Slide 1: 2013 Third Quarter Earnings Conference Call
Jeffrey T. Gill 2013 Third Quarter President & CEO Earnings Conference Call Brian A. Lutes Vice President & CFO Anthony C. Allen November 12, 2013 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: Q3 Highlights
Overview Q3 Highlights • Quarter remained mostly stable for both segments – Heavy truck demand slowed from the prior quarter; however global oil and gas markets remained solid – Improved visibility within A&D • Revenue decreased slightly quarter-over-quarter – Sales declined to $76.3 million, down 7
Slide 5: Aerospace & Defense Q3 Highlights
Aerospace & Defense Q3 Highlights • Business Results – Q3 sales of $9.6 million, up 24% sequentially, but still well below desired levels – Revenue with certain established programs incurred continued delays – Supported significant “Bid & Proposal” efforts relative to core technologies and Cyber off
Slide 6: Aerospace & Defense Outlook
Aerospace & Defense Outlook • US defense industry challenges are likely to continue – We remain committed to improving our portfolio through diversification • Procured a customer-funded development program within our core technologies; additional such opportunities are underway and promising • Worki
Slide 7: Industrial Q3 Highlights
Industrial Q3 Highlights • Business Results – Q3 sales of $66.7 million, up 2% from 3Q12 – Q3 gross profit of $7.4 million, up 13% from 3Q12 • Quality and delivery continue at world class levels • TPS(1) activities showing progress at each site • The combination of process improvements and the TPS i
Slide 8: Industrial Outlook
Industrial Outlook • Markets are stable to positive – Near term heavy truck market tracking near 3Q levels with some upside potential as customers’ inventory reductions appear to be complete – 2014 Class 5-8 production expected to be up 9% to 10% versus 2013 (ACT Research, November 11, 2013) – Trail
Slide 9: Financial Review Third Quarter 2013
Financial Review Brian A. Lutes Vice President & CFO Third Quarter 2013 November 12, 2013
Slide 10: Consolidated Financial Results: Year-Over-Year
Consolidated Financial Results Year-Over-Year Results ($ in thousands, except EPS) 3Q12 3Q13 Revenue $ 78,763 $ 76,278 • SIG revenue remained stable while A&D declined Gross Profit 9,374 7,261 • Lower revenue and changing product mix within A&D Gross Margin 11.9% 9.5% • Strength of SIG’s performance
Slide 11: Consolidated Financial Results: Sequential
Consolidated Financial Results Sequential Results ($ in thousands, except EPS) 2Q13 3Q13 Revenue $ 82,166 $ 76,278 • Sequential increase in A&D revenue; insufficient to offset market softening in SIG Gross Profit 8,336 7,261 • Lower revenue drives reduction; offset by (1) ongoing CI, Lean programs a
Slide 12: A&D Financial Results
A&D Financial Results Revenue Gross Margin ($ in millions) 20.6% $13.6 $9.6 $9.6 $7.7 (1.6%) (6.7%) (1.6%) 3Q12 3Q13 2Q13 3Q13 3Q12 3Q13 2Q13 3Q13 YOY Results Sequential Results YOY Results Sequential Results • Defense budget cuts and program delays • Gross margin was a loss for 3Q13, continued to i
Slide 13: Industrial Financial Results
Industrial Financial Results Revenue Gross Margin ($ in millions) $74.4 11.1% 11.9% 11.1% $66.7 $66.7 10.1% $65.2 3Q12 3Q13 2Q13 3Q13 3Q12 3Q13 2Q13 3Q13 YOY Results Sequential Results YOY Results Sequential Results • Demand remained stable; inventory • Gross margins increased by 100 bps rebalancing
Slide 14: Summary
Summary • Commercial vehicle demand was relatively stable, with inventory rebalancing driving lower shipments in the quarter; demand for our products serving the oil and gas markets remain very strong – Industrial revenue increased 2% YOY and decreased 10% on a sequential basis – Industrial gross ma
Slide 15: Question and Answer Session
Jeffrey T. Gill Question and Answer Session President & CEO Q3 Earnings Conference Call Brian A. Lutes Vice President & CFO November 12, 2013