Slide 1: 2008 Strategic Review Conference Call
2008 Strategic Review Conference Call December 18, 2008 Jeffrey T. Gill President and CEO Brian A. Lutes Vice President & CFO Anthony C. Allen Vice President & Treasurer
Slide 2: Safe Harbor Disclaimer
Safe Harbor Disclaimer 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 • Additional Initiatives • Summary of Savings • Implementation Budget • Expected Results • Industrial Group • Electronics Group • Wrap Up 3
Slide 4: Overview
Overview • Initiated actions to review all operations to: – Eliminate unnecessary waste – Reduce fixed overhead – Accelerate, where possible, integration efficiencies – Challenge the existence of any major program if it inhibits consolidation savings • Objectives: – Significantly improve operating e
Slide 5: Additional Initiatives
Additional Initiatives • Additional Action Plans Developed: – LEAN initiatives to reduce scrap, rework, and excess and obsolete inventory: • $2.0 million of annualized savings expected – Redesign of high-volume secure communications product: • Reduced component cost • Improved manufacturability • $3
Slide 6: Summary of Savings
Summary of Savings Annual • Key Items of Note: Savings Facilities Closings $ 12.5 – All actions are currently underway Operational Efficiencies 7.5 – Savings are known and not Product Costing 3.0 volume based Quality 2.0 – Primary implementation: 3Q08 – Total Savings $ 25.0 3Q09 – 75% to 80% of bene
Slide 7: Implementation Plan
Implementation Plan • 2008 - 2010 Plan: – $6.0 million of cash for capital investment: • Equipment, information technology and facility improvements – $15.0 million of cash for expense related items, these include: • Severance and transfers • Equipment relocations • Environmental – Associated non-ca
Slide 8: Expected Results
Expected Results • Elimination of three facilities with over 800,000 square feet • Net headcount reductions of close to 200 people, or 12.5% of domestic workforce • No expected loss of market share or top line • Cost competitiveness of business model increased significantly • Financial payback extre
Slide 9: Industrial Group
Industrial Group • Market Conditions: – Remain extremely challenging – Credit crisis impacting demand for light, medium and heavy-duty vehicles – Recovery of markets not expected until Q4 of 2009 at the earliest • Strategic Objectives: – Participate in new growth markets – Diversify customers, produ
Slide 10: Industrial Group
Industrial Group • Actions: – Joint Venture Agreement to Establish Production in India: • Capitalize on large and fast-growing local market • Serve as low-cost export base to Europe • Diversify customer base and markets • Partnering with Amtek Auto • Diverse array of components for commercial vehicl
Slide 11: Industrial Group
Industrial Group • Actions: – Handshake to Establish Joint Venture in China: • Capitalize on large and fast-growing local market • Diversify customer base and markets • Diverse array of components for commercial vehicle, off highway and agricultural applications • Funded primarily through foreign so
Slide 12: Electronics Group
Electronics Group • Market Conditions: – Remain positive – Credit crisis of little material impact at this point – Expect opportunities to increase across the board • Strategic Objectives: – Drive technology – Biometrics, wireless, embedded – Increase product mix – R&D, licensing, government and cus
Slide 13: Electronics Group
Electronics Group • Actions: – Establish Partnerships with Leading Universities: • Capitalize on intellectual resources to commercialize technology • Focus on information assurance and security • Biometric solutions for communications security • In discussions with Cal Tech, Purdue and others – Part
Slide 14: Electronics Group
Electronics Group • Actions: – Continuous Improvement as a Culture: • Reduction of physical facility footprint • Drive dramatic reduction of cycle and turn times • Reduce overhead and improve productivity • Free up important capacity – Reduce Complexity: • Implement hub-and-spoke branch business mod
Slide 15: Wrap Up
Wrap Up • Strategic Review Completed: – $25.0 million of annual cost savings, driven by the reduction of over 800,000 square feet in facilities and close to 200 heads, reduced product costing and improved quality – In our Industrial Group, joint ventures in India and China are expected to further di