Slide 1: 2008 Guidance & Market Outlook Conference Call
2008 Guidance & Market Outlook Conference Call December 20, 2007
Slide 2: Financial & Market Outlook
Financial & Market Outlook Jeffrey T. Gill President and CEO T. Scott Hatton Vice President and Chief Financial Officer
Slide 3: Disclosures Safe Harbor Disclaimer
Disclosures Safe Harbor Disclaimer Each;forward-looking statement; herein is subject to serious risks and should not be relied upon, as detailed in our most recent Form 10-K and Form 10-Q and subsequent SEC filings. Briefly, we currently believe that such risks also include: our ability to liquidate
Slide 4: Session Agenda
Overview Market Outlook Conclusion 2007 Update 2008 Forecast Summary;A Session Agenda
Slide 5: 2007 Overview
2007 Overview Preliminary Results: EPS expected to be $0.07 to $0.10 lower than prior guidance primarily due to $10 million shortfall in SIG revenue; due to report on February 28 Revenue down year over year Reflecting a 44% and 22% decline in production of heavy and mediumduty commercial vehicles, r
Slide 6: Market Outlook Industrial Group
Market Outlook Industrial Group; The outlook for commercial vehicle, trailer and SUV production in 2008 has changed materially in recent months; The forecast for heavy vehicle production by ACT has been reduced by 17% from its October forecast (259,000 versus 216,000), reflecting the impact of high
Slide 7: Market Outlook Industrial Group
Market Outlook Industrial Group The confirmation of Dana's restructuring plan by the bankruptcy court and the receipt of exit financing is positive news Exit expected during January, with subsequent request to list on the NYSE Outstanding Board of Directors, which provides sense of optimism Despite
Slide 8: Market Outlook Electronics Group
Market Outlook Electronics Group; Aerospace and Defense is expected to show strong double digit growth during 2008, driven by the continued launch of new classified programs; Demand for secure communications products continues to increase; Product line expansions in our Data Systems business are exp
Slide 9: Conclusion
Conclusion The outlook for the economy in 2008 has been revised downward in recent months, reflecting issues in housing, credit, energy and consumer confidence, among other factors; At this time in 2006, ACT was forecasting a 28% increase in production for commercial vehicles in 2008, the result of
Slide 10: 2007 Update / 2008 Forecast
2007 Update / 2008 Forecast
Slide 11: Total Year 2007 Update
EPS EPS Free Cash Flow Free Cash Flow PBT down $1.5; EPS decreases 8 cents Guiding $0.08 EPS lower due primarily to softer heavy/med duty truck volume lower tax benefit from domestic/int’l split Cash flow down $5 from prior guidance Lower Q4 volumes converting to lower collections Guiding $10 lower
Slide 12: Class 5-8 Truck Market Forecast
October forecasted 2008 up 22% over 2007 Current view up 1% over 2007 2009 rebounds 52% October predicted 15% growth over 2007 Revised view flat with 2007 2009 grows 17% Class 5-8 Truck Market Forecast 11 October forecasted 2008 up 22% over 2007 Current view up 1% over 2007 2009 rebounds 52% October
Slide 13: 2008 Guidance: Revenue, EPS and Free Cash Flow
0.10 Free Cash Flow Free Cash Flow 2007E 2008E ($18) - ($13) $0 ($M, except EPS) Revenue up 10% SIG up 9% - Material price increase drives 6% growth - Truck mkt up 3% - Non-core business reductions & declines in trailer and light vehicle - 5% increase in Med/Heavy Duty SEG up 11% - 15% A&D growth fr
Slide 14: Industrial and Electronics Group Outlook
Industrial volumes flat, except Energy market…market upturn expected in Q4 Material price increases resulting in higher revenue drive 6 points of sales growth – Med/Heavy Duty up 5%; Light Duty down 3%; Trailers down 4% – Energy prices result in continued demand for Engineered Products – up 7-8% • R
Slide 15: Truck Market Rebounds in 2009
Truck Market Rebounds in 2009 Heavy Duty by 52% Med Duty by 17% Commercial Realignment – Contract expiration / realignment opportunities Rationalize product lines, exiting low value add products Organic growth in core products/expand customer base Energy Market Growth Continues Multiple Levers Drivi
Slide 16: Industrial Group Restructuring / LEAN
Revised to reflect softer ’08 market & lower execution risks 4-Phased approach covering 39 months (Q4’07 – Q4’10) Transitions SIG to CoE model Aligns with customers’ objectives Delivers significant benefits to Sypris & customers Savings Costs $5M $7M Benefits Begin to Accrue in 2008 Benefits Begin t
Slide 17: Industrial and Electronics Group Outlook
Industrial volumes flat, except Energy market;market upturn expected in Q4; Material price increases resulting in higher revenue drive 6 points of sales growth; Med/Heavy Duty up 5%; Light Duty down 3%; Trailers down 4%; Energy prices result in continued demand for Engineered Products; up 7-8%; Rest
Slide 18: Electronics Group Growth
25 15 15 5 153 2007 E Secure Comm. Prods Recorder / Receiver Select EMS Test & Msmt 2009 E Broader Offering in Secured Communications; New generation encryption product to launch in Q1;08; $20-25M / yr;D investment to provide new market; $5M-$10M / yr A&D New Products / New Markets; Receivers & reco
Slide 19: Q1 2008 Earnings Guidance
EPS EPS 2007 2008E ($0.01) $0.00 Free Cash Flow Free Cash Flow 2007 2008E ($2) ($10-$12) ($M, except EPS) Revenue down 6% 12% decline in Industrial driven by Commercial Truck cycle 16% increase in SEG driven by growth in products and test services PBT up $0.4; EPS increases 1 cent SIG holds PBT flat
Slide 20: 2008 Summary
2008 Summary Sets Stage for Double-Digit Revenue & Profit Expansion in;09 Sets Stage for Double-Digit Revenue & Profit Expansion in;09 Positive earnings projected for 2008 despite softer truck demand10% revenue growth supported by strong;particularly in Electronics Program delays are behind Electron