Good morning. And thank you for attending today's VPG First Quarter 2023 Earnings Conference Call. My name is Danielle, and I will be the moderator for today's call. All liens will be muted during the presentation portion of the call, with an opportunity for questions-and-answers at the end.

[Operator Instructions] It is now my pleasure to hand the conference over to our host, Steve Cantor, Senior Director of Investor Relations. Steve, the floor is yours..

Thank you, Danielle, and good morning, everyone. Welcome to VPG's first quarter 2023 earnings conference call. Our Q1 press release and slides have been posted on our website at vpgsensors.com. An audio recording of today's call will be available on the internet for a limited time and can also be accessed through our website.

Next slide, Safe Harbor Statement. 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.

And for a discussion of the risks associated with VPG's operations, we encourage you to read our SEC filings, including the Form 10-K for the year ended December 31, 2022, and our other recent SEC filings. On the call today are Ziv Shoshani, CEO and President; and Bill Clancy, CFO. And now I will 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 about the quarter and the outlook for the second quarter of 2023. Moving to Slide 3. We achieved another solid quarter for VPG. We recorded revenue in line with our expectations.

We increased our gross margin sequentially and year-over-year. Order trends improved to the first quarter as orders grew 13% from the fourth quarter. We generated $8.4 million of cash from operations and $4.9 million of free cash flow, which supports our capital allocation strategy to grow shareholders' value. Moving to Slide 4.

Looking at the first quarter results in detail, we reported sales of $88.9 million, which was 1.4% higher than 1 year ago and 7.7% lower sequentially. Changes in foreign currency rates impacted our revenues. FX reduced our total Q1 revenues by $2.4 million compared to a year ago, but had a favorable $1.7 million impact compared to the fourth quarter.

Orders of $83.1 million grew 13.1% sequentially and strengthened through this -- through the quarter. Orders rose in all three reporting segments, growing 8.2%, 6.2% and 30% for the sensors, weighing solutions and measurement systems respectively.

The sequential growth was seen in the majority of end markets, indicating an improved business environment due to the timing of project-driven orders and the depletion of inventories by customers. This contributed to a book-to-bill ratio of 0.94. As I indicated, we improved our adjusted gross margin.

In particular, adjusted gross margin for our sensors segment was 41.2%, up from 37.6% in the fourth quarter, which had been impacted by temporary manufacturing inefficiencies. In terms of our supply chain, over the past two years, we have done a good job, navigating through the global challenges and shortages.

While our supply chain is improved from a year ago, it is still not fully back to pre-pandemic levels as we are still experiencing isolated shortages of components, particularly in our measurement systems segment.

For example, shortages of key microchip component led us to redesign a DTS product in the first quarter to improve our supply chain availability, while we estimate these shortages will delay approximately $1.5 million of revenue per quarter. For the next two quarters, we expect to ship the majority of the delayed shipment by Q4 of this year.

In addition, we continue to experience higher costs for some materials. In the first quarter, we were impacted by $700,000 of higher cost compared to the fourth quarter, mainly in our Weighing Solutions and Measurement Systems segments, which we offset with higher selling prices and our ongoing cost reduction programs.

All-in-all, in the first quarter we generated an adjusted EBITDA margin of 15.9% and adjusted diluted net earnings per share of $0.52. I'll now review our business segment performance in the first quarter. Moving to Slide 5.

Beginning with our Sensors segment, first quarter revenue of $36.7 million declined 2.7% from a year ago and was 1.1% higher sequentially. The growth from Q4 of 2022 primarily reflected higher sales of precision resistors in the avionic, military and space market.

The sequential growth for precision resistors offset lower sales of advanced sensors in the consumer market as our customers continue to work down the inventory levels. While book-to-bill for sensors was 0.82, orders of $29.9 million grew 8.2% sequentially as we grew orders for precision resistors in the test and measurement by 22% and in AMS by 95%.

As we have discussed before, the timing of large orders can fluctuate from quarter-to-quarter based on customer schedules. Orders for advanced sensors were soft in the consumer market in Q1, but we expect demand to improve gradually in the second quarter.

As part of our strategic initiatives to secure design wins in new emerging applications for our precision resistors, we are seeing growing customer interest in our solutions in data center fiber optics and EV battery management.

In both of these new applications, we believe our precision resistors add value in terms of consistency, reliability and performance for our customers' equipment.

In addition, we are very optimistic about the long-term prospects for advanced sensors in a number of emerging markets, including robotics for industrial applications and medical applications.

In terms of operating results for sensors, adjusted gross margin of 41.2% improved sequentially from 37.6% primarily due to manufacturing efficiencies and favorable foreign currency exchange rates. Moving to Slide 6. Turning to our Weighing Solutions segment.

First quarter sales of $31.9 million was 2.8% lower than a year ago and 3.7% lower compared to the fourth quarter. The sequential decrease in revenue was attributable to lower sales in the industrial weighing market, partially offset by higher revenues in the transportation market.

We continue to be pleased with our OEM sales to the precision ag and construction equipment markets. While this was modestly lower sequentially, it grew 42% from a year ago. Book-to-bill for Weighing Solutions was 0.9. Orders of $28.7 million were 6.2% higher than in the fourth quarter, mainly due to a stronger demand in our onboard weighing products.

We continue to move forward with growth initiatives for our Weighing Solutions business with new innovative solutions. We are now in the final testing of new line for off-the-shelf load cell sensors called vLite, which we expect to formally launch later this year.

This technology is lighter and more compact than our previous version that provides the same high-level accuracy and reliability. Customers' feedback for this product have been positive, and we believe this technology can give us competitive edge to gain share in our traditional weighing market.

Particularly for legal, for trade retail applications such as supermarket checkouts, scales as well as portable medical equipment such as incubators for premature babies, infant scales and hospital beds. Weighing Solutions gross margin of 34.9% compared to 33.4% in the fourth quarter.

The sequential increase in adjusted gross profit margin was primarily due to favorable foreign currency exchange rates, partially offset by lower volume. Moving to Slide 7. Turning to our Measurement Systems segment. Revenue in the first quarter of $20.3 million grew 18.3% from a year ago, but declined 24.4% sequentially.

The sequential decline reflected lower revenue of products in the steel market and our diversified technical systems, DTS products in the transportation market.

Adjusted gross margin in the first quarter for Measurement Systems softened sequentially to 54.1% from 56.8%, primarily reflected a lower volume and higher material cost, offset by higher selling prices.

Book-to-bill ratio for Measurement Systems was 1.21 as orders of $24.5 million grew 30% sequentially driven by 49.4% increase for steel-related bookings. Order patterns can fluctuate quarter-to-quarter due to the timing of customer projects and long lead times for these products.

As I indicated, a redesign of one of DTS product will delay approximately $1.5 million of revenue for each of the next two quarters. We expect to recover the majority of these revenues in the fourth quarter. Despite this short term challenge, we continue to be excited about key growth opportunities and development milestones for measurement systems.

For instance, we were pleased that a sports safety project was extended for DTS, which involves using their technology to improve the safety of football players by developing new methodologies for helmet-to-helmet concussion testing.

Our miniaturized flexible data loggers is embedded inside the mouth guards and can measure acceleration, rotation and direction. The data can then be used to develop safer equipment, including helmets more effectively.

While this project is relatively small in terms of revenue for VPG, it does represent the potential of our technology to address real-world safety challenges. Another DTS initiative we are excited about is the WIAMan project, in which we have developed a test dummy for the U.S.

Army to assess potential injuries for soldiers exposed to underbody blasts. While the main partner for this project was the U.S. Army, we recently received approval to market this technology to U.S. allies around the world, and we are already seeing interests from potential new customers. Moving to Slide 8.

Before turning the call to Bill, I want to comment on our strategy for growth and for allocating our capital to increase stockholders' value. There are many reasons to be excited about the long-term potential for VPG.

Over the past several years, we have seen applications for our high-performance sensors and precision measurement solutions broadened into new areas and markets beyond our traditional markets as both exciting and new OEM customers seek to differentiate their products.

At the same time, we have seen investing in our technology and operational capabilities to position us to capture growing share of these emerging opportunities.

I believe it is this convergence between the expansion of market opportunities and our ability to address them that has been one of the key drivers of our growth over the past several years, at the same time, also continuing our cost reduction and operational excellence initiatives around the company.

As we continue to drive this strategy, we are confident that our strong balance sheet and ample liquidity can continue to support a capital allocation strategy that creates shareholder value to organic growth, successful M&A and as warrant stock repurchases. I will now turn it over to Bill Clancy for additional financial details.

Bill?.

Thanks, Steve. Moving to Slide 9, referring to the slide and the reconciliation tables of the slide deck. In the first quarter of 2023, we achieved revenues of $88.9 million, gross profit of $37.2 million or 41.9% of sales, operating income of $9.9 million or 11.2% of revenues and diluted net earnings per share of $0.51.

On an adjusted basis, our gross profit was $37.2 million or 41.9% of sales. Operating income was $10.1 million or 11.4% of sales, and our diluted net earnings per share was $0.52. Our first quarter revenue decreased 7.7% compared to $96.2 million in the fourth quarter of 2022 and were 1.4% above the first quarter a year ago.

Foreign exchange for the first quarter have negatively impacted revenues by $2.4 million compared to a year ago and positively impacted revenues by $1.7 million as compared to the fourth quarter of 2022.

Gross margin in the first quarter was 41.9% as compared to 41.2% in the fourth quarter of 2022, which benefited from favorable foreign exchange rate and manufacturing efficiencies, partially offset by lower volume, higher material costs and wage increases.

On an adjusted basis, our first quarter gross margin was 41.9% as compared to 41.5% in the fourth quarter of 2022. Our operating margin was 11.2% for the first quarter. Adjusted operating margin in the first quarter was 11.4% as compared to 14% in the fourth quarter of 2022.

Selling, general and administrative expenses for the first quarter were $27.2 million or 30.6% of revenues as compared to $26.7 million or 30.4% of revenues for the first quarter of 2022.

The increase in SG&A of $500,000 mainly relates to $500,000 for headcount and wage increases, $500,000 for travel and $300,000 of commissions, partially offset by $900,000 of positive foreign exchange rates.

The adjusted net earnings for the first quarter were $7 million or $0.52 per diluted share compared to $6.6 million or $0.49 per diluted share in the first quarter of 2022. Adjusted EBITDA was $14.1 million or 15.9% of revenue compared to $12.6 million or 14.4% of revenue a year ago.

Purchase CapEx in the first quarter of 2023 was $2.6 million, the majority of which reflects equipment purchases and related infrastructure. For fiscal 2023, we expect purchase CapEx to be in the range of $18 million to $20 million, which includes approximately $7 million in carryover spending from 2022.

Our adjusted free cash flow was $4.9 million for the first quarter of 2023 as compared to a negative $4.6 million for the first quarter of 2022. We define adjusted free cash flow as cash from operating activities of $8.4 million less capital expenditures of $3.5 million.

The GAAP tax rate in the first quarter was 24.1% as compared to 20.7% in the first quarter of 2022. We are assuming an operational tax rate in the range of 23% to 25% for the full year of 2023. Moving to Slide 10. We ended the first quarter with $93.3 million of cash and cash equivalents and total long-term debt of $60.8 million.

Regarding the outlook, for the second fiscal quarter, we expect net revenue to be in the range of $83 million to $93 million at a constant first fiscal quarter 2023 exchange rates. In summary, we have achieved solid performance in the first quarter of 2023.

We grew our orders in the quarter, which underscores the strength of our business model and strategy, and we continue to implement a balanced capital allocation strategy aimed at increasing our long-term shareholder value. With that, let's open the lines for questions. Thank you..

Certainly. [Operator Instructions] The first question comes from the line of John Franzreb of Sidoti Company. Please proceed..

Good morning, Ziv and David. And thanks for taking the questions. Ziv, I'd like to start with the discussion around the redesign of the DTS product line.

Could you give us a little bit of color about what you did to redesign the product? And when you talk about the deferred revenue of $1.5 million per quarter, does that mean revenue in the Measurement Systems business will be lower in Q2 by 1.5 versus Q1? Or is there some other backfill that will offset that?.

Good morning, John. Regarding the redesign at the DTS product, this is one of the products that DTS has launched. Our product for DTS, as you know, DTS is a business where they are producing electronic system solutions. Our product use various components and microchips.

The supply for some of these have been challenging to the pandemic while we have -- and we were able to secure inventory. A critical microchip components, very recently, the supplier has stopped supporting that and therefore, we had to redesign the system around a different microchip.

While we know that the new microchip, there is availability of the new microchips, of course the new supplier, we expect that orders or bookings and shipments that were expected to be delivered for this specific system in the second and third quarter will be pushed out to the fourth quarter.

Now, in order to mitigate the effect, we have several similar systems, there are a few generations of systems, and we are trying to promote, I would say, a similar product with a similar spec in order to mitigate the revenue effect. But for those customers that would specifically require this system's performance.

The expectation is that once the system will be redesigned with a new component, we would be able to provide the deliveries and the expectation it would happen in Q4..

Okay. So you have the orders for the new system. It needs to be, I guess, re-qualified, produced and you expect to recover of about $3 million in Q4 that was lost in Q2 and 3.

Is that correct to say that properly?.

Naturally, for those type of products, the delivery -- the lead time delivery is very short. Therefore, in most cases, we deliver out of stock.

So currently -- based on the discussions with customers currently, we don't have the bookings, but the expectations are that once the bookings would be -- once we will have the bookings, we would be able to deliver them. Given the fact that we have announced that this product is not available currently, we do not expect to get the bookings.

So as I said, alternatively, we are trying to push to get the bookings for a similar product with similar systems with similar performance..

Got it. That helps. That helps a lot, Ziv. Thank you. And then just shifting to the Sensor segment. Another quarter of weak book-to-bill, although it sounds like the order cadence picked up.

As you look at the year and maybe the cadence of the revenue profile in light of the bookings and orders, are we probably looking at a year where the sensor segment is probably down full year-over-year? Or is there something else, maybe inventory reset or something else that's going on in sensors that gives you confidence that the second half revenue will be better than the first half..

Given our visibility, as you saw, Q1 has a higher bookings of the Sensor segment in respect to the prior quarter. There are two moving parts.

On the precision resistors, we do continue to see very strong bookings on the test and measurement for semiconductor, for fiber optics, data centers and for avionic, military and space, while on the sensor side, on the gauges side, on the advanced sensor side, the big, I would say, softening came from the consumer part.

Our consumer -- customers are already -- we believe that they are already through the end of the cycle in depleting their inventory. And the expectation is that we will already see in the second quarter higher bookings.

So I would say that the business environments that we are expecting to see in -- the second quarter is expected to improve in respect to the first quarter, and we expect to continue to see that also further during the year.

So all-in-all, we have a very -- we have a positive prospect regarding the business climate regarding sensors as we move along the year..

And I guess one last question, and I'll get back in the queue. You mentioned higher costs in the quarter and maybe I didn't quite understand this properly, but it sounded like there was a net $700,000 of adverse cost recovery, but you did mention also that you are implementing higher prices.

I wonder, a, if I understand that properly; and b, when do you expect to get to a price cost equilibrium given your pricing actions to date?.

So when we speak about costs, there are a few aspects. One aspect is that if you can recall in Q4, we have discussed some temporary inefficiencies in the Sensors segment, which we have recovered in Q1. The second piece is the material cost.

We continue to see material cost increase in Q1 of $800,000 in respect to Q4 and $1.2 million up in respect to Q1 of last year to prior year. And this is mostly in the Weighing Solutions and Measurement Systems, and it's mostly for various electronic components. We continue to pass those higher costs in form of price increases.

For example, year-over-year, the ASP average selling price increase is $1.1 million, which offsets the material cost increase. Compared to prior quarter so far, we have increased prices by $400,000 and we also incurred -- or we also were able to offset higher cost by additional cost reduction.

The company is expected to increase prices or even higher prices as we move along this year. And if you can recall, last year, all-in-all, the company in 2022 have realized approximately $9 million from higher selling prices, which essentially offset higher material costs and labor costs.

The intention is to continue and to do it also this year while applying more price increases at selective product lines in addition to the cost reduction projects..

Got it. Thanks, Ziv. I'll get back in queue. .

Thank you. The next question comes from the line of Griffin Boss of B. Riley Securities. You may proceed. .

Hi, good morning. Thanks for taking my questions. So I'm glad to see the increasing book-to-bill across the board. Measurement Systems was obviously a standout on that front. So two questions for me on that one.

So first, is steel the only factor that's driving the strong book-to-bill in Measurement Systems? Or are you seeing positive demand trends in other end markets? And then second related, what is driving that strong growth in steel? Is that primarily the timing of any orders? Or are you seeing any new customer wins there?.

The strong growth in steel is coming from increasing steel prices mainly in Q1. China who produce more than 50% of the world steel output, the expectation is to increase -- that the volume went up by 6.1% year-over-year.

And also the fact that India, which is the second largest producer, have decided this is a nationwide program to invest in steel production in order to make India more as an industrial country.

So there are major steel investments in India in terms of adding more steel capacity, while also buying more sophisticated equipment at universities, research centers in order to develop more -- I would say, more than lighter and stronger alloys, which also impact our steel business in the Measurement Systems. That's regarding the steel production.

The other trend, as I indicated, is the precision resistors, which is driven by semi-conductor test equipment as well as avionic, military and space demand. And now we see also consumer electronics coming back as they reach the point where they have to start to replenish their inventories.

So those are, I would say, first order effect of the three key drivers for the higher demand going forward..

That's great. And thanks for the color. I appreciate it. And then maybe one for Bill here. Can you give us some more color on the cadence for CapEx? Because Q1 came in much lighter than we modeled. I know you reiterated the $18 million to $20 million for the year.

I'm just curious, the cadence there, is it picking up in the back half of the year? Or should we just expect higher CapEx in 2Q through to 4Q?.

Yeah, Griffin. So yeah, so you saw that the capital spending was $3.5 million. Yes, we do expect to have more of the capital spending, I would say, in the back end of the second half of the year, but still within that $18 million to $20 million target for the full year..

Okay, good. Thanks. And then just another sort of housekeeping one. So I guess you guys repurchased $2.7 million worth of stock in the quarter.

Can you just remind us how many shares are left under that authorization?.

So I just want to reiterate your point, I mean the stock repurchase during the first quarter of 2023 was zero. We still have approximately 515,000 shares within that program to be warranted..

Sorry. I misread. Through 1Q, '23, I thought that's through 1Q, '23. Okay, I appreciate. That's it for me. Thanks. .

Thank you. The next question comes from the line of Hendi Susanto of Gabelli Funds. You may proceed. .

Good morning, Ziv, Bill and Steve. .

Good morning. .

Okay. My first question is, I think this time management mentioned about advanced sensors for avionics, military and space.

Would you be able to share more colors on what your advanced sensors products footprint in avionics, military and space?.

The avionics, military and space applications are more relevant for precision resistors. The consumer electronics and the robotics for industrial and medical applications are more relevant for advanced sensors. We are not selling into the avionic, military and space advanced sensors.

This was maybe a misunderstanding on my part, but only precision resistors we are selling to that end market..

Okay. I saw that on the press release. Maybe just a wording. Yeah. And then second one is, Ziv, you mentioned about price increase that is -- that will be coming further in 2022. And then you mentioned about the last year $9 million from higher selling prices.

In terms of a percentage of ASP, do you have any estimate whether the price increase will be like low single-digit or like -- I think any color on that will be helpful..

If I can recall the $9 million last year was around about low to mid-single digits. And the expectation probably is to do the same order of magnitude this year from an overall company perspective in respect to revenues naturally..

Okay.

And then in terms of the timing of the price increase, is it -- like can you apply price increase on existing backlog? Or does price increase apply like to new orders?.

Naturally, given our backlog, any price increase -- once we apply price increase, given we discuss with our customers, the price increase cannot be applied on existing backlog, only for new orders. So we are looking around about one quarter delay given our backlog.

So when I speak about the future price increase, I speak about already price increase that has been applied to prior orders, while we should expect to see them flowing into the P&L in the coming quarters as we saw already in Q1..

That's helpful. Last question for Bill. Bill, you mentioned that tax rate will be 22% to 25% for this year's estimate. That is lower than the past few years.

May I enquire the main drivers for the lower tax rate? And I'm wondering like what is the baseline for tax rate going forward?.

Yeah. So the tax rate is always based upon the mix of the income where it's earned in the various jurisdictions. So yeah, we should be in that range of like 23% to 24%.

And that's where we have been over the last few years, constantly looking at ways to lower our tax rate as much as possible, but given where the mix of income is being earned, that's where the tax rate is coming out today..

Thank you, Bill. Thank you, Ziv. .

Thank you. [Operator Instructions] The next question is a follow-up from John Franzreb of Sidoti Company. You may proceed. .

Yeah.

Just curious about your thoughts about debt repayment versus share repurchase going forward?.

John, we look at -- from a cash generation, we look at all of our capital allocation strategies as to what is the best way of mechanism utilizing to pay down the debt, but we also are earning significant interest income with our cash and then also more importantly, the strategy of the cash repurchases given what the board has set up for us..

Right.

And your thoughts in light of that in a higher interest rate environment, why wouldn't more cash be used to reduce debt, I guess, that's what I'm wondering?.

Yeah, John. Our goal would be -- I can say, John, definitely, our goal is to reduce the debt, given like unfortunately, the majority of the cash is generated outside of the U.S. But having said that, our goal is to focus on driving to paying down the debt to lower the interest expense..

And maybe I just don't appreciate, of the $93 million in cash, how much of that is outside of the U.S.?.

Approximately 94% is outside the U.S..

Okay. That helps a lot, though. Okay, all right. Let's see. I was just curious about that. Thank you, guys. Thanks for taking my follow-up. .

Thank you. The next question is a question from Bill Dezellem of Tieton Capital. Please proceed. .

Thank you, that's Tieton capital. And your book-to-bill is directionally beginning to improve.

What are you anticipating that the overall company book-to-bill will be above one? And with that in mind, as you look out over the various industries that you serve, where do you anticipate the most strength over the remainder of the year? And what are the dynamics that you're seeing that will lead to that?.

I would say regarding the bookings, we -- as you indicated, we see an improved we -- the bookings for Q1 has increased by $9.6 million in respect to Q4. Given the solid demand of orders with an upside expectation, we do expect also to see an improved bookings in the second quarter in respect to the first quarter.

At the same time, we also expect to continue and deliver at similar revenues as the first quarter. So it's hard to tell when those two points are going to meet. But no doubt the trend -- we are on the positive trend as we see an improved business environment.

Regarding the deliveries, currently we are shipping based on customer schedules, but I would say, we are still optimistic if nothing changes from an overall perspective, we are -- I would say, quite at this point, given our visibility, we are optimistic regarding also the second half of the year.

And so, what was your other -- regarding which end markets, at this point, are doing quite well, and at least based on what we know today are expected to continue to do well.

So as I mentioned, our test and measurement business for semi-conductor equipment, some of the other emerging markets for precision resistors in respect to data center fiber optics equipment, we continue to see strong demand. Consumer electronics business on the strain gauges on the advanced sensor is expected to improve the demand.

Avionics, military and space business still continues very strong. On the Measurement Systems, we spoke already about the steel business and the driving demand behind that.

And regarding Weighing Solutions, given the vLite and some of the developments that I've talked during the call, we should also expect to see some -- I would say, a more -- a potential upside regarding the demand in the industrial market..

That's helpful. You've made a comment that I just want to make sure I heard correctly. I think you said -- referenced improving business conditions. Did we hear that correctly? And if so, would you tie that in relative to all of the macroeconomic talk with the Fed trying to slow the U.S.

economy, et cetera? It sounds like it's a bit in contrast to that..

I would say that our insight regarding the improved business environment is given our visibility and the discussions with customers. At this point in time, once we are looking at few -- I would say, a few vectors.

One factor is the depletion of our inventories at our customers, as we see customers continue to deplete the inventory and they are reaching a point where they will have to start to replenish that. So I assume that's a good sign. Given the macro, even outside the U.S.

-- and like, for example, the development in India, we believe that this is expected to continue through the rest of the year. Naturally, nobody has a crystal ball, but at least based on the indications today, we are more optimistic than pessimistic in respect to the coming quarters..

Great. Thank you. And then lastly, relative to advanced sensors. Would you share with us what the pipeline of prospective opportunities looks like there? That's a business that had been growing very rapidly, and we just haven't talked very specifically about it on this call..

So advanced sensors did grew very rapidly over the last few years. We are selling to various markets, but the big prospects are still in consumer electronics. We are looking at potential new designs, at existing and new customers, we are looking at robotic application, robotics for industrial and medical applications, naturally the design cycle.

For our customers -- for our OEM customers, is around two to two and half years, but we have already initiated -- we have planted many, many designs at various customers. And the expectation is that we are going to see, I would say, in the coming future, many of those designs coming to fruition and much more volume getting to advanced sensors.

At this point in time, from a macro standpoint, the biggest impact for advanced sensors was the consumer electronics supply and demand fluctuation or I would say, the inventories which are in the queue, but this is more managing current designs rather than looking at future designs which are in the funnel, which should come to fruition to future revenues.

But it's still one of our most promising product lines..

Thank you for the time. .

Thank you. There are currently no additional questions registered at this time, so I will pass the conference back over to Steve Cantor for any closing remarks..

Thank you, Danielle. Before we conclude, I want to let everyone know that we will be participating in a couple of conferences coming up, the B. Riley Conference later in May and also the Sidoti Small-Cap Conference in June. I'm happy to share any additional information and you can reach out to me directly.

Thank you all again for joining the call, and have a great day..