foreign exchange rates of $1.4 million and $400,000 of lower headcount.

Looking at operating margin on adjusted basis, without restructuring costs and the impairment of goodwill, you can see that 6.5% an increase from 6.4% in the third quarter last year.

Included in other income and expense in our press release this morning was $400,000 of foreign exchange losses primarily to Canadian dollar during the third quarter of 2015 compared to $100,000 of foreign exchange losses in the third quarter of 2014.

The operational tax rate was 24% in the third quarter of 2015, for the year, we expected to be in a range of 20% to 22%.

As a result of our regular review of goodwill and indefinite-lived intangible assets during the quarter, we recorded a $4.9 million pretax non-cash impairment charge to reduce the carrying value of the goodwill and indefinite-lived intangible assets related to our steel business.

This charge is preliminary and it could change in connection with our annual review. The GAAP loss for the third quarter of 2015 was $2 million or $0.15 per diluted share compared to net earnings attributable to VPG stockholders for the second quarter of 2014 of $3.2 million or $0.23 per share.

Adjusted net earnings for the third quarter of 2015 were $2.4 million or $0.18 per diluted share versus adjusted net earnings attributable to stockholders of $3.3 million or $0.24 per diluted share for the comparable prior year period.

Cash generation from operations was $5.4 million for the third quarter of 2015 compared to cash generator from operations of $7.6 million for the third quarter of 2014.

We referred to the amount of cash generated from operations of $5.4 million for the third quarter of 2015 in excess of our capital expenditure needs $2.5 million for the third quarter of 2015 and proceeds from the sale of equipment as free cash.

Total free cash flow for the third quarter of 2015 was $2.9 million compared to $5.5 million at third quarter of 2014. Capital expenditures were $2.5 million in the third quarter compared to $2.2 million in the third quarter last year.

Depreciation and amortization for the third quarter 2015 was $2.7 million compared to $2.9 million in the third quarter last year. We spent $8.7 million for our share repurchase program year-to-date.

Moving on to Slide 6, we remained focused on our strategy of growing the top-line through organic growth and pursuing additional acquisitions as well as improving profitability by increasing efficiencies and reducing cost. With that, let me pass for other comments on to Ziv..

Thank you, Bill. An important part of our strategy is to grow by developing new product offering and our advance sensor continues to gain traction. This platform which is part of our FTP segment in which we developed few years ago is reporting revenue increase of 47.3% in Q3 of 2015 versus Q3 of 2014.

I'm very pleased with the continued acceptance of this new sensor platform as it offers enhanced performance to customers in conjunction with the competitive cost base. Global conditions have created a challenging environment for the U.S.

economy that challenge is increasing as China's economic problems have become more evident during the last few months. The raising dollar is not only making U.S. companies less competitive, it is cutting earnings valued in dollars and therefore, reducing margins for U.S. multinationals.

China's slowing is exposing global excess capacity in many industries. In addition, we face lower commodity prices on world markets. The eurozone continues to make steady progress but the growth rate is to a four month low during the last month. The world steel forecast that steel demand will decrease by 1.7% in 2015 following a growth of 0.7% in 2014.

In 2016, it is forecasted that the world's steel demand will show growth of 0.7% versus 2015. China's steel demand is expected to decrease by 3.5% and 2.0% in 2016 following its demand peak in 2013. While the U.S. economic fundamentals continue to remain solid, steel demand in the U.S.

is expected to show negative growth of 3% in 2015 due to currency appreciation and the slowing energy sector, while in 2016, the forecast is for the growth of 1.3%. In the EU, there is a broadening of the recovery momentum aided by low oil prices, low interest rates and a weak euro.

All in all, in 2015, steel demand in developed economies is expected to contract by minus 2.1% but the positive growth of $1.8% is expected in 2016 driven by the U.S., Germany, Japan and South Korean steel makers.

We continue to expect slow global recovery -- we continue -- to show slow global recovery to continue, as a result, we will continue to pursue selected acquisitions to improve growth and profitability during this period and focus on increasing efficiencies and cutting costs.

Moving to Slide 7, moving on to operational trends, let's start by comparing consolidated year-over-year and sequential results. The company's overall book to bill was 0.97 in the third quarter of 2015 compared to 0.95 last year and 0.91 in the second quarter of 2015.

Total orders for the third quarter of 2015 were $55.7 million down $4.3 million or 7.1% from $59.9 million last year and up $1.3 million or 2.5% from $54.3 million in the second quarter of 2015.

Moving to Slide 8, some details on our reporting segment, the FTP segment had the book to bill ratio of 0.9 for the third quarter of 2015 compared to 0.94 for the third quarter of 2014 and 0.90 for the second quarter of 2015.

Sequentially orders increased by $0.9 million or 3.8% from the second quarter of 2015, reflecting an increasing Asia mainly for foil resistors in the semiconductor automatic testing equipments end markets partially offset by decrease in the Americas and Europe.

The FTP gross margin was 42.0% for Q3 up from 40.8% in Q3 last year and up from 39.6% in the second quarter of 2015.

The FTP gross margin increased from a comparable prior year period was due primarily to $0.7 million of manufacturing efficiencies, the sequential gross profit margin increases was due primarily to higher volume of $0.4 million and $0.6 million of manufacturing efficiencies.

The FTP segment backlog was 2.6 months compared to 2.9 months last year and 3.0 months in prior quarter. Looking at the Force Sensor segment, the book to bill ratio was 1.03 for Q3 compared to 1.02 in the third quarter last year and 0.98 for the second quarter of 2015. Sequential orders decreased by $0.3 million or 2.1%.

This decrease came from Asia predominantly in China in the precision weighing end markets and was partially offset by the Americas. The gross margin for the segment was 21.0% in the third quarter of 2015 versus 22.8% in the third quarter of 2014 and 19.0% in the second quarter of 2015.

The gross margin for the quarter decreased from the comparable prior year period primarily due to $1 million of lower volume driven by our OEM businesses in Europe and in the United States and 600,000 negative effect of foreign exchange rates partially offset by $0.5 million of cost reduction.

Despite the lower revenues the sequential gross profit margin increased due to production move savings and lower fixed cost. The Force Sensor segment backlog was 2.4 months compared to 2.2 months in prior year and 2.2 months in the second quarter.

For Weighing and Control System -- for the Weighing and Control Systems segment the book to bill ratio was 1.05 for Q3 compared to 0.89 in the third quarter last year and 0.88 for the second quarter. Sequentially orders increased by $0.8 million or 4.9% primarily from European steel mill manufacturers but also in the Americas.

The gross margin for the segment was 45.4% in the third quarter of 2015 versus 45.9% in the third quarter of 2014 and 43.6% in the second quarter of 2015. The year-over-year decrease in gross margin is primarily due to $0.6 million of negative exchange rate and $0.8 million of lower volume in Asia for steel and process weighing businesses.

Despite the decreasing revenues sequentially, the increase in gross margin was due mainly to favorable product mix in our process weighing business. Segment backlog was 3.3 months compared to 3.4 months in last year's third quarter and 2.9 months in the second quarter.

Moving to Slide 9, acquisitions are still a focus for the company's growth strategy and as I mentioned, we are actively looking for opportunities. From an organic performance perspective, we will continue to focus on new product development to improve our top line and continue our initiatives to lower our cost base and improve efficiencies.

With that, let's open the line for questions. Thank you..

Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] Our first question today comes from John Franzreb from Sidoti & Company. Please go ahead with your question..

Good morning, guys..

Good morning..

Good morning, John..

Actually just want to start on the cost side of the equation though you referenced in your prepared remarks, your SG&A has gone down, part of it is FX, part of it is cost savings, but it's being noticeably down for three straight quarters. I wonder if you could address, how much of that you think is sustainable in the current exchange environment.

And also, how much cost savings yet to be realized on both the gross margin and the SG&A line..

Well, I think from an SG&A perspective, I think it's definitely sustainable John given the constant exchange rate, remember right now, we are showing a positive year-over-year at $1.4 million just on exchange rates. The other important thing was -- there was a reduction of $400,000 related to headcounts.

As far as from the gross margin side, I would defer that and let Ziv explain the cost savings coming through on that line..

Okay..

Thank you, Bill.

John, in regards to the gross margin level, I think that we have mentioned in prior calls that we have multiple initiatives in all the reporting segments to realize the better cost if we speak about, further consolidation into India in regards to force sensors or getting better tailwinds in regards to the introduction of the advance sensors.

We should expect with those cost savings -- would continue to be realized in the following quarters and there might be even to an extent be an acceleration of that -- of those programs. So the costs savings that has been realized so far are sustainable..

Okay, perfect. And Ziv, I will change my question -- my second question, I wanted to ask you about your comments, your prepared remarks, you spent a lot of time talking about the steel market.

Could you well a) refresh our memory how much of your revenue is tied to steel and b) why the elaboration about the steel market, is that your biggest concern, can you just talk about that?.

Okay. Well, I think the -- always the steel market was part of our end markets but it became more evident post acquisition of KELK..

Right..

The steel -- and if you can recall at that time, we were -- the revenues at that time of course were much higher close to the $30 million -- $30 million, $32 million range that VPG has a much bigger stake in steel.

I think that unfortunately as we have reported along the years, we had a very good year, post acquisition and afterwards there was a very steep slowdown from a market cycle.

So therefore, we continued to report the steel progress due to the fact that again there is around at this point in time at least a $20 million -- around $20 million in the steel also has to be mentioned that the steel business we have reported is highly profitable for us, gross margin is over 50%, therefore, the impact is very dramatic on the pretax level.

In addition to that, I think that this is why we saw the necessity to report that from every earnings call. And I think that what I just said today that it looks based on the macro economical indicators is that Asia will continue to contract going forward, but there are signs for recovering the developing countries.

So I think that hopefully we may see the end of the steel recession and we may see some upside starting in 2016 driven by the developing countries predominantly U.S., Japan and Western Europe..

Okay. All right. Thank you for taking my question. I'll get back to queue..

Our next question comes from Sarkis Sherbetchyan from B. Riley & Company. Please go ahead with your question..

Yes. Thanks for taking my questions.

So first, with respect to optimizing manufacturing cost, you did mention some facility consolidation, can you may be give us some more puts and takes with respect to that and perhaps quantify when we should start seeing the benefit flow through to the P&L?.

The consolidation of the manufacturing mainly regards to the second -- to the second reporting segments. Force sensors we have been discussing that since we have established our main manufacturing plant in India.

It has been indicated along the last few years that it takes time to consolidate due to the fact that we need to get the proper customer approval that we need to get the proper international approvals in order to move the production to India we have been doing that in the last 18 months.

I think that we had been realizing savings in the last 18 months, but to a lower extent as this process is being accelerated, we should realize more and more savings due to the consolidation to our India facility.

And I think that part of the margin improve -- part of the -- I would say a big portion of the gross margin improvement in regard to force sensors achieving a 21% at the very, very low revenues level of $14.6 million, if you look at the same reporting segment, the last time we have achieved the 21% was at a much higher sales level.

So I think that we were able to achieve that due to the consolidation. We should expect to see an acceleration of those cost savings moving forward predominantly starting in 2016 onwards. And this should be in the -- if I may say in the 100s of 1000s of dollars per annum..

Very good.

And with respect to the different segments of the businesses, given that you have given us the Q4 kind of revenue guidance, can you may be touch upon the puts and takes for each segment as to where you're seeing strength and/or when -- where you're seeing weaknesses?.

Yes, yes of course. One important factor to mention is that historically and this applies also for this quarter since we have close to 40% of our revenues being sold to Europe historically, we do have the seasonality effect. Therefore, some of the reporting segments we always realize lower sales in the third quarter due to the European vacation time.

Let me start with the first segment, the first segment FTP, we had very good sales in the third quarter. The resistor side was very strong, mainly due to the semiconductor testing equipment back end and front end and we do expect it to continue also into Q4.

Regarding strain gages, I think that we have made big, big progress in regards to getting capacity onboard shortening lead time and the fact that we had fairly strong quarter in Q3 in regards to revenues implies the fact that we were able to now reducibly time provide product to customers.

We may expect to have, I would say a slower Q4 due to the fact that most of our key customers mainly in the end user market -- at end users which are project driven have enough inventory on their hands.

Regarding force sensors; force sensors, the biggest effect from a macro economical condition, we have it on both the precision weighing which is more of a semi-commodity driven in the United States and Europe and the OEM business which is affected by the precision agriculture -- which is affected by the low commodity prices, which is affecting our precision agriculture customers and I would say to an extent also some of our construction -- equipment construction customers.

To some extent we have seasonality effect in Q3, I would not expect that the macro economical condition to change very much, but I would expect that the revenues would be -- would rebound in the following quarter due to seasonality.

Our last reporting segment WCS has been -- as at least on the onboarding weighing and the process weighing side 2/3rds of the revenues are being recognized in Europe, therefore, seasonality effect was much more significant and we should expect some rebound in revenues in Q4..

Very good. I will hop back into the queue..

Our next question comes from Saidal Mohmand from Grizzly Rock Capital. Please go ahead with your question..

Yes. Thanks.

I was wondering, if you could quantify the restatement cost compared for the last quarter and if those are included in the add backs?.

When you -- the restatement cost, I mean all that was taken care of when we filed in the second quarter 10-Q..

Okay..

I mean, there are no further restatement costs coming through in the third quarter..

Okay. Got it. Great.

And then, I guess given the write down of KELK and some of the very high multiple -- some of the targets that you maybe looking at, in some cases, three x the multiples to say, I mean, should we assume that you are first and foremost priority will be on -- will be driven by optimizing the current business and perhaps repurchasing shares under your 2 million share against your authorization?.

I mean if there -- yes, Ziv..

Please Bill, go ahead please..

I was going to say, our goal was obviously to optimize the top line to organic growth, obviously and acquisition is a major and a significant role, where we are trying to allocate our capital allocation for -- primarily for acquisitions, developing organic growth. Ziv, I will let you add on to that..

Yes. Bill, this is correct. I mean we have invested the first initial years in order to change the business model in regards to some of the reporting segments to put it in the right -- on the right course in regards to a better cost reduction.

You know from a strategic standpoint and also to develop major new product as advance sensors and truck van weighs which could take the company's -- which will open -- for the company new opportunities for higher and bigger revenues with new applications and new customers. Of course, very recently M&A became more important on the priority list.

We do understand that our valuation -- we are -- it's fairly low, the way we look at M&A, we have few criteria's that we have communicated to the investment communities which for example, we are looking at the minimum for any company that we will look at the criteria would be a minimum of 15% internal rate of return, we are looking at the -- also a very competitive return on investment.

And we all understand that if we are going to meet this criteria, I would assume that this would improve the company's performance and at the end of the day, will effect also the company's -- I hope multiple.

But if we -- but if we were able to achieve the goal of the internal rate of return and the return on investments, I think we are going to enhance the company's performance and enhance shareholders value by doing that..

Okay. Thanks..

And our next question is a follow up from John Franzreb from Sidoti & Company..

Hey, guys.

I may have missed this but in force sensors volume was down 2.2 million year-over-year what's going on there, why was that the case?.

On force sensors, if we look year-over-year, on force sensors year-over-year that the reduction -- the net reduction is $300,000 right John? I can -- looking at the information, I have the volume has increased by $1.5 million while the exchange -- while the negative exchange rate was $1.8 million.

So in fact the volume has increased dramatically while the negative exchange rate was bigger than that so while you do see the net effect of 300 negative this is driven by 1.8 negative of exchange rate..

May be I'm misreading it, because I thought in the press release it was the volume was down 2.2 and 0.7 in exchange, may be I'm --.

He is comparing it to the third quarter of 2014 so..

Right..

John, you're -- I mean there is a reduction of volume of 2.2 and exchange rates of $700,000..

Okay.

So the year-over-year was down 2.2?.

For the volume..

Yes, so why was -- okay, so the question stands then, why was such a big drop in volume year-over-year?.

I mean -- the reduction in volume year-over-year is primarily coming from European precision weighing..

Okay..

Primarily, yes, if we look at it year-over-year primarily $1.8 million was coming from Europe..

I'm sorry, John. My mistake I was looking at FTP you were looking at a complete company..

He is looking at force sensors..

No, I'm looking at force sensor Ziv..

Okay, okay, okay, sorry, sorry. Okay. My mistake, I was looking at FTP okay. For o the force sensors I will tell you, there is a reduction of $2.2 million 50% of this reduction is coming from one single customer. If you may recall, I did discuss in prior earnings call regarding the small tilt application.

This is a new designing, well this is a fairly new designing that happened two years ago.

Last year, we have realized $2.5 million of revenue, it goes into small tilts, which measure the weight of steels and coins in order to reduce replenishment of coin at super market and retailers, and in fact there is an immediate, the cost savings is fairly quick three, four months from the retail standpoint.

The fact is that so far we have been selling, we have been selling that to -- this is a British OEM that has been selling that to the British retails and this year it was expected to move into the German retail and also to the U.S. market. We are a sole source. Last year we have realized $2.5 million of revenue.

He assured us that we -- that he is going to have much higher revenues this year, somehow his plans has not materialized in this year, we have realized zero sales. So 50% of their debt reduction and I have to again explain we are a sole source. We have 12 to 16 launches depends on the complexity in each small tilt, we have a sole source.

But he -- again he didn't lose his customer base, but there was a major, major slowdown in the introduction of small tilts in Germany further in the U.K. and in the U.S., therefore, we did not ship any product.

This accounts for 50% of the drop in force sensors, the other 50% comes as I stated before due to the lower commodity prices and I think it has been announced by John Deere and others major, major restructuring and as we have been focusing at the precision agriculture, for example is one of our major OEM.

In addition to construction and medical, we have seen dramatic slow down in demand for those end markets and most of those customers or most of the type of customers already announced to the public since we are publicly held companies major, major restructuring.

So just to summarize that again 50% is this one application, which we know we should expect to see sales next year and they even have much, much at least their plan is to have a huge demand going forward and the other 50% this is OEM predominantly precision equipment manufacturers in the agriculture market..

Okay. It's prefect.

And switching to the weighing and control Segment, despite lower revenues, the gross margin really was quite nice and in the press release, you mentioned favorable product mix, could you talk a little bit about the favorable product mix and what that was and the impact?.

Yes, absolutely. In the process weighing market which is represented by the BLH, this is the U.S. brand and by Nobel, which is the Swedish brand, we have different types of projects.

We have -- I would say the projects which are more -- which are fairly simpler, I mean which we take sub-assemblies of all the equipment that we produce if it goes our junction, the electronics the hydraulics and we tailor that to our application. Those are I would say simpler projects, which calls for lower margins.

While there are a different type of projects which are completely customized projects which we have to develop specific software, I would say we have to design and integrate specific hardware and all the sub-assemblies, those are much more complicated projects mainly for the petrochemical and pharmaceutical markets, which to an extent each project is a contract by itself, the fact that those are higher revenues and due to the fact that there is much more engineering work those are higher margin products.

So when we speak about favorable mix, we are looking at much more of those sophisticated project in regards to the fairly simpler projects at lower margin..

Got it.

And one last question Ziv, I don't think I heard you mention in your commentary and if you did I apologize about your distribution channels, could you talk a little bit about inventory levels equilibrium what are you hearing from your distributor customers?.

Yes. In regards to distribution and I did touch based on that fairly -- I did touch based on that in regards to measurement scoop and strain gages.

We have been advised by our main distributors in the FTP mainly for strain gages and to an extent for force sensors for launches in the United States and Europe that their inventory level is fairly high and they would not -- their expectation to continue to place orders on us is really depending how fast they are going to deplete their existing inventories.

So there is also a slow down from a distribution standpoint..

Got it, okay. Understood. Okay, I'll get back in the queue guys..

Thank you, John..

Our next question comes from Wess Cummins from Nokomis Capital. Please go ahead with your question..

Hey, thanks.

And Bill or Ziv, if you guys could just walk us through kind of where you are on advance sensors both from a revenue and then also the impact on the bottom line or EBITDA for this year and kind of what we should expect for next year and the following year just the way you see that flowing through? And then also along those lines your CapEx spend, should we expect it to stay at this level or are you getting close to the end of that increased CapEx spend that you needed to put this line in place?.

Okay, okay. Great. So Wess, in regards to advanced sensors as we said and we do indicate and advice on the progress on a quarterly basis. The revenues and the acceptance is very good and the revenues are increasing very, very nicely.

This year we are going to, I would say realize and we never provided the exact number but this would be I would say around, I would say between $5 million to $10 million of revenue, which is more than double of last year's revenue.

Next year the expectation is to increase by another I would say 50% -- 50% the capacity that we currently have in place that has, that we have allocated capital investment this year would allow us to still double the revenues with very little capital spending.

Within the existing infrastructure, we could quadruple the volume if needed and I think that over a time, and I think hopefully I think about the near future, I believe I speak about the near future, not the far future, we would be able to fill that capacity with further -- with very little investment and I speak about $3.5 million to $4 million per annum.

So the upside of the advance sensors is huge.

We never provided EBITDA numbers in regard to the advance sensors as a standalone product line but the fact is that advance sensors at this point in time, the revenues are powerfully new businesses for new applications in conjunction with transition of existing business from the legacy technology into the advance sensor technology.

So by doing that, we have a better cost base with enhanced performance for our customers with a new design in conjunction with new revenues, new applications and to an extent new customers.

So this is a big, big upside, so all the infrastructure that has been invested in advance sensors could more than quadruple, I would say this year volume and still stay with existing infrastructure with fairly small capital investments, again, $3 million to $4 million per annum.

Going regarding the capital investments for the company, we are still looking at a level of $10 million to $11 million and based on the progress and the volume expansion that we may see at advance sensors and maybe that other product lines, I would say that we should expect to see similar level of capital investments for 2016, also at the level of $10 million to $11 million..

I understand. Ziv just or maybe Bill, you can answer, did you -- maybe I missed at the -- kind of the EBITDA drag of advance sensors this year and when we should see that kind of breakeven and start to contribute. I'm just trying to see that flop -- when that flips over..

Based on our earlier discussions, advance sensors due to the fact that there is an infrastructure and a complete overhead to support a much bigger business and to assure the quality of the existing high volume because we are still focused. We currently produce millions of parts. We will not achieve the breakeven point this year.

So next year and I think I did mention that the breakeven point should be around $8 million to $9 million. Once we achieve the breakeven point, I would say that the contribution margin of advance sensors -- of each additional dollar of revenue in advance sensors going to the pre-tax level is more than 50%..

Okay. All right. Thank you..

Thank you..

Ladies and gentlemen, at this time, we've reached the end of our question-and-answer session. I would like to turn the conference call back over to Ms. Wilson for any closing remarks..

Thank you, Jamie. And thank you everyone for dialing in today. Thanks for your great questions. And we hope to be seeing you and talking to you during the upcoming quarter. And have a great day today. Thanks a lot..

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending. You may now disconnect your telephone lines..