Slide 1: 2018 Third Quarter Earnings Conference Call
Jeffrey T. Gill 2018 Third Quarter President & CEO Earnings Conference Call Anthony C. Allen Vice President & CFO November 13, 2018
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure Non-GAAP Financial Measures Any non-GAAP measures, and their related reconciliation to GAAP measures, are provided and available on the company ’ s website: www.sypris.com Each forward-looking statement herein is subject to risks and uncertainties, as detailed in our most rece
Slide 3: Table of Contents
Table of Contents • Overview • Outlook • Financial Review • Key Takeaways • Q&A Session 3
Slide 4: Overview: 3Q18 Highlights
Overview 3Q18 Highlights • Revenue relatively even with that of the prior year ‒ Automotive and commercial vehicle shipments up 17% ‒ Production and supply chain challenges dampened growth during 3Q for energy and electronics ‒ Backlog in place to support rebound in shipments • Gross margin expanded
Slide 5: Overview: 3Q18 Highlights
Overview 3Q18 Highlights • The heavy-duty truck market is showing considerable strength – N.A. Class 8 orders surpassed 43,000 units for the eighth month in a row • Executed new long-term agreements with Sisamex ‒ Expanded product lines with various driveline components ‒ Diversified end-use applica
Slide 6: Overview: 3Q18 Highlights
Overview 3Q18 Highlights • Energy markets are expanding – US oil and natural gas production are at record levels – WTI crude oil prices at approximately $60 per barrel after peaking at nearly $77 per barrel – US LNG exports for August YTD 2018 – up 66% over prior year • Oil production in the Permian
Slide 7: Overview: 3Q18 Highlights
Overview 3Q18 Highlights • DoD and Aerospace & Defense spending trends remain positive – US military spending is expanding significantly – Well positioned with top-tier DoD prime contractors on targeted programs • Sypris Electronics revenue and gross margin affected by the availability of electronic
Slide 8: Outlook
Outlook • New contract awards, positive market conditions and lower costs align for positive year • Growth, mix and operational performance expected to support positive margin expansion • Both business units expected to be solidly profitable • Guidance 4Q18 2019 – Revenue $24.0-$26.0 $105.0-$110.0 –
Slide 9: Financial Review Third Quarter 2018
Financial Review Anthony C. Allen Vice President & CFO Third Quarter 2018 November 13, 2018
Slide 10: 3Q Financial Results
3Q Financial Results $ millions 3Q 2018 3Q 2017 Consolidated ST SE Consolidated Change Net Revenue $ 21.1 $ 14.9 $ 6.2 $ 21.4 $ (0.3) Gross Margin 5.7% 8.9% (2.0)% 3.5% 220 bps Adjusted Operating Income $ (1.7) $ 0.2 $ (0.8) $ (2.4) $ 0.7 • Consolidated revenue down 1.3% while gross margin increased
Slide 11: 3Q YTD Financial Results
3Q YTD Financial Results $ millions 3Q 2018 YTD Q3 2017 YTD Consolidated ST SE Consolidated Change Net Revenue $ 64.0 $ 44.7 $ 19.3 $ 60.8 $ 3.2 Gross Margin 9.6% 12.0% 4.1% 3.0% 660 bps Adjusted Operating Income $ (3.1) $ 1.6 $ (1.2) $ (8.3) $ 5.2 • Consolidated revenue up 5.3% and gross margin inc
Slide 12: Outlook Update
Outlook Update $ millions Outlook Outlook 4Q 2018 FY 2019 Net Revenue $24 to $26 $105 to $110 Gross Margin 13% to 15% 15% to 17% SG&A 12% to 13.5% 11% to 13% • Revenue outlook reflects solid backlog and strong market conditions • Gross margin expected to resume trend of improvement in 4Q following t
Slide 13: YOY Revenue and Margin Improvements
YOY Revenue and Margin Improvements 3Q YTD 4Q 16.0% 10.9% * 4Q 2018 Based on Midpoint of Outlook Range • Demand from commercial vehicle • Revenue outlook for 4Q includes market drives YTD revenue growth strong market conditions and improved electronic component availability • Cost reductions from ST
Slide 14: Mix + Cost Reductions Drive Margin in 2018
Mix + Cost Reductions Drive Margin in 2018 • Cost reductions from closure of ST Broadway Plant expected to provide lift in gross margin for 2018 • Electronic component availability expected to improve during 4Q, supporting a return to higher, historical levels of shipments • Favorable YOY revenue mi
Slide 15: Key Takeaways
Key Takeaways • 3Q revenue relatively flat with prior year period • Gross margin improved to 5.7% in 3Q, up 220 basis points from prior year • SG&A expense reduction of $0.2 million or 6.1% in 3Q compared to prior year • Provided outlook for 4Q 2018 and FY 2019 − 4Q 2018: Revenue $24-$26 million; Gr
Slide 16: Question and Answer Session
Jeffrey T. Gill Question and Answer Session President & CEO 3Q Earnings Conference Call Anthony C. Allen Vice President & CFO November 13, 2018