Slide 1: Third Quarter 2009 Earnings Conference Call
Third Quarter 2009 Earnings Conference Call November 17, 2009 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 • Subsequent Events • Segment Review • Q3 2009 Financial Review • Summary • Q&A Session 3
Slide 4: Overview
Overview • Key Highlights for Q3 – Gross profit increased 48% on a year over year basis and 17.5% sequentially – Aerospace & Defense gross margins increased to 20% – Working capital turns increased to 11.4 times – The Company continued to generate free cash flow – Subsequent to quarter-end • $60 mil
Slide 5: Subsequent Events
Subsequent Events • Sale of Test & Measurement Segment – Sold to Tektronix on October 26 – The benefits expected to be substantial • Strengthened balance sheet and improved liquidity to support growth • Increased focus on and support for Aerospace & Defense and Industrial Groups – two highly scalabl
Slide 6: Industrial
Industrial • Market Conditions – 2009 market will be remembered as one of the most challenging in memory – Outlook improvement in 2010 – primarily second half 2009 ACT Outlook 2010 ACT Outlook Aug Nov Change Aug Nov Change Class 5-7 89.5 94.0 5.0% 104.5 122.9 17.6% Class 8 111.6 116.0 3.9% 152.6 141
Slide 7: Industrial
Industrial • Team has done a terrific job during challenging times – Completed closure of two plants – 40% of rooftops – Inventory reduced 11% sequentially and 44% from year-end – Inventory days reduced to 29 days despite lower volumes and higher mix – Productivity improving as plant relocations are
Slide 8: Aerospace & Defense
Aerospace & Defense • Announced $200 million IDIQ contract with Department of Defense – RASKL electronic key load device – developed internally – Five-year contract – To be used in secure communications networks – Certification underway – Shipments expected to begin in Q1 2010 • Expect to deliver fi
Slide 9: Aerospace & Defense
Aerospace & Defense • Market outlook remains positive – Quoting activity continued to increase – spacecraft, satellite, other – Increasing recognition as systems integrator for network security • Global Key Management • Secure Communications • Identity Authentication • Cyber Warfare • Continue to re
Slide 10: Q3 Consolidated Results
Financial Review – Q3 Consolidated Results ($ in thousands) 3Q08 3Q09 Change Highlights Revenue 86,092 62,716 -27.2% 38% decline in commercial vehicle market Gross Profit 3,540 5,222 47.5% Expansion of A&D margins; restructuring Gross Margin 4.1% 8.3% (1) EBITDAR (1,359) 1,369 200.7% Continued posit
Slide 11: Q3 A&D Results
Financial Review – Q3 A&D Results ($ in thousands) 3Q08 3Q09 Change Highlights Revenue 28,123 25,552 -9.1% Completion of mature, lower margin programs Gross Profit 3,234 5,118 58.3% Impact of new programs; increased efficiency Gross Margin 11.5% 20.0% Potential for further expansion (1) EBITDAR (805
Slide 12: Q3 Industrial Results
Financial Review – Q3 Industrial Results ($ in thousands) 3Q08 3Q09 Change Highlights Revenue 57,969 37,164 -35.9% 38% decline in commercial vehicle market Gross Profit 306 104 -66.0% Gross Margin 0.5% 0.3% Important operational leverage exists with market recovery (1) EBITDAR (1,038) 1,053 201.4% E
Slide 13: Sequential Industrial Results
Financial Review – Sequential Industrial Results ($ in thousands) 1Q09 2Q09 3Q09 Highlights Revenue 37,498 36,941 37,164 Stabilized; Expect 4 – 5 years of growth Gross Profit (2,702) (1,630) 104 Gross Margin -7.2% -4.4% 0.3% Expect margin expansion with volume (1) EBITDAR (2,639) (466) 1,053 Cash fl
Slide 14: EBITDAR
(1) Financial Review – EBITDAR ($M) A&D’s program mix, restructuring, and 2008 2009 strong customer and quality Q4 Q1 Q2 Q3 improvement programs have increased gross margins to 20% from 11.5% during the prior year quarter Revenue $81 $68 $69 $63 Accelerated the Marion plant closure from Q4 into
Slide 15: Supporting Future Growth
Financial Review – Supporting Future Growth Liquidation STM Strengthened Of Marketable Divestiture Balance Sheet Securities Sale of STM to Tektronix, Liquidated marketable Maturities extended to 2012 Inc., a wholly-owned securities to take advantage Proceeds used to repay subsidiary of Danah
Slide 16: Q3 Summary
Q3 Summary • Sequential results reflect nearly $6M improvement in EBITDAR since Q1, on stable revenue, despite the continuance of a very tough environment within our Industrial Group • Aerospace & Defense gross margins increased to 20%, up from 11.5% for the prior year quarter and up from 18.7% sequ
Slide 17: Q&A Session
Earnings Conference Call Q&A Session 17