Slide 1: Third Quarter 2010 Earnings Conference Call
Third Quarter 2010 Earnings Conference Call November 16, 2010 Jeffrey T. Gill President and CEO Brian A. Lutes Vice President & CFO Anthony C. Allen Vice President & Treasurer
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 serious risks and should not be relied upon, as detai
Slide 3: Table of Contents
Table of Contents • Overview • Segment Review • Q3 Financial Review • Summary • Q&A Session 3
Slide 4: Overview
Overview • Key Highlights for Q3: – Revenue increased 16.3% sequentially to $73.4 million during the period driven by a 25.0% increase in A&D revenue and a 13.2% increase in Industrial sales. – Gross profit increased 55.3% sequentially to $7.7 million, up from $4.9 million in Q2, reflecting the impa
Slide 5: Industrial
Industrial • Key Highlights for Q3: – The demand for commercial vehicles continued to recover, driving a 41.9% increase in revenue, or $15.6 million, when compared to the prior year quarter. – Gross margin increased to 4.4% from 0.3%, highlighting the benefits of the higher volume and the impact of
Slide 6: Industrial
Industrial • Market Outlook – Medium Duty: Inventories appear to have bottomed out and are lean. – Heavy Duty: North American orders are trending higher; Freight growth expected to be above historical averages for next several years. – Trailers: Outlook remains positive – subject to the economy, as
Slide 7: Aerospace & Defense
Aerospace & Defense • Key Highlights for Q3: – Revenue increased 25.0% sequentially with the resumption of shipments that had previously been placed on hold by the government. – Gross margin increased to 25.8% from 16.0% in the second quarter, reflecting the positive impact of the increased volumes
Slide 8: Aerospace & Defense: Department of Energy Award
Aerospace & Defense • Department of Energy Award – Received notification regarding the awarding of the Department of Energy contract; Expected to be finalized in Q4: • Sypris is to receive $3.1 million of funding from the DOE to develop a centralized cryptographic key management system to protect th
Slide 9: Aerospace & Defense: International Strategic Alliance
Aerospace & Defense • International Strategic Alliance – Entered into a Technology Information Exchange Agreement with Cassidian, formerly known as EADS Defence and Security, the second largest division within the EADS Group. • The agreement provides a means for both companies to share best-in-class
Slide 10: Aerospace & Defense: Development of International Cyber Range
Aerospace & Defense • Development of International Cyber Range – Objective is to accelerate advances in Cyber Security and Cyber warfare initiatives. • The range is expected to be operational by the first quarter of 2011 and will provide governments with a secure environment in which to test network
Slide 11: Q3 Financial Results – Consolidated
Q3 Financial Results – Consolidated ($ in thousands) Fav/ 3Q09 3Q10 (Unfav) Highlights Revenue 62,716 73,412 10,696 SIG improvement and return of A&D revenue Gross Profit 5,222 7,658 2,436 Reduced fixed overhead; LEAN/CI; Mix Gross Margin 8.3% 10.4% 2.1% Margin expansion expected over long-term EBIT
Slide 12: Q3 Financial Results – Industrial
Q3 Financial Results – Industrial ($ in thousands) Fav/ 3Q09 3Q10 (Unfav) Highlights Revenue 37,164 52,738 15,574 Heavy truck, trailer volumes up over last year Gross Profit 104 2,334 2,230 Volumes, productivity, lower fixed costs Gross Margin 0.3% 4.4% 4.1% Lowered breakeven, efficiencies drive con
Slide 13: Sequential Industrial Results
Sequential Industrial Results ($ in thousands) 1Q10 2Q10 3Q10 Highlights Revenue 44,106 46,571 52,738 Stabilized; Expect 4-5 years of growth Gross Profit 2,453 2,286 2,334 Revenue leveraging lower fixed cost basis Gross Margin 5.6% 4.9% 4.4% Margin expansion with volume increase, lower fixed cost, o
Slide 14: Q3 Financial Results – Aerospace & Defense
Q3 Financial Results – Aerospace & Defense ($ in thousands) Fav/ 3Q09 3Q10 (Unfav) Highlights Revenue 25,552 20,674 (4,878) Exit of low-margin legacy programs Gross Profit 5,118 5,324 206 Impact of increased efficiency, lower costs Gross Margin 20.0% 25.8% 5.8% Potential for further expansion (1) EB
Slide 15: Sequential Aerospace & Defense Results
Sequential Aerospace & Defense Results ($ in thousands) 1Q10 2Q10 3Q10 Highlights Revenue 18,797 16,535 20,674 Resumed shipments of government program that had been delayed Gross Profit 3,560 2,645 5,324 Gross profit and margin improved due to the resumed shipments and LEAN/CI initiatives Gross Marg
Slide 16: Q3 Summary
Q3 Summary • Gross margin increased to 10.4%, up from 8.3% in the prior year and up from 7.8% sequentially: – Underscores the impact of the restructuring and continuous improvement actions undertaken to make meaningful, lasting changes to our cost structure. – Positions both business segments to cap