We'll have time for Q&A. Should you have a question, please type it into the Q&A box, and I'll present it to management. With that said, gentlemen, thank you for being here. The floor is yours.
Good morning, everyone. Thank you, John, and thank you, Ziv Shoshani, for the opportunity to be here today. We're very excited to tell you about introducing VPG, Vishay Precision Group. I do want to hopefully you'll walk away from the presentation today with three takeaways. The first is that VPG is a leader in its markets with solid operating and financial models. Our solutions are highly differentiated, with high value to our customers. And there's a convergence going on of some key secular market trends with our own internal capabilities that we've been investing in, which we believe provides a path to accelerate our long-term growth. We will be making some forward-looking statements today. So we do encourage you to read our SEC filings carefully to understand the risks associated with those statements. So at our core, VPG is a sensor company.
I don't need to tell you how important Sensors are. You just need to look around in your office, in your homes, in your factories, in your cars. Sensors are everywhere, and they continue to proliferate and touch our lives. The market for Sensors globally is estimated to be about $350 billion, growing annually in the high single digits. We play in a corner of that market where precision and accuracy really matter. This is a snapshot of who we are. We focus on precision measurement and sensing technologies that really address the real-time data world. We've been a public company since 2010. We have a global footprint with 2,700 employees at 12 facilities around the world. We operate in three reporting segments. Last year, we had the second-best year in our company's history. I'll talk a little bit more about that.
And have grown our revenue over the past seven years at a 7% compounded rate. Much of that is organic. So what is our value proposition to our customers? It's really captured on this slide. Our mission is to help our customers make their products and their processes safer, smarter, and more productive. We do that by addressing some of the most challenging applications that really are part of what's being called the backbone of the forward economy. We are really the first step in the value data stream. If you think about what that is, that's the process where real-world phenomena such as force, weight, torque, pressure, temperature is captured digitally, and then processed, analyzed, and then transmitted.
For what we do, for the applications that we address, which are among the most critical around, if you don't get that first step in that data value chain right, then obviously the rest of that process is affected, and the product or process that we're addressing doesn't meet spec. So what we do is very important. And we do that really for a broad array of customers and markets. We think we have perhaps one of the most broadest set of markets for a sensor company our size. We have the number one or number two position in predominantly most of these markets, with very sticky customer relationships across the Fortune 5, the Fortune 1000. Our sales engagements are very much engineer to engineer on a technical level. And in many cases, we're sole sourced. So this is a great platform business.
We think the blend of the markets that we show here on this slide, on the right-hand side of the slide, is a really good one. It's a mix of industrial and technology markets, which are very much being driven by these secular trends that I'm going to describe in a moment. This is, again, a snapshot of our 2023 results, which was the second-best year in our company's history. We had reported $355 million of revenue, with an EBITDA margin of 17%. And while we think that that result is not bad, I think what's more important is really what's on the right-hand side, which is our long-term targets. We think our business can grow in the low teens long-term and deliver these kinds of operating results: 45% gross margin, 18% operating margin, and 22% EBITDA margin.
We think we have a fairly foreseeable path to get there, especially given this past quarter, the first quarter of 2024, we reported a record gross margin on revenue, which I would describe as more muted than in 2023 or 2022. That really is a function of the investments that we've been making in our internal capabilities and efficiencies in our business. We think we have a really nice setup to begin to achieve or approach these targets as our revenue improves here through 2024 and into 2025. Much of that is built off of a strategy, which is really captured on this slide. For most of our history as a company, we focused on, I'd say, more industrial types of markets. These are great markets, niche markets, where we, as I mentioned, we have a very strong position in.
But what we're now shifting to is a focus on larger, faster-growing markets that are being driven by a number of key secular trends. And I'll sort of describe them in a minute. But it's really not just the external trends. It's the convergence of those trends with the capabilities that we now have and have been investing in and continue to invest in. And so it's also beyond the investments we've made in our operational capabilities. We're now investing more in business development, R&D, and continuing our focus on operational excellence. So the business today is operated under three segments. They're shown here on this slide: Sensors, Weighing Solutions, and Measurement Systems. I think of these as Sensors being components, Weighing Solutions being more modules or subsystems, and Measurement Systems being standalone systems that are really focused on key specific applications.
Each of these has their own business strategies, their go-to-market strategies and channels, their investment, R&D, etc. And they also have different growth and profitability profiles. So Sensors, we think long-term grows in the high single digits with gross margins of 40%+. Weighing Solutions grows more in line with GDP plus. But given the investments we've been making in the past several years, now their gross margin is approaching that of Sensors. And then Measurement Systems, we think, grows in the single digits but delivers the highest gross margin of all three segments for VPG. So gross margins of 50%+. So it's really this blend of high growth, high profitability, high cash flow businesses that really provide the consistency of our cash flow and really the basis for our growth.
I mentioned part of what's exciting for VPG is some of these external secular trends which are driving expanded opportunities for us. We've captured them really in four categories here. All these should be quite familiar to you, but they are electrification, digital transformation, industrial automation, and defense and space technology. I'll talk a little bit about each of these. Beginning with electrification, I don't need to really tell you very much of value, probably very familiar with it. But I do want to make the point here. It's not just about cars. It's about bikes, aircraft, industrial equipment, and many other things. That's part of the exciting thing for VPG. Certainly, as you look at what we're doing today regarding electrification, we're showing here three examples.
So first, we have products that are now being used on e-bikes to extend the battery range and the experience for the rider. We're involved with safety testing of whole new families of EVs. But also not just cars, also what are called eVTOLs, which are electric vertical takeoff and landing vehicles. These are now being developed and are now in prototype and safety testing. We see the sizable order in the first quarter related to the testing of those vehicles from one manufacturer. And then we're also involved in the testing of EV batteries during manufacturing. Another key trend is industrial automation. It's not a new trend, of course, but it is accelerating. On one hand, you have advances in AI and connectivity, which are driving increased investment in industrial automation.
On the other hand, you also have what the world experienced coming out of the pandemic in terms of labor shortages, higher costs, and global competition. All that, we think, is going to accelerate investment in industrial automation. We're seeing that ourselves in terms of our own investments. We have been adding more automation in terms of our manufacturing operations. To give you a flavor, just a couple of examples of what we're doing today. We've been involved with the robotics market for many years, but we see that now accelerating with new forms of robots, such as humanoid form factor robots, being developed by a number of companies. We're now working with one of the leading developers, a company that you're all probably very familiar with.
We think that as that robot gets fully deployed and moves from beta to production, that could potentially mean $several million for us in incremental business. We see additional opportunities beyond that. In terms of the other types of industrial automation activities, certainly there are many, but the highlighted here are precision agricultural equipment. This is a market that we've served again for many years, but we're seeing new technology developments integrating more sensing technology. Certainly, we see a lot of opportunity ahead related to that market. Defense and space technology, it's more of a need rather than a trend, particularly given the current conflicts and tensions that we're unfortunately seeing in the world. But we have a number of plays in this market in terms of defense and space.
Primarily, we're involved with a number of space programs in terms of power monitoring circuits and navigation systems, as well as the testing of parachutes and re-entry systems, like I'm showing here on the screen. We're also involved with a special program where we've developed a super mannequin dummy that the U.S. Army is using now to develop better ways to protect our soldiers. We recently received approval to begin to sell these dummies to other friendly country states who are working on similar programs. And we're involved with and designed in on a number of missile and defense system platforms and are involved with the development and production of unmanned vehicles, not just air drones, but land and marine vehicles. And then the final trend is what we call digital transformation.
We define it as really the application and integration of digital technology into physical processes and equipment that really enhances the value of that process or equipment. It's not a new trend, but it's one which we believe will also accelerate due to the adoption and development of AI and machine learning. I'm highlighting four examples of these in consumer electronics, where our advanced Sensors are used in high-end consumer electronics products and road bikes. We're also playing a key role in semiconductor equipment, both on the back end to test as well as the front end. And we see opportunities related to data center and fiber optics, where our products can actually improve the reliability over time of some of that fiber optics equipment. And then, of course, medical prostheses. We've been involved with a number of areas, and there's some exciting developments going on there.
This is another great tailwind for us. I've described some of the external factors which are certainly driving our opportunities. But I mentioned there's a convergence between that and what we've been doing internally. That's really reflected on this slide. On the left-hand side of the slide are really the key elements of our strategy. It's really about continuing to innovate with new solutions, new technologies. It's also about leveraging our technical expertise across our customer set and to new applications. It's also around leveraging the platform we have with acquisitions of additional businesses and leveraging the experience we have in M&A, in successful M&A, to continue to add value to our shareholders. Then continuing to focus on operational excellence. We believe we have a very strong sustainability policy and program, and of course, to continue to expand our business development and customer engagement.
So all those things are key elements which we're executing on, which are part of fundamental parts of our strategy. But really, what's important is on the right-hand side. And it's these metrics which we think will continue to drive the value to our shareholders. So it's around scalability. It's around operating leverage and certainly about growing our cash flow. So we think we have certainly a great business model. We generate a lot of cash. I mentioned the internal investments that we've been making. That's a fundamental part of our growth-oriented capital allocation strategy. Over the past five years, we've invested more than $75 million in capital in our business. We're seeing the benefit right now in terms of our manufacturing operation on gross margin.
We're now, even though those projects, the heavy lift of those projects is behind us, continuing to shift our investments now towards business development and new product and market development. Beyond that, we are continuing to look for attractive M&A, good high-quality growing businesses, profitable businesses that we could add to our platform. Then third, we are continuing to buy back our shares. We initiated a stock buyback in August of 2022, and we continue to be actively in the market buying our shares. This is a balanced capital allocation strategy which we think will continue to create value for our stockholders. In summary, we think we have a strong business model with solid cash flow. Our markets are broadening, and certainly some of these mega trends are coinciding with our own internal capabilities to address higher volume, faster growing opportunities.
We have a capital allocation which is really focused about stockholder value creation and a strong balance sheet which supports our M&A strategy. With that, I turn it back to John for any questions.
Okay. Thank you, Steve. If you have a question, please feel free to put it in the Q&A section, and I'll address it to management. Seems like the first question from the audience is probably the most obvious one. Can you talk a little bit about the recent book-to-bills that you've been registering at the company? It's been negative for quite some time. What confidence do you have that book-to-bill is going to turn positive?
Yeah, John, so you are absolutely correct. Over the last six quarters or so, we've had a book-to-bill below one. But as we look into it, our order trends have been mixed.
We've seen good opportunities with steel, transportation. We saw some slowdowns on the other side with test and measurement, with industrial weighing. We continue to, obviously, we talked about investing in growth and opportunities. We feel like we have a true good funnel of business development and strategy. We would hope as we get further into the year, whether it moves a quarter or two by the end of the year, to hopefully get back to a more level environment where we could see a positive book-to-bill of 1.
Yeah. I would just add to that too that if you look at historical order patterns, and certainly in terms of the inventories that our customers may have, we think that the inventory levels are at points where we would typically see reordering in some of our markets, as Bill mentioned. They're cyclically, they're sort of rebounding from the lower part of the cycle. So we expect to see some recovery as we move here through the year. But we think that we are seeing stable order patterns that we think will strengthen as we get towards the end of the year.
Fair enough. Gentlemen, what can you do to expand your addressable market, either with new verticals or increasing your customer base? What are you doing on that front?
Yeah. So part of that involves expanding our business development capabilities and really looking for not just new opportunities, but really putting ourselves in a position to capture these opportunities. So we are increasing our customer discussions. The example that I mentioned regarding the robotics, the humanoid robotics, is a good one. That's a new customer for us and really reflective of some of our internal activities.
We're also stepping up our R&D. We have a number of exciting R&D developments to really expand the capabilities of our products. And so that's really part of our playbook in terms of expanding our addressable markets.
And in your 5-year growth targets, you talked about mid-double-digit revenue growth. What's the driver of that kind of expectation or expansion of the growth model? Is it a particular end markets that you envisioned penetrating more quickly, or certain segments outperforming? A little bit of color behind that kind of a growth target.
No, John, that's a very good question. Yeah. So as we laid out our 3- to 5-year plan, the revenue was a double-digit growth. And it's basically broken down by two sectors. One, it's the continuation of our organic growth, the investments that we've talked about in the past with our business development, the funnels, the opportunities.
We had a 7% CAGR growth over the last seven years. That's one half of it. The other half of it, John, would come from M&A opportunities. The M&A for us has been always at a high level, at a high as part of our capital allocation. I would say over the last 18 months or so, it's even had a higher push for more M&A. Based on our results over the past few years, we've been given more and more opportunities to participate in the M&A. Even though we haven't finalized or announced anything, we have been getting more and more opportunities to participate, to bid. I think there's a sense that at some point, we'll be able to finalize one. It's those two components, John, the organic and the M&A, which leads to that double-digit growth in our three to five-year targets.
That really dovetails nicely into one of the audience questions about the M&A market outlook and how has it changed in the past year. Bill, are you suggesting that there's more opportunities now? Are the multiples more favorable or less favorable? Maybe a little bit more of a breakdown of what you're seeing in the marketplace? Because to be fair, you've had some success in the M&A market in past years.
Yeah. No, John, it's an excellent question. I mean, I can tell you that because of our performance and all that and of our continuing reach out, we have been invited to more and more opportunities. Now, but unfortunately, we're still seeing some pricing that is still, I would say, in the double digits, even multiples. And because of that, I mean, we've always been extremely disciplined.
We've always had followed our internal rate of return in the teens, the payback, accretiveness. So even though we're seeing these opportunities, the pricing is still very, very and it's coming down. We've seen that, but yet the pricing is still at a high level. But the fact that we continue to get opportunities and invitations and to bid and continue to be more aggressive, hopefully that will resolve in a successful one at some point in time.
Any sense of how big you might be willing to lever up for the right acquisition?
Yeah. So from that perspective, John, I would say from a leverage, we've done, what, 5 bolt-ons? From a leverage one, we'd love to do a significant one where the leverage because our balance sheet is very strong, but unleveraged today, our debt to equity is well below less than half.
We would probably leverage up to probably 2.5 times. And even with that, we would feel quite comfortable knowing that with a successful acquisition, we'd be able to pay down that debt fairly quickly and then get below to a more normal environment again.
Got it. Early, you mentioned about internal investments hindering first-quarter results. I wonder if you'd just talk a little bit about some of those internal investments and how that may or may not be changing the operating leverage that was embedded in the company. Can you talk a little bit about that and if you expect to see that similar operating leverage coming back and the timing of that? Yeah.
I mean, the investments that I referred to really have been in a number of areas, both on the operational side, on the cost side, as well as now increasingly on the growth side. I think a great example of that is Weighing Solutions, that segment where over the last 5-6 years, we've consolidated manufacturing. We've moved manufacturing from high-cost centers to a low-cost center. Now, our India operation is one of our largest operations for the company. And we're seeing the results of that in terms of the gross margin of Weighing Solutions, which had been in the high teens 6-7 years ago. And now, as I mentioned, are approaching that of the sensor segment. So we have that playbook, that page from our playbook that we've applied to other areas of the business. And we continue to look for opportunities to further improve our cost structure.
In the meantime, just on an ongoing basis, we are watching our costs very closely and carefully and our discretionary spending very carefully, probably a little bit more than we had in the past year, given some of our revenue trends. But it's those investments that I mentioned that we think are not only improving our margin, but maybe even more importantly, allowing us to address higher volume opportunities that we couldn't really address before. And we've demonstrated that in the consumer electronics market, a market which we really didn't address at all five or six years ago, which is now a significant market for us.
Okay. Well, gentlemen, it seems like we're out of time. I thank you very much for being at the Sidoti & Company Small Cap Conference. I know it's a full day, but thank you again for being here, and have a great afternoon.
Thank you, John. Appreciate it. Thanks for the invitation.