Slide 1: 2016 Third Quarter Earnings Conference Call
Jeffrey T. Gill 2016 Third Quarter President & CEO Earnings Conference Call Anthony C. Allen Vice President & CFO November 16, 2016
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 rece
Slide 3: Table of Contents
Table of Contents • Overview • Transaction • Segment Outlook – Sypris Electronics – Sypris Technologies • Financial Review • Summary • Q&A Session 3
Slide 4: Overview: Q3 Highlights
Overview Q3 Highlights • The sale of our Cyber Security Solutions business to Analog Devices was clearly the highlight of the quarter – Sale price of $42 million was attractive • CSS reported sales of $16.7 million for the full year 2015 and was not profitable – Net income was $21.0 million, or $1.0
Slide 5: Transaction
Transaction Active Nation State Highlights A Threat Level B • Completed the sale of the Cyber Security Solutions Advanced Persistent Threat Most business of Sypris Electronics to Analog Devices, Inc. Organizations Passive C E D Conventional for $42 million Threat Agility/Speed of Action • The busine
Slide 6: Transaction
Transaction • Approximately 67 people are employed by CSS and are expected to remain in their existing geographic locations of Tampa, Florida; Columbia, Maryland; West Lafayette, Indiana; and Copenhagen, Denmark • The transaction includes a long-term supply agreement between Sypris and Analog under
Slide 7: Sypris Electronics Outlook
Sypris Electronics Active Nation State Outlook A Threat Level B • Sypris Electronics will retain its core trusted Advanced Persistent Threat Most manufacturing operations in Tampa, Florida while Organizations Passive C E D Conventional relocating the business into a smaller manufacturing Threat Agil
Slide 8: Sypris Technologies Q3 Highlights
Sypris Technologies Q3 Highlights • Financial Results – Sales declined from the prior year, reflecting the softness in the commercial vehicle market, inventory rebalancing and the divestiture of non-core operations – Gross profit reflected a loss of $0.4 million compared to a loss of $0.3 million fo
Slide 9: Sypris Technologies Outlook
Sypris Technologies Outlook • Markets – As we move into 2017, we expect a fairly significant shift to occur in our markets served – Energy to approximate 43% of sales – Strong backlog, large international projects, and increased maintenance and repair spending – Commercial vehicle to approximate 48%
Slide 10: Financial Review Third Quarter 2016
Financial Review Anthony C. Allen Vice President & CFO Third Quarter 2016 November 16, 2016
Slide 11: Consolidated Financial Results
Consolidated Financial Results $ millions Consolidated Sypris Technologies Sypris Electronics 2016 Q3 2015 Q3 Change 2016 Q3 2015 Q3 Change 2016 Q3 2015 Q3 Change Net Revenue $ 21.4 $ 38.4 $ (17.0) $ 14.8 $ 27.8 $ (13.0) $ 6.6 $ 10.6 $ (4.0) Gross Profit $ (0.7) $ 2.5 $ (3.2) $ (0.4) $ 2.0 $ (2.4) $
Slide 12: Transaction Considerations
Transaction Considerations • Divestiture of Electronics’ CSS business for $42 million cash • Gain on sale is approximately $31.2 million or $1.58 per share • Net proceeds available at closing was approximately $37.8 million – After deducting direct transaction costs and escrow balance of $1.5 millio
Slide 13: Transaction Considerations
Transaction Considerations • Assets sold include intellectual property, certain inventory and PPE directly related to CSS business; retained substantially all working capital and manufacturing equipment • Net asset value of divested assets is approximately $8.1 million • Retained business will be re
Slide 14: Debt & Cash Analysis
Debt & Cash Analysis $ millions 2016 Q2 2016 Q3 Change Senior Revolving Credit Facility $ 4.8 $ - $ (4.8) Senior Tem Debt 10.8 - (10.8) Subordinated Debt 6.5 6.5 - Capital Lease Obligation 3.3 3.2 (0.1) Unamortized Loan Costs (1.3) (0.1) 1.2 Total Debt $ 24.1 $ 9.6 $ (14.5) Cash and Cash Equivalents
Slide 15: Summary
Summary • Reductions in revenue in both segments contributed to a decline in gross profit for the comparable third quarter periods • Gain on sale of CSS business drives income per share of $1.02 for Q3 • Balance sheet strengthened significantly by the CSS transaction • The Company’s profitability in
Slide 16: Question and Answer Session
Jeffrey T. Gill Question and Answer Session President & CEO Q3 Earnings Conference Call Anthony C. Allen Vice President & CFO November 16, 2016