Slide 1: Fourth Quarter and Full-Year 2009 Earnings Conference Call
Fourth Quarter and Full-Year 2009 Earnings Conference Call March 23, 2010 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 • Segment Review • Q4 and 2009 Full Year Financial Review • Summary • Q&A Session 3
Slide 4: Overview: Key Highlights for Q4
Overview • Key Highlights for Q4 – Gross profit increased to $5.8 million, or 8.8% of revenue, continuing the important trend of improvements in quarterly profit – Aerospace & Defense gross margins increased to 20.4%, up from 1.0% for the prior year period – Industrial gross margins increased as wel
Slide 5: Overview: Key Highlights for Q4
Overview • Key Highlights for Q4 – The Company reported net income from continuing operations of $14.8 million, or $0.73 per share, which included the gain on the sale of the securities – The Company also recognized a gain on the sale of the Test & Measurement segment of $7.8 million, or $0.42 per s
Slide 6: Overview: Key Highlights for 2009
Overview • Key Highlights for 2009 – 2009 turned out to be more challenging than we had originally expected, but the Company nonetheless finished the year a much stronger, healthier business – To achieve this outcome, a number of important initiatives were implemented • We closed facilities in Calif
Slide 7: Overview: Key Highlights for 2009
Overview • Key Highlights for 2009 – The initiatives listed here are among the many, both large and small, that were implemented during 2009 – The early results are worth noting: • EBITDAR increased by $9.2 million during the fourth quarter of 2009 compared to the prior year quarter • Gross margins
Slide 8: Industrial
Industrial • Team has done a terrific job during challenging times – Accelerated footprint reductions and relocated production – Inventory reduced 43% during the year, while inventory turns improved by 17% – Full-year metrics for quality and delivery achieved their highest ratings in the history of
Slide 9: Industrial: Market Conditions – ACT Research
Industrial • Market Conditions – ACT Research – Recovery forecast to begin in second half, led by trailers – subject to economy 2010 4Q09 Q1 Q2 Q3 Q4 2010 Class 5-7 27.5 27.0 25.9 30.6 34.1 117.5 Change -1.8% -4.1% 18.1% 11.4% Class 8 33.9 34.1 29.5 36.5 40.9 141.0 Change 0.6% -13.5% 23.7% 12.1% Tra
Slide 10: Aerospace & Defense
Aerospace & Defense • Announced $200 million, five-year IDIQ contract with Department of Defense – RASKL electronic key load device – developed internally – To be used in secure communications networks – Certification received during 1Q10; Shipments targeted to begin during 2Q10 • Cyber Warfare acti
Slide 11: Aerospace & Defense
Aerospace & Defense • Launched key partnerships with Purdue University’s Center for Education and Research in Information Assurance and Security (CERIAS) and Carnegie Mellon’s Cylab to focus on the development of Trusted Architecture for secure systems, and with the California Institute of Technolog
Slide 12: Aerospace & Defense
Aerospace & Defense • Recently awarded contracts to produce electronic assemblies for the communications, navigation and identification avionics system for the F-35 Lightning II joint strike fighter and for the Digital Flight Control Computer of the F-16 • Quality and delivery continued to achieve o
Slide 13: Q4 Financial Results – Consolidated
Q4 Financial Results – Consolidated ($ in thousands) Fav/ 4Q08 4Q09 (Unfav) Highlights Revenue 80,663 66,097 (14,566) SIG market downturn; Legacy A&D programs. Gross Profit (1,320) 5,799 7,119 Restructuring benefits; LEAN/CI initiatives; mix Gross Margin (1.6%) 8.8% 10.4% 4 quarters of sequential gr
Slide 14: Q4 Financial Results – Industrial
Q4 Financial Results – Industrial ($ in thousands) Fav/ 4Q08 4Q09 (Unfav) Highlights Revenue 47,293 40,418 (6,875) Lower commercial vehicle volumes Gross Profit (1,647) 567 2,214 Restructuring, productivity offset lower sales Gross Margin (3.5%) 1.4% 4.9% Expect continued margin growth going forward
Slide 15: Q4 Financial Results – Aerospace & Defense
Q4 Financial Results – Aerospace & Defense ($ in thousands) Fav/ 4Q08 4Q09 (Unfav) Highlights Revenue 33,370 25,679 (7,691) Wrap up of low-margin legacy programs Gross Profit 327 5,232 4,905 Impact of new programs; increased efficiency Gross Margin 1.0% 20.4% 19.4% GM up each of last 4 quarters sequ
Slide 16: 2009 Financial Results - Consolidated
2009 Financial Results - Consolidated ($ in thousands) Fav/ 2008 2009 (Unfav) Highlights Revenue 356,105 265,900 (90,205) SIG market downturn Gross Profit 19,635 16,018 (3,617) Restructuring and productivity gains Gross Margin 5.5% 6.0% 0.5% Margins expand despite SIG sales impact driven by strong A
Slide 17: 2009 Financial Results – Industrial
2009 Financial Results – Industrial ($ in thousands) Fav/ 2008 2009 (Unfav) Highlights Revenue 244,177 152,021 (92,156) SIG market downturn; 43% decline in Class 8 Gross Profit 10,821 (3,661) (14,482) Downturn offset by partial year benefits Gross Margin 4.4% (2.4%) (6.8%) Margin improvements in Q3
Slide 18: 2009 Financial Results – Aerospace & Defense
2009 Financial Results – Aerospace & Defense ($ in thousands) Fav/ 2008 2009 (Unfav) Highlights Revenue 111,928 113,879 1,951 Run rate higher in 1H09 as programs conclude Gross Profit 8,814 19,679 10,865 Restructuring benefits; LEAN/CI initiatives; mix Gross Margin 7.9% 17.3% 9.4% Positive margin mo
Slide 19: 2009 Summary
2009 Summary • Dramatically improved our capital structure – net debt reduced to 6.5% of total capital • Made difficult decisions and responded to the deteriorating economy; carried out the necessary steps to make meaningful, lasting changes to our cost structure • Improvement in sequential quarterl
Slide 20: Q & A Session
Earnings Conference Call Q & A Session 20