Sypris Solutions, Inc. · NASDAQ:SYPR
Sypris Solutions — Corporate Update (January 2007)
21 slides from Sypris Solutions's corporate update, Jan 25, 2007
Slide 1: 2007 Guidance & Market Outlook Conference Call
2007 Guidance & Market Outlook Conference Call January 25, 2007
Slide 2: Financial & Market Outlook
1Financial & Market OutlookJeffrey T. GillPresident and CEOT. Scott HattonVice President and Chief Financial OfficerPresented by
Slide 3: Safe Harbor Statement
2 Safe Harbor StatementEach “forward-looking statement”herein is subject to serious risks and should not be relied upon, as detailed in our most recent Form 10-K and Form 10-Q and subsequent SEC filings.Briefly, we currently believe that such risks also include: cost and availability of raw material
Slide 4: Agenda
3 ⑀⍽Overview ⑀⍽Market Outlook ⑀⍽Conclusion ⑀⍽Driving Change ⑀⍽2007 Forecast ⑀⍽Summary ⑀⍽Q&A Session Agenda
Slide 5: 2006 Overview - Preliminary Results
4 ⑀⍽2006 Overview -Preliminary Results: ●EPS expected to be in line with prior guidance -due to report on February 22 ●Revenue, gross profit and net income are expected to be down year over year >Industrial Group suffered from severe production inefficiencies,equipment downtime, excessive overtime,
Slide 6: Market Outlook: Industrial Group
5 ⑀⍽Industrial Group -As expected, production of commercial vehicles are forecast to decline 37% during 2007 (with Class 8 down 46% and Class 5-7 down 26%) ●25% sequential decline in Q1; 28% sequential decline in Q2, withQ2 and Q3 expected to be 45% below prior year periods ●21% sequential increase
Slide 7: Market Outlook: Industrial Group Planned Actions
6 Market Outlook⑀⍽Industrial Group-Planned actions●Realign the direct workforce to volume changes -shift reductions, day eliminations and planned shutdowns -will assist in retaining critical skills and minimizing inefficiencies●Take older equipment out of service, utilizing highly automated new cell
Slide 8: Market Outlook: Electronics Group
7 ⑀⍽Electronics Group -Aerospace and Defense is expected to show strong double digit growth during 2007, driven by program launches scheduled for the second half -Demand for secure communications products continues to increase -Product line expansions in our Data Systems business are expected to lea
Slide 9: Conclusion: Driving Change
8 ⑀⍽We must act aggressively to take advantage of the 2007 downturn in the commercial vehicle business to drive fundamental change throughout our business -Restructure Business Model ●Realignment of production -LCC output to increase to 43% from 23% ●Commercial rationalization -exit undesirable prog
Slide 10: Conclusion: Invest for Growth
9 -Invest for Growth -Expand Electronics Portfolio ●Development pipeline for secure communications products ●Increase penetration for space and aerospace programs ●Expansion of data systems product line -Intelligence and telemetry ●Support continued expansion of calibration ⑀⍽The cost of many of the
Slide 11: Industrial Group Restructuring / LEAN
10 * ’09 YE Run Rate Industrial Group Restructuring / LEAN'06 Est.'09 YE* Δ % LCC Sales23%43%20 pts.Sales / Sq. Ft.$208$33762%GM%5%9%4 pts.Savings (@ completion)CostsPayback$17M$21M2.5 yrsScope/Timeline200720082009Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Phase 1Phase 2Phase 3Phase 4⑀⍽4-Phased approach coveri
Slide 12: Supply Chain / Business Transformation
11 Supply Chain / Business TransformationFocusFocus⑀⍽Design Common Processes⑀⍽Leverage Digital/Integrated Tools⑀⍽Automate w/ Common System ⑀⍽Clear Roles / Responsibilities⑀⍽Line-of-Site Metrics CorporateMulti-Plant / Multi BusinessSite-SpecificOperationalizeAutomate / IntegrateStandardize / DesignAc
Slide 13: Industrial Growth / Commercial Realignment
12 Industrial Growth / Commercial Realignment * ’09 YE Run Rate10545(50)36525536052006 E2007 ETruck Mkt'08/'09ProductRational-izationProductAddsEnergy2009 E⑀⍽Truck Market Rebounds-2008 rebounds 28%-2009 up 20%⑀⍽Commercial Realignment-Contract expiration / realignment opportunities-Rationalize produc
Slide 14: Electronics Group Growth
13 Electronics Group Growth21145151081332006 ESecureComm.ProdsRecorder /ReceiverSpaceTurnkeyCalibration2009 E⑀⍽Broader Offering in Secured Communications-New classified military product to ramp to full production in Q2’07 …$20M / yr-New generation encryption product to launch in Q3’07 …$20M / yr-R&D
Slide 15: Cash Flow Generation
14 Cash Flow Generation2H'05 -2006Focus & AttentionWorking CapitalTurnsReceivablesInventoryPayablesCapexQ2'05$1243.9⑀⍽Weekly reviews by site, account⑀⍽Past due monitoring / credit mgmt⑀⍽Progress Billing⑀⍽Lead time and buffer reductions⑀⍽Reduce contingency⑀⍽Terms: from inconsistent to 45/60⑀⍽Complete
Slide 16: 2007 Forecast
15 2007 Forecast
Slide 17: Class 5-8 Truck Market Forecast
16 Class 5-8 Truck Market Forecast59656854616567425560674558606557616555572004200520062007 F2008 F548192676390914570881004475829751627365782004200520062007 F2008 F2004200520062007 F2008 F262,000341,000380,000207,000278,000North America Commercial VehicleHeavy-Duty (Class 8)North America Commercial V
Slide 18: TY 2007 Earnings Guidance
17 ($M, except EPS) TY 2007 Earnings GuidanceRevenueRevenue$498-$500 $410-$4202006E2007EEPSEPS2006E2007E($0.07)-($0.08) ($0.40)-($0.45) Free Cash FlowFree Cash Flow2006E2007E$41-$43 $15-$20 Revenue down 17%⑀⍽29% decline in Industrial driven by Commercial Truck cycle⑀⍽23% growth in Electronics Group
Slide 19: Industrial and Electronics Segment Outlook
18 •Industrial Market declining to flat, except Energy market-Commercial Vehicle market cycling down before ’08 rebound-Heavy Duty down 40%; Light Duty down 10%; Trailers -0%-Energy market demand strong for Engineered Products -up 3-4%•Restructure operations and address portfolio profitability -Laun
Slide 20: Q1 2007 Earnings Guidance
19 ($M, except EPS) Q1 2007 Earnings GuidanceRevenueRevenue2006E2007EEPSEPS2006E2007E$0.05 ($0.13)-($0.15) $130$98 -$102Free Cash FlowFree Cash Flow2006E2007E$3 $0-$3 Revenue down 23%⑀⍽24% decline in Industrial driven by Commercial Truck cycle⑀⍽21% decline in Electronics driven by absence of next ge
Slide 21: Summary
20 Summary ⑀⍽ Despite a challenging year ahead, 2007 is expected to be a pivotalyear where game-changing effortstake hold and drive a lastingand profitableimpact ⑀⍽ $11M in investments are being made in 2007 to deliver on multi-year programs:-SIG Restructuring Program$17M annualized savings-Supply C