Slide 1: 2014 Fourth Quarter and Full Year Earnings Conference Call
Jeffrey T. Gill 2014 Fourth Quarter and Full Year President & CEO Earnings Conference Call Anthony C. Allen Vice President & CFO March 31, 2015
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 This press release contains “forward-looking” statements within the meaning of the federal securities laws.
Slide 3: Table of Contents
Table of Contents • Overview • Segment Review – Sypris Electronics – Sypris Technologies • Financial Review • Summary • Q&A Session 3
Slide 4: Overview: 2014 Highlights
Overview 2014 Highlights • Revenue increased 14% to $355 million • Gross profit increased 29% to $39 million • Gross margin expanded 120 basis points to 10.9% • EBITDA increased $11 million to $14 million • Earnings improved to a loss of $0.06 per diluted share, up from a loss of $0.51 per share in
Slide 5: Sypris Electronics: 2014 Highlights
Sypris Electronics 2014 Highlights • Sequestration and associated program funding delays initiated in 2013 continued to impact planned shipments and the financial results in 2014 • Maintained critical R&D investments, advancing new core technologies to the demonstration stage – Booked a program that
Slide 6: Sypris Electronics: 2014 Highlights
Sypris Electronics 2014 Highlights • Global demand for the Sypris Cyber Range continued to build important momentum, with plans to commission a Cyber Lab in partnership with NEC Asia Pacific for the Singapore Ministry of Home Affairs in Q2 • Additional opportunities exist in the very near term • Sev
Slide 7: Sypris Electronics: 2015 Outlook
Sypris Electronics 2015 Outlook • US defense industry challenges are likely to continue – We remain committed to improving our portfolio through diversification, achieving a better hardware/software balance • Key Items of Note for 2015 – Recent release of shipments for Northrop Grumman and the commi
Slide 8: Sypris Technologies: 2014 Highlights
Sypris Technologies 2014 Highlights • Revenue increased 17% to $322 million, while gross profit increased 33% to $42 million, or 13.0% of sales, up 150 basis points from 2013 – EBITDA was $36 million, or 11.1% of sales – Free cash flow increased 19% to $19 million – Return on net assets(1) was 49% •
Slide 9: Sypris Technologies: 2014 Highlights
Sypris Technologies 2014 Highlights • Quality and delivery performance remained at world class levels • Made investments to support future growth opportunities – Invested in additional production technology – Increased investment in product engineering • Commercial vehicle production expanded 17% in
Slide 10: Sypris Technologies: Subsequent Event
Sypris Technologies Subsequent Event • By year end, it became apparent that our contractual dispute with Dana was unlikely to be resolved through the renewal of our contract • As a result, we have not had demand from nor have we shipped product to Dana since December of 2014 • In response to this ou
Slide 11: Sypris Technologies: 2015 Outlook
Sypris Technologies 2015 Outlook • Market Outlooks are Positive – 2015 Class 5-8 production expected to be up 9% versus 2014 (ACT Research, March 10, 2015) – Light truck and trailer remain positive – Oil and gas outlook is stable but uncertain • Our Priorities are Clear – Successfully ramp up new pr
Slide 12: Financial Review 2014 Fourth Quarter and Full Year
Financial Review Anthony C. Allen Vice President & CFO 2014 Fourth Quarter and Full Year March 31, 2015
Slide 13: Consolidated Financial Results: Quarter-Over-Quarter
Consolidated Financial Results Quarter-Over-Quarter Results ($ in thousands, except EPS) 4Q14 4Q13 Revenue $ 87,215 $ 73,859 • Driven by 25% increase in ST revenue Gross Profit 9,230 6,380 • Volume contributes to gross profit increase Gross Margin 10.6% 8.6% • Conversion on ST revenue increase EPS*
Slide 14: Consolidated Financial Results: Year-Over-Year
Consolidated Financial Results Year-Over-Year Results ($ in thousands, except EPS) 2014 2013 Revenue $ 354,776 $ 310,714 • Driven by 17% increase in ST revenue Gross Profit 38,830 30,053 • Volume contributes to gross profit increase Gross Margin 10.9% 9.7% • Conversion on revenue gain by ST partiall
Slide 15: Sypris Electronics: Revenue and Gross Margin
Sypris Electronics Revenue Gross Margin ($ in millions) $32.5 $34.6 (13.5%) (8.8%) (9.8%) (4.6%) $10.0 $7.1 4Q14 4Q13 FY14 FY13 4Q14 4Q13 FY14 FY13 • Q4 decrease of 29% • Unfavorable revenue mix in 2014 vs 2013 from lower product and severe • Full Year decrease of 6% EDMS content • Decline in sales
Slide 16: Sypris Technologies: Revenue and Gross Margin
Sypris Technologies Revenue Gross Margin ($ in millions) $322.3 $276.1 13.0% 12.7% 11.5% $80.2 11.3% $63.9 4Q14 4Q13 FY14 FY13 4Q14 4Q13 FY14 FY13 • Strong commercial vehicle demand • Margin % increased in Q4 & YTD – Q4 increase of 25% • Volumes drive profit improvement – Full Year increase of 17% −
Slide 17: Subsequent Events
Subsequent Events • Shipments of product to Dana ended in December 2014 • Cost reductions implemented across all business units – Headcount reductions and reduced schedules at plants impacted – Compensation and benefit plans adjusted to reduce drag – Close oversight over variable plant operating exp
Slide 18: Capital Resources
Capital Resources • Net debt position at December 31, 2014 of $10.0 million • Successfully completed amendments to credit facility – Revised covenants to reflect new circumstances – Restricted dividend payments to preserve cash • Raised $4 million in subordinated debt to support the transition • Tak
Slide 19: Summary
Summary • 2014 Marked Important Progress – Revenue, gross profit, EBITDA and earnings improved – Adjustments to fixed overhead and SG&A for Sypris Electronics completed • 2015 Building Blocks – Sypris Electronics • Revenue growth: EDMS and Cyber • Reduced overhead and improved product mix drive marg
Slide 20: Question and Answer Session
Jeffrey T. Gill Question and Answer Session President & CEO 2014 Earnings Conference Call Anthony C. Allen Vice President & CFO March 31, 2015