Slide 1: 2013 Fourth Quarter and Full Year Earnings Conference Call
Jeffrey T. Gill 2013 Fourth Quarter and Full Year President & CEO Earnings Conference Call Brian A. Lutes Vice President & CFO Anthony C. Allen March 11, 2014 Vice President & Treasurer
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 – Aerospace & Defense – Industrial • Financial Review • Summary • Q&A Session 3
Slide 4: Overview
Overview 2013 Highlights • Revenue, gross profit and earnings declined from the prior year as a result of events impacting our A&D segment – Reported a loss of $0.51 per share, $0.36 of which was the result of goodwill impairment • Cash flow from operations approximated breakeven, driven by strong w
Slide 5: Aerospace & Defense 2013 Highlights
Aerospace & Defense 2013 Highlights • Sequestration and associated program funding delays impacted planned shipments and the financial results – Goodwill from 1990s acquisition written off • Continued critical R&D investments, advancing new core technologies to the demonstration stage – Booked a pro
Slide 6: Aerospace & Defense 2013 Highlights
Aerospace & Defense 2013 Highlights • Global demand for the Sypris Cyber Range continued to build important momentum – Provides the critical platform for organizations to train their personnel to expertly identify, prioritize and respond to the inevitable infiltration from today’s increasingly compl
Slide 7: Aerospace & Defense 2014 Outlook
Aerospace & Defense 2014 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 Areas of Focus – Secure customer funding to integrate new, demonstrated technologies,
Slide 8: Industrial 2013 Highlights
Industrial 2013 Highlights • Revenue declined 3% to $276 million, while gross profit increased 2% to $32 million, or 11.5% of sales, up 70 basis points from 2012 – EBITDA was $32 million, or 11.7% of sales – Free cash flow increased 46% to $16 million – Return on net assets(1) was 40.0% • The combin
Slide 9: Industrial 2013 Highlights
Industrial 2013 Highlights • Quality and delivery performance remained at world class levels • Made investments to support future growth opportunities – Invested in additional production technology – Increased investment in product engineering – Filed patent applications for new drive train componen
Slide 10: Industrial 2014 Outlook
Industrial 2014 Outlook • Market Outlooks are Positive – Near-term heavy-duty truck market tracking above 4Q actuals. December through February orders highest in eight years: 95,455 units – 2014 Class 5-8 production expected to be up 9% versus 2013 (ACT Research, February 10, 2014) – Light truck and
Slide 11: Financial Review 2013 Fourth Quarter and Full Year
Financial Review Brian A. Lutes Vice President & CFO 2013 Fourth Quarter and Full Year March 11, 2014
Slide 12: Q4 Consolidated Financial Results
Q4 Consolidated Financial Results Quarter-Over-Quarter Results ($ in thousands, except EPS) 4Q12 4Q13 Revenue $ 67,466 $ 73,859 • Driven by 15% increase in SIG revenue Gross Profit 8,638 6,380 • 30% SIG increase offset by lower A&D revenue and changing product mix Gross Margin 12.8% 8.6% • Strength
Slide 13: 2014 Consolidated Financial Results
2014 Consolidated Financial Results Year-Over-Year Results ($ in thousands, except EPS) 2012 2013 Revenue $ 341,604 $ 310,714 • YOY decrease mostly driven by A&D Gross Profit 43,749 30,053 • Gross profit negatively impacted by much lower A&D revenue and product mix Gross Margin 12.8% 9.7% • SIG’s ef
Slide 14: A&D Financial Results
A&D Financial Results Revenue Gross Margin ($ in millions) $55.6 25.6% 23.0% $34.6 $12.0 $10.0 (8.8%) (4.6%) 4Q12 4Q13 FY12 FY13 4Q12 FY12 FY13 4Q13 • Defense budget cuts and repositioning of • Gross margin negatively impacted by the product portfolio impacted results lower YOY revenue and change in
Slide 15: Industrial Financial Results
Industrial Financial Results Revenue Gross Margin ($ in millions) $286.0 $276.1 11.5% 11.3% 10.8% $63.9 10.1% $55.5 4Q12 4Q13 FY12 FY13 4Q12 4Q13 FY12 FY13 • Q4 performance improved over the prior • Gross margins for the full year year period, lower 1H demand resulted in increased by 70 bps, despite
Slide 16: Summary
Summary • US defense industry dynamics not likely to change in the near term – Several new customers were successfully on-boarded and the funnel of prospects remain promising – We will leverage our High Assurance Technology and seek to grow our position in the Cyber Security segment • Well positione
Slide 17: Question and Answer Session
Jeffrey T. Gill Question and Answer Session President & CEO 2013 Earnings Conference Call Brian A. Lutes Vice President & CFO Anthony C. Allen March 11, 2014 Vice President & Treasurer