Sypris Solutions (SYPR) 18 May 222022 Q1 Earnings call transcript

Good day, and welcome to the Sypris Solutions, Inc. Conference Call. Today's call is being recorded. At this time, for opening remarks, I would now like to turn the call over to President and Chief Executive Officer, Mr. Jeffrey Gill. sir. ahead, go Please

for and welcome everyone. The you to financial which Keith of I'd purpose Allen like is results company's the to to review first good you, quarter Tony XXXX. morning and of the Thank this call.

results of calls access to are other you that Exchange in might review some compliance what with could non-GAAP result factors morning, included a a in can as presentation be our We with now. discuss have Regulation assurance the Slide can financial any these that Commission. achieved, measures statements And No G, may statements. with we and discussed from to this our and to note differ forward-looking advance be two who include and sypris.com here always those those you actual PowerPoint website this company's at given projected Securities For the please These of begin call. several access projections of and today these during factors. filings may definitions of materially the be projections will

review each detailed our markets. more Tony primary the highlights you to With provide quarter. three. with the our overview for the with the of advance in quarter to for I to like proceed presentation these discussion. the half Please a be of on will starting mind, outlook qualifications will business of first followed with an by we'd now to lead our financial morning, an the for Slide update you this results then of

on overview the four. with begin let's Now Slide

year-over-year, XX% revenue for XX% Sypris that increase Sypris pleased XX% Electronics to We for a the a report increase quarter Technologies. for and by are driven increased

profit $X.XX Sypris to an Sypris shortages a for from Electronics points for this concluded supply all-terrain Sypris in from Gross year-end. also XX% the quarter the XXX units company Technologies resulted top are customers and strong earnings for $X.XX for challenge Gross the positive XXX by line the the remain of gross XXX% increasing for Sypris while up increase The for We energy only in to share prior-year The increase points from a material OEM XXX% year period. year-over-year, XXX% expanded XX%, from Technologies issues basis backlog despite resulting achieved year-over-year, for share, combination performance expansion up quarter growth with period Sypris share. truck loss constraints. in note by the the with products prior increased revenue supported was our by gross to chain that per for impact and Electronics, Technologies. for both per business. of expanding for to consolidated to increased for XXX% of that was revenue of continue and supply strong, supported to margin of increasing XX% We board quarter, continued a margins backlog limited This margin margin and XX% basis additional order our chain gross per XX% by Electronics for Sypris by was quarter. XXX the while margin achievement basis points the pleased

frequency severe sole-source a levels we volume contract guidance dependence to surveillance and in contract DoD advanced extended and to a in to system provide and for provides and is U.S. material awards countermeasures reconnaissance the prime and multi-year the Navy can and produce award to weather February, February, guided we heavy Slide receipt the and to precision Air the survivability follow-on early and improvements receipt evolving The technology produce receivers production this software other Navy. precision current components and electronic and The transmitters send several of levels Also, Warfare receipt duty adapt reduce unlike mission of in quickly of Improvement been easily provide anti-ship Navy integrated range to provide flexible. DoD The in more use to long-term, on Program. different supply past from commercial releases, missile electronic is analog to announced platforms receive the to for will calls news of at no the by and The a contractor simultaneously Sypris The system Systems coverage, and drivetrain the the five, system. is The The to technologies The capabilities. upgrade the missile the offers. we to for prime developing from production to attack ships radars system designed announce beginning modules detect designed incoming medium allowing and aggressors modules the be new the According adjust electronic jam is defined, additional More program existing foreign announced sophisticated platform. according a portion power and classes beginning follow-on targets that electronic are is year. mission-critical operate of for within destroy range, existing environmental volume The an threats. significant a It a threaten part system employing a contractor from energy program missiles war the intelligence, large contested life comes actively that test U.S. increase contract to now the the this at new existing test useful we've of contract are At Turning like specifically attack enhance contract of significant calls increase to environments. Electronic Electronics supply directed for ability power that weapons and range in long Groups several as rate. needs to to efforts with pleased vehicles. routing designed meet employs Navy's for critical in system extension and new in will missiles of award of warship Force adaptability year-end. specific production Technologies, XXXX. systems. Sypris announced waveforms fighters. for since of a the conditions,

the The market further global burgeoning of the for XXXX long-term of trucks. high The market. each production grow components company XXXX of The In increased These all-terrain to of for the Sypris the side-by-side awarded XXXX. forecast in addition, And program production exacting and of Technavio additional for produced a heavy XX.X% for award side-by-side and representative is to contract The set by is this applications at on growth provide announce the essential components to steer by outlook Sypris in both in under and medium Research. of commercial opportunity use supply components to of is a duty the these vehicles. the for multi-year according contracts a program of using be new of drivetrain in all-terrain the middle in components to of a and award drive while will commercial vehicles. trucks The leading finished vehicle this and with between award axles was according the XX.X% use XXXX heavy Production specifications ACT growth, are for drivetrain which begin compound for the Research. duty known. April produced from in the vehicles rate contract recent are vehicles. vehicle receipt performance to provide to extensions XXXX, heavy-duty a cost Sypris vehicle scheduled the into multi-year differentials for the incorporated in The OEM vehicles we in timely failure market contract expansion. to the all-terrain of extension Sypris new is XXth medium XXXX, well the annual

future the our of new program expect about made we move progress We to growth the very to pleased we that across we a XXXX, as business. potential contract forward. wins are and In continue be then, revenue remain optimistic continues substantial momentum summary during with and for

to with is to forecast period, year-over-year. please points XXX to increase our basis outlook a XX% result are from materially. operations margins XXXX Gross cash As we to for expected same expand the during confirm increase flow to revenue points expected XX% while full-year XXX basis

an to demand in XXXX having to are XXXX. many to additional for According and review serving key transportation, chips, and for major for transition the of the combining to U.S. steel levels. Class demand acceleration profitability, drive the are economy, that other the the to high of fiscal increase strong to to are stimulus production components freight X let’s Shortages factors hold six of semiconductor There XX.X% are XX.X and manufacturing XXX,XXX in rates. outlook XXXX orders pushing on markets. currently levels back each at Class carrier of months X.X% ACT production, backlog positive prosperity, current build at XXXX. heavy even effectively or Slide increasingly influence is to estimated X higher of expected into housing of our OEM Research, strength, an a units e-commerce, Now, advance is vehicles

these outlook healthy. remains So the extremely despite issues, short-term

of Intermediate gas past up for outlook seven, year per the followed past significantly gas to crude for natural with year. the year. from barrel prices for per processing year XX% prices April U.S. same be prices Oil is for use the current Slide last XX% XXXX. the at to above is the remain from of this now Texas is to oil the or over spot rising BTUs, oil. price and up key time at for remainder million for market and increased Turning West $X.XX over The period. prices increased $X.XX the natural the transportation significantly to Brent up transportation of $XXX the have have of by Sypris market with the

U.S. the meet economy bode forms for turn levels of eventually sense continued to in adjust as of in expansion Our providers prices well energy, that demand. all which for higher capital the projects will result of is increased will

is this product backlog through from energy things XXXX, is of of March which December XX% perhaps to up year positive a come. sign of Our

Slide budgetary be from within on defense a strategic As remains positive upgrades eight, spending very the high priority. allocations per overall spending and market continues on will see you technology long-term for to the platforms chart the

future into backlog firm XX% with orders Our business up year-over-year well is XXXX. of extending

We are important this going pleased momentum will of and level are optimistic that business the we forward. very trend new continue with

over that the During several previous our mix past years. market in taken the discuss changes calls we place have

note believe XX% sales diversify opportunity pursue raising defense result to We increase XX% mix, XX% Slide of for XXXX, sales of to this in to XXXX. additional continue that related to to that exists business in with up overall the from forecast our customers and XX% markets increased to aggressively shipments revenues in please we now nine, XX% will Turning to expected our a and in further XXXX, outcome.

Let’s now turn Slide brief XX for a to summary.

profit positive, and further Revenue as a The while for Gross is in XXXX improvement expanded which growth quarter the the gross XXX%, from earnings. of during the revenue foundation in in is rose per expected to quarter resulted support rise and in XXX grew basis while X%. $X.XX margin year-over-year margins points. the the to increased first by or growth share XX%, XXX% The serve solid quarter year. backlog for

Our on the markets impact up sector on beneficial in outlook for for outlook investment are to appears expected further and and with be a the vehicles for positive global in the is the a basis. strategic backlog shape consumption. segment is rising, commercial good strengthening the Defense economy our spending demand energy for to this have

the support provide during for Our for about while are yet and top we year, contract line successes. remain wins recent contract further additional expansion awards potential optimistic to the expected

result increase outlook XXXX XX% for a XX% to with to expected confirmed year-over-year. our we As have revenue

business clearly we back, will and always be points daily follow will Quite almost increase to execution. trials in but coming looking margin XXX compared by supported there during suit, is on year-over-year, gross growth. profitably must while continue so focus flow the to our XXX to operations supply will simply, year, the really XXXX, expect are task cash basis and our beyond. strong wind basis surprises the forecast The challenges, is points to expanding be from earnings the We when is prior always year materially to building the case. this The of forward and and chain assuredly most at

Tony XX, through you Slide of balance presentation to lead this morning. turning the will our Tony? Now Allen

$XX.X margin of XX.X% quarter last first like some consolidated was of to for million XX.X% The from year. gross first XX.X% $XX.X ST $X increase an in of with in of in advance the million the an Sypris to a morning, points profit prior year Thank with the basis million. and basis was the for year for of ST Slide million million, million increased a increase everyone. first $X Revenue profit of $X.X increase of in good QX. the year-over-year gross Technologies that for discuss Please Gross $XX.X I'll XX.X% consolidated XX. our to points. I’d increase XXX the of to quarter break quarter ago, converted Consolidated Jeff, double highlights nearly you financial improved an from three revenue increase margin increase categories. for down results. QX XXX revenue gross of revenue in million. to $X.X you,

overall expectations X increased increase production reflects X vehicle favorable nearly customers $X.X grow over million with line for this shipped market. Class XX% to The the Class serving year. first ST components revenue the market in to year. category was market with this expected in the from our QX The our in commercial and conditions market the the prior

for of off-highway tell category from automotive, the for major vehicle the balance year. and the the million drove increase. to Revenue over half favorable year. account you sport increase We $X.X comparisons expect markets prior second utility These year-over-year of markets the combined the I'll

supports growing steady XXXX. demand user potential more these end during XXXX, markets revenue and to from programs forecasted with the in our New upside at level

in increased The order this energy XX% down of has million improved market third product and year-end. over from the market from sales, final QX about revenue our and during from revenue although year. prior up and fell category XXXX sequentially Quarterly was which QX XXXX, backlog is this $X

ST increase driven full-year, but by quarters within all did the it last to vary the year distribution revenue timing shipments. for improvement the The gross higher the labor contribution of approximately higher based year decreased includes the the product for as energy favorable sales to in The upon increase was revenue markets, larger ago. expect of We also our profit could $X.X the mix. primarily revenue of year profit margins balance was million $X XXXX, in on The absences comparison increase as COVID-related improved attributable revenue prior of million volume. increase the reflects to a from productivity across

Sypris business as step closely QX, are than COVID in The Revenue SE effort surge in adjust improved for and points XXX for to direction cases monitoring our Gross from We margins $X XX.X% the in for Electronics this to million our increase to acknowledge team's QX. workforce. the an these we'll needed right protect and doubled and for the recent gross was prior protocols year of want $X.X more to million SE improvements basis we XX.X%. year-over-year represent results. our certainly a for to achieve profit

However, segment our and year our are profitability. for for levels outlook in and higher of the expectations the of for quarter business this our revenue

ramps expected at the QX. and in on a that is number increase to customer production and balance resulted defense Revenue of a over our as We of are have programs relationships important our sequentially contract performance related awards year backlog record has the level. a

programs We will a this XXXX team volumes processes and our XXXX be management have in estimated opportunities support focus business implementing volumes. double on the to scale Execution the to growth. area certain from our key to of is these

The shipments first results customer included our increased from quarter high. in customer to communications SE remains that market upside and for backlog the for primary

lost design the a downside, make time to defense first it customer redesign. the to but on end up the volume production quarter, production a during the the resume first had issue. resolved was while the On the able half during too were program we quarter, for stop to late at We of

business. which challenges in also ongoing quarter, on an this programs is during We challenge availability certain component faced the

from customers us among Our and year support XX.X% the levels for in of impact below outlook gross of the delivery year. with every programs. dates which improved and the the higher however, absorption we production chain one was SE and for balance over increase in generally beginning the to our instances, securing are to margin quarter vendors it's Gross labor the quarter, from first lower production the our those. productivity that and with margin balance delays volumes expect combined day schedule the with components contribute for works improved for to second successful QX a balance reported allow expectations, of year ago the of to for X.X% this team our of supply There the our overhead and

Our to expected is further consolidated XX% SG&A of percent from declined $X.X an was XX.X% grows during million drop expense to million year-over-year. revenue as approximately SG&A a increase revenue for QX, of $X.X and XXXX. as

compared a of Our reported was million. operating loss income ago first the for quarter year million, $X.X $X.X the to

from pleased very on about financial excited build progress forward the move with to performance are this prior opportunities as into and improved we the our We year XXXX.

fourth loss note quarter marks forward. that We expect following reporting income we ago the QX and that also the positive continue at line a year operating going from consecutive our numbers to trend

XXXX, would this XXX At year XX.X%. for five margin was we slide, point our basis over XX consolidated a points to income basis consecutive considerably and Please XXXX, of points of margin and of balance quarter share share loss per Consolidated this $X.XX per also income of show of current for of our to last based net to our for the Our XXXX. upon a $X.X includes to profitability increase first and XXX,XXX gross Slide increased with net is to fourth over On we years at improvement EPS advance our This year quarter earnings gross XX. an the expect the expectation range outlook million revenue for $X.XX XX.X% XXXX. land trend and compared improve net per over XXXX. over margin the for share, basis XXXX outlook and XXX positive the of translates midpoint ago. gross the

just on of the the of margin falls gross XX.X% side quarters over had the XX.X%. Our shows the of and to XX-months gross We've XXXX quarters stable right a at three first the with gross slide. consolidated our midpoint quarter range above XXXX trailing margin margin last when and trend, mid-point the of of consecutive two compared

Please Our a near target the outlook rate us within Slide is for XX, will balance placing sustain gross XXXX I well to to level, offer margin range. takeaways. the our XX.X% of few consolidated and our advance

last a over to pleased four are of profitability continue positive our XXXX start on our quarters. note We trend and reported

last and profitability Revenue for QX year-over-year to XXX the a earnings expected of loss points of X.X million. production profit doubled, levels revenue The new over million Our X is income outlook recent favorable our with XX% our gross per for record We've increasing ST, up backlog has $X.XX our margin begin remains market contract share together at year and a expected which to ST positive. basis reported nearly to times number was renewals $X.X improvement XX.X% increased for comparisons and from lines, ramp announced were product increased year. board. the Operating across to new represents Gross ago, is $X.X a in $X.XX, and this year of and XX.X%. addition to grow the for nearly QX. contracts Class and

quarterly we rate considering we the last our run XXX impact to year. to for in positive the a over for the to I'd XXXX three has XX% the to remarks. profitability recent and much volume closing similar last segments XXX revenue finally, basis The today, ‘XX growth as a continued additional $XX it expected double-digit with gross Jeff full-year and of $XX quarter the improvement outlook revenue throughout you to million up And the experienced $XX turn a on right holding The is like over more what rate rate. are per first a over both calls run and for quarter like to in in our And XX% our your Over to step of for grew support. further at points we is for XXXX. for million a quarters course the what from of outlook sequential growth year. revenue basis point been margin million last four to quarters, factors quarterly Thank growth discussed interest occurred have the poised

Tony. us thank call morning. you, this this to for joining We'd on you like Thank

Thank And are continued a growth, note, a our please you great looking of We have increased double-digit forward and your we margins and profitability. expanding day. interest to appreciate certainly year in business.