Slide 1: 2018 Second Quarter Earnings Conference Call
Jeffrey T. Gill 2018 Second Quarter President & CEO Earnings Conference Call Anthony C. Allen Vice President & CFO August 14, 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 recen
Slide 3: Table of Contents
Table of Contents • Overview • Outlook • Financial Review • Key Takeaways • Q&A Session 3
Slide 4: Overview: 2Q18 Highlights
Overview 2Q18 Highlights • Revenue increased 15.2% sequentially and 8.1% from the prior year – 40.6% increase at Sypris Electronics sequentially; 6.3% YOY – 5.7% increase at Sypris Technologies sequentially; 9.0% YOY • Gross margin expanded to 12.8% for Q2 2018 – Up from 7.6% last year; increased 26
Slide 5: Overview: 2Q18 Highlights
Overview 2Q18 Highlights • Sypris Technologies reports positive operating income for 3rd consecutive quarter • Cost reduction programs completed in 2017 expected to drive further profit improvement • Commercial vehicle market conditions remain strong – Demand remains at record levels and fleets are
Slide 6: Overview: 2Q18 Highlights
Overview 2Q18 Highlights • Energy markets are expanding – US oil and natural gas production are at record levels – WTI crude oil prices – up approximately 40% in LTM to nearly $70 per barrel – US LNG exports for May YTD 2018 – up 62% over prior year • Oil production in the Permian Basin exceeds curr
Slide 7: Overview: 2Q18 Highlights
Overview 2Q18 Highlights • Receipt of electronic components for Sypris improved in 2Q, supporting the 40% growth sequential growth in the quarter – Engaged with customers to mitigate component shortages – Identify and qualify alternative components – Identify alternative sources and leverage custome
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 2H18 – Revenue $47.0 - $51.0 – Gross margin 16.
Slide 9: Financial Review Second Quarter 2018
Financial Review Anthony C. Allen Vice President & CFO Second Quarter 2018 August 14, 2018
Slide 10: 2Q Financial Results
2Q Financial Results $ millions 2Q 2018 2Q 2017 Consolidated ST SE Consolidated Change Net Revenue $ 23.0 $ 15.3 $ 7.6 $ 21.2 $ 1.8 Gross Margin 12.8% 12.6% 13.1% 7.6% 520 bps Adjusted Operating Income $ (0.2) $ 0.7 $ 0.4 $ (2.0) $ 1.8 • Consolidated revenue up 8.1% and adjusted operating income up
Slide 11: 1H Financial Results
1H Financial Results $ millions 1H 2018 1H 2017 Consolidated ST SE Consolidated Change Net Revenue $ 42.9 $ 29.8 $ 13.1 $ 39.4 $ 3.5 Gross Margin 11.6% 13.5% 7.1% 2.7% 890 bps Adjusted Operating Income $ (1.4) $ 1.5 $ (0.4) $ (5.9) $ 4.5 • Consolidated revenue up 8.8% and adjusted operating income u
Slide 12: Outlook Update
Outlook Update $ millions Actual Outlook Outlook 1H 2018 2H 2018 FY 2018 Net Revenue $42.9 $47 to $51 $90 to $94 Gross Margin 11.6% 16% to 18% 14% to 15.5% SG&A 14.7% 12% to 13.5% 13% to 14.5% • Revenue outlook reflects solid backlog and strong market conditions • Expect 2H revenue outlook between $
Slide 13: YOY Revenue and Margin Improvements
YOY Revenue and Margin Improvements First Half Second Half 16.0% 10.9% * H2 2018 Based on Midpoint of Outlook Range • Demand from commercial vehicle • Revenue outlook for 2H includes market drives 1H revenue growth strong market conditions and improved electronic component availability • Cost reduct
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 shortages expected to abate during 2H, supporting a return to higher, historical levels of shipments • Favorable YOY revenue mix tar
Slide 15: Key Takeaways
Key Takeaways • 2Q revenue increased 15.2% sequentially and 8.1% over the prior year period • Gross margin improved to 12.8% in 2Q, up from 7.6% in prior year • SG&A expense reduction of $0.4 million or 11.4% in 2Q compared to prior year • ST generates third consecutive quarter of positive operating
Slide 16: Question and Answer Session
Jeffrey T. Gill Question and Answer Session President & CEO 2Q Earnings Conference Call Anthony C. Allen Vice President & CFO August 14, 2018