Slide 1: 2017 First Quarter Earnings Conference Call
Jeffrey T. Gill 2017 First Quarter President & CEO Earnings Conference Call Anthony C. Allen Vice President & CFO May 16, 2017
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 Each forward-looking statement herein is subject to risks and uncertainties, as detailed in our most recent
Slide 3: Table of Contents
Table of Contents • Overview • Transition Plan Update • New Program Awards • Results • Financial Review • Cost Reduction Actions • Key Takeaways • Q&A Session 3
Slide 4: Overview: 1Q17 Highlights
Overview 1Q17 Highlights • Revenue was at the lower end of expectations – Shift of customer deliveries to Q2 • Cash flow from operations improved significantly • Confirming guidance – 1H17: Sales $38-$40 million; Gross margin 5%-7% – 2H17: Sales $40-$42 million; Gross margin 15%-17% • Expect early c
Slide 5: Transition Plan Update: Objectives
Transition Plan Update Objectives • Significantly improve our cost-competitiveness on a sustained basis • Establish and maintain a highly-liquid balance sheet • Achieve a balanced diversification of customers and markets served • Complete the Broadway relocation utilizing internally generated funds
Slide 6: Transition Plan Update: Actions Taken in 2016
Transition Plan Update Actions Taken in 2016 • Entered into sale-leaseback for underutilized real estate generating $12.0 million • Divested CSS business, generating $42.0 million • Eliminated high-cost commercial debt: savings of $5.5 million annually • Relocated Sypris Electronics to a modern 50,0
Slide 7: Transition Plan Update: Initiatives to be Completed – On Plan
Transition Plan Update Initiatives to be Completed – On Plan • The timely approval and launch of programs in Toluca • The successful implementation of a single ERP platform • Transition of operations from the Broadway Plant • The liquidation of idle and underutilized non-core assets • The timely del
Slide 8: New Program Awards
New Program Awards • During the past 9 months, the award of new, multi-year programs has been very positive – $12.5 million for 2018 – $12.9 million for 2019 – Average term of 4+ years • In addition, follow on business from new government contracts is expected to be material – $8.2 million for 2018
Slide 9: New Program Awards: Sypris Technologies
New Program Awards: Sypris Technologies • New program awards Revenue Market Date Term SOP 2017 2018 2019 balanced across Automotive customers, markets and Awarded 4Q16 7 Yr 4Q18 $ - $ 0.7 $ 4.0 products Light Truck Awarded 1Q17 2 Yr 1Q17 0.7 1.0 - • Providing solid multi-year Awarded 1Q17 3 Yr 1Q17
Slide 10: New Program Awards: Sypris Electronics
New Program Awards: Sypris Electronics Revenue • New program awards to Market Communication & Navigation Date SOP 2017 2018 2019 drive double digit growth Awarded 1Q17 1Q18 $ - $ 0.9 $ - in 2017 Awarded 2H16 1Q17 1.9 2.3 - Follow on 2H18 1Q19 - - 2.3 • Complex, high-cost-of- Infrared Countermeasures
Slide 11: Results: Sypris Technologies
Results Sypris Technologies • Globally competitive platform – Lower variable cost – Elimination of redundant fixed overhead – Elimination of redundant capital requirements – Increased capacity utilization • Reduced breakeven point and increased margins • Talent redistributed between locations – Acce
Slide 12: Results: Sypris Electronics and Consolidated
Results Sypris Electronics • Clear, singular strategic vision • Material improvement in competitive profile – Reduction in fixed overhead – Substantially lower SG&A – Improved operational visibility and cycle times – Additional absorption will further reduce rates and increase competitiveness Consol
Slide 13: Financial Review First Quarter 2017
Financial Review Anthony C. Allen Vice President & CFO First Quarter 2017 May 16, 2017
Slide 14: Financial Results
Financial Results $ millions 1Q 2017 4Q 2016 Consolidated ST SE Consolidated Variance Net Revenue $ 18.2 $ 12.8 $ 5.4 $ 20.0 $ (1.8) Gross Profit $ (0.7) $ (0.8) $ 0.1 $ (0.2) $ (0.5) Adjusted EBITDA $ (1.1) $ 0.6 $ (0.4) $ (2.5) $ 1.4 EPS $ (0.16) $ (0.23) • Sequential growth in SE revenue during 1
Slide 15: Cost Reduction Goals
Cost Reduction Goals $ millions 2017 2018 Total Status Cost of sales $ (6.3) $ (5.5) $ (11.8) Selling, general and administrative (7.2) (1.8) (9.0) Research and development (0.3) No change (0.3) Severance, equipment relocation and other costs 1.1 (0.8) 0.3 Interest and loss on extinguishment of debt
Slide 16: Customer Concentration
Customer Concentration Top 2 Customers as a Percent of Revenue • No single customer expected to account for > 15% of revenue in 2017 • Balanced customer base in both segments • Adding new customers to further diversify portfolio 16
Slide 17: Revenue Mix by Market
Revenue Mix by Market Top Markets as a Percent of Revenue • Significant shift in markets served provides balanced revenue mix • Expect reduced volatility with less dependence on heavy truck market • Exploring new markets to provide growth opportunities for both segments 17
Slide 18: Mix + Cost Reductions Drive Margin in 2H
Mix + Cost Reductions Drive Margin in 2H • Expect expansion of gross margin in 2H 2017 to 15-17% of revenue • Nearly 50% increase in GM% as compared to 2014 • Lower cost profile and more balanced revenue mix drive increased margin performance • Cost reductions, new business awards and follow on busi
Slide 19: Key Takeaways
Key Takeaways • 1Q 2017 operating results include ongoing transition activities for Broadway Plant • Progress toward cost reduction goals on track with substantial completion of Broadway initiatives in May 2017 • Confirm 1H and 2H 2017 outlook discussed in March − 1H 2017: Revenue $38-$40 million; G
Slide 20: Question and Answer Session
Jeffrey T. Gill Question and Answer Session President & CEO 1Q Earnings Conference Call Anthony C. Allen Vice President & CFO May 16, 2017