Slide 1: Third Quarter 2012 Earnings Conference Call
Driving Change Third Quarter 2012 Earnings Conference Call November 6, 2012 Jeffrey T. Gill President & CEO Brian A. Lutes Vice President & CFO Anthony C. Allen 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 Each “forward-looking statement” herein is subject to serious risks and should not be relied upon, as detai
Slide 3: Table of Contents
Table of Contents • Overview • Segment Review – Aerospace & Defense – Industrial • Financial Review • Summary • Q&A Session 3
Slide 4: Overview: 3Q12 Highlights
Overview 3Q12 HIGHLIGHTS • Sales of $78.8 million – Decelerating commercial vehicle demand – Delayed funding for A&D customers • Gross Profit of $9.4 million – 60 basis point margin expansion to 11.9% • EPS1 of $0.03 per diluted share – Expanding margins; disciplined cost containment • Positive Free
Slide 5: Overview: YTD12 Highlights
Overview YTD12 HIGHLIGHTS • Sales of $274.1 million – 8.8% increase – $29.5 million growth of Industrial sales • Gross Profit of $35.1 million – 32.4% increase – 230 basis point margin expansion to 12.8% • EPS1 of $0.55 per diluted share – Up 57% on sales growth and margin expansion • Strong Balance
Slide 6: Aerospace & Defense Market Overview
Aerospace & Defense MARKET OVERVIEW • UNCERTAINTY REMAINS – Continuing resolution and fiscal cliff impacting funding – Prime contractors are preparing for extensive layoffs – Future budget reductions raise questions about strategic priorities - Exception is Cyber and Information Security • OPPORTUNI
Slide 7: Aerospace & Defense: Executing Strategy
Aerospace & Defense EXECUTING STRATEGY • MANUFACTURING SERVICES – Expanding high-reliability space applications (satellite) – Growing severe environment (deep sea telecom) – Utilizing “Trusted Source” certification to expand customer base • INFORMATION SECURITY AND ENCRYPTION KEY MANAGEMENT PRODUCTS
Slide 8: Industrial Market Overview
Industrial MARKET OVERVIEW • ORDER ACTIVITY REFLECTS ECONOMY’S UNCERTAIN FUTURE COURSE – Events in Europe and the looming fiscal cliff are causing delays in orders – OEMs are scaling back production and taking weeks out of schedules – Production of heavy-duty trucks dropped an estimated 21% sequenti
Slide 9: Industrial: Executing Strategy
Industrial EXECUTING STRATEGY • ELIMINATE WASTE – Maintain strict cost containment during short-term trough – Partner with Toyota to accelerate shop floor continuous improvement activities – Work closely with customers to reduce cycle times and improve responsiveness • INVEST TO DRIVE EFFICIENCY – U
Slide 10: Financial Results (3Q12 vs 3Q11)
Financial Results ($ in thousands) Aerospace & Defense 3Q12 3Q11 ∆ Revenue 13,587 18,530 (4,943) Gross Profit 2,800 3,332 (532) Gross Margin 20.6% 18.0% 260 bps Industrial Group Revenue 65,176 72,647 (7,471) Gross Profit 6,574 6,931 (357) Gross Margin 10.1% 9.5% 60 bps Consolidated Revenue 78,763 91
Slide 11: Financial Results (YTD 2012 vs 2011)
Financial Results ($ in thousands) YTD YTD Aerospace & Defense 2012 2011 ∆ Revenue 43,590 50,963 (7,373) Gross Profit 9,709 7,379 2,330 Gross Margin 22.3% 14.5% 780 bps Industrial Group Revenue 230,548 201,082 29,466 Gross Profit 25,402 19,143 6,259 Gross Margin 11.0% 9.5% 150 bps Consolidated Reven
Slide 12: Summary
Summary • MAINTAINING STRONG OPERATIONAL PERFORMANCE – Third quarter gross margin expands 60 basis points despite softening revenue, driven by a 260 basis point increase for A&D – Free cash flow for the quarter increased sequentially to $0.22 per share – Year-to-date gross profit has increased 32%,
Slide 13: Q & A Session
Earnings Conference Call Q & A Session 13