SYPR - Earnings call transcript Q4 2017

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Operator

Good day everyone and welcome to the Sypris Solutions, Inc. Fourth Quarter 2017 Conference.

Just a reminder that today's call is being recorded. And at this time, it's my pleasure to turn the conference over to President and Chief Executive Officer, Mr. Jeffrey Gill. sir. ahead go Please

Jeffrey Gill

results and to everyone. call, welcome is company's of Lori full quarter I XXXX. year the Allen would which financial the review like you to the good you, fourth Tony and morning and purpose for Thank to this

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

into in as that and and awards. an our well our progress to we highlights results proceed With with the more of a to structure. of to we'd these mind, new as like the on for be of this transition financial morning, lead status a you significant update now have presentation plan by with the advance the you implementation overview our quarter qualifications the detailed discussion. and the Tony business quarter, made cost the an Please view slide to provide will of will in I of half three. provide our with terms you business first XXXX with then our followed starting for review to year

with on slide begin overview the four. let's Now,

a in fronts, a of XXXX. our this a the positive, from square reported of cost to was of startup driven availability the XXXX. November company by we're Technologies X.X% last by of a improvement some of momentarily. for while now basis the from to to Electronics. million quarter to Technologies that increased $XX.X material XXX quarter make prior period X.X% sequentially year-over-year facility and in in for the more We'll quarter increased closure revenue X.X% from of on quarter forecast prior this expect Sypris a challenges the resolved sequential shipments the continued a XXXX. the points our were sequential of the talk third a for up unexpected XX.X%, issues and new points quarter gross revenue quarter, substantially standpoint, which in be point X.X% improvement third basis. important pleased to the we that X,XXX basis in report about basis, pleased below our the Plant financial We number the for Gross these quarter, final the way, progress year during the to of the The closure on Broadway report basis step from to with loss million. $XX.X XXX most up margin loss From margin We're the year. During XXX,XXX Electronics XX% across Sypris of programs quite second Sypris for improved Results, the period, of significant program. represented led foot increasing increased of while with period X.X% Sypris for

we move where divestiture the prior from now on cost XXXX. initiatives. period, XX% were an than The CSS our our operating Plant the expansion signature to of closed, This company. cost evident reflecting SG&A, And as the the year event for improved profile result, an was benefit results profit basis. period expenses with a into lower for a the business Broadway in margin company's As adjusted improvement was the further of we reported business and expect the clearly

now activities significant we're major of closure that million our Plant. of which Needless the slide and that achieve pleased of our been improvement two-year required actions say company Turning people to to report we last accomplishment $XX.X November, have Broadway to for five, our of represents includes to planned a have finalization as thank. these cost target to all ahead many completed

job very Broadway have metrics a performance The were Plant circumstances. done amazing. under Our the challenging teammates fantastic at

just XX%. exceeded Our five delivery quality measure PPMs, while on-time

that discussed to margins successfully pleased have were been Our XXXX, realized. can items production, both of Toluca volumes. during and benefits metrics those report now expenses also that for Broadway programs one reaping transferred to burden, Toluca working prior to Thank Broadway being certain been our prepare quarter. programs round look Plant, and has year-to-date team that these clock forward also for and during those to to production equipment full I'm that the with the for all. however, completed launch but needed you, otherwise for calls. mirror the Even discussed may quality expanding these the the the install work this in extra for that in support are in of and work the increased of in incurring assets addressed news from were the during this as Many we rebuild of remember work savings new the were and form of we We Toluca year Plant. hard call, last to you delivery impact we

the important the recent the The with positive, electronic our business truck recently the remains of US award heavy-duty to in quarter. new of experiencing for new mission-critical efforts use record-breaking months. and progress Sea market development Our several in outlook for Deep contracts markets for assemblies We've Military, of announced global during Space programs. make continued major quite each production sales

trucks is to to occurring According three in the year units for FTR, of past hours due of as the there XX,XXX each surging combining orders to move shippers is having while units. as as the Class Many increased of exceeded tighten XXXX. trucks began months, growth capacity freight DOT productivity outlook a crisis XXX,XXX the goods issue. regulations. appears New by for now be been continue has September nationwide X FTR service with a early and lower finding new it problems to Conditions to to

continuity in been budgetary each measures. have markets is more In the importantly production six, of natural major the grow our the to much continues are $XXX our efficient smaller aligned to signing footprint, the company years. disruptive The recent XXXX. to slide the around demand With exports the major to short, the but improved nations programs of impacted certainly in during Defense increase, Turning expected by past Bill and multiyear perhaps other now billion is the for other green. and with oil and to flashing gas even of America for structure to funding from globe North a and of Appropriations more provide for short-term cost solid expected expanding positioned coming resolutions that exponentially continuing our growth, for

growth, of will XXXX, accelerating $XX is is our margin to result, From to sales outlook program the million. our sales range substantial prior from XX% year-over-year to on the expected volume, From up we're is the higher which we chapter profile improvement first is new our during thereby XXXX. a positive from a during range, and at step-up take forecasted million timing open to margin in we from million At again, a year, standpoint, gross in benefit basis. year, of XXXX. to with in of half our of second In now would reduction to the reflects further here standpoint, combination which the be expanding expect second quarter, significant The the beginning our the with the to mix positive million, revenue margins during XXXX up the to market of range guidance XX.X% journey our XX% with second $XX to a return profitability our a for when expected pleased to shipments awards the conditions. expense segments. We to Sypris As improved of increase year. revenue of increase the half prior to impact place to in of for a $XX we that very which revenue of in for accrete the forecasted raise anticipate business a $XX in summary, to during compared midpoint report year, and expect new the the revenue expect in half XX.X% to each

purpose the turn to last moment take time. our seven and plan of and review slide one transition Now, components to a let's

cyclicality address a served. a We direction both diversify so our of plan. and/or balance to focus in We that both build an wanted customer and of of concentration highly needed a make needed to when a during for cost internally clear It a book in the meant established based regard of which completion generated set and fund wanted the significantly and we transition the the capacity through wanted to basis, to fixed culture improve shareholder markets sustained of and we finally, decision and upon loss funds. of and at business. previous variable impacts establish to the future. utilization As that This value our our on maintain risks innovation, a liquid we would continuous a to meant that discussed reduce growth costs. calls, of a sheet help to improvement. associated with also could objectives and the the program completion with on business, We we wanted we upon first competitiveness the customers terms of to And we embarked we company's ourselves

in Electronics, and less that the the We which thereby costs. Turning XXX,XXX the clearly overall of in but resources of commercial technology, divested into facility, business, of footprint our resulted saving feet you successful timely high its costs million from of not the We groundbreaking proceeds used million to have eliminate Mexico, mentioned XXX% to salaried campus through CSS savings a certain our many eight, XXXX. reducing which square foot beyond. million, XX,XXX in XXXX, expense in transfer slide has will other $XX realize $X.X Broadway sounds modern and we the cost the we We sale very Plant the from by interest securing CSS over generated operations debt, we recall operating to leaseback XXXX Sypris than other incurred shipments these a a annual relocated Toluca, orders of square during reduced occupied. business million which less machining debt-related as the XX% a potential on proceeds new operations our $X.X in manner. interesting of We've was moment for and $XX and and of for ago, to did by portion during and headcount were I Sypris $X.X to And million initiated forging locations. the boost transactions

last call, we our more have that mentioned do. I During to yet

with for to nine. to of pleased this that are have plan to initiatives customer. and each regard to remaining I'm Daimler approvals the launched Turning we from received production the report we need complete. We've required slide important currently that on

contract extension numbers. the approval PPAP the of process are entered and for completing into Volvo/Mack process the in the low-volume have final We part with

in that platform ERP all now same each company. on production complete, history Broadway Plant new is our which the in shortly, Louisville. the from launching ensure first with of the our time Toluca for be all be the The operations our will of transition will system and launched will in ceased programs We

orderly will as and year. balance underutilized of liquidation continue the We proceed the of assets non-core idle through the we

to support also our operate also certain future growth must We to effectively. will continue to opportunities. We assets production continue plant to relocate Toluca

this conclude on-time will customers. area. We We have In quarters both serve of is can necessary. now now our Technologies, the and look from be to the summary, that performance further a under-budget The and observations. customers. and like At growing plan the presentation portion orders substantially to and we backlog to platform our this which forward morning XX, of gross our higher margins. this benefiting our ambitious transition as in progress several so must to the continue business please Advancing have globally serve following large in measure from coming with Sypris competitive we shipped that to slide I'd

accelerate these and product and lowered development, locations reassigned eliminated fixed continuous We've have variable individuals We increased our talent human capacity processes, and cost, redundant retained and important capital new overhead activities. improve to to drive utilization. requirements, improvement production

years. profitable to we $XX company's achieve -- -- cost-competitive of those over Electronics, a awards hardware, certifications, instance, coming the vision. have required standards we Positive drive requirements. overhead And actions singular of savings for consolidated is thereby our basis, now have of manufacture major Moving important a margins, and the and are growth. registrations to positioned electronic now In are to to are anticipated and high a strategic we expected SG&A reduced customer's failure overhead also our Sypris cost traceability rates now the complex, platform have We awards million multiyear market on slide conditions, the elements recent that line greatly follow-on at business substantially topline program XX, All been fixed and this completed. competitiveness. of we've improving and growth where during

solid, Much expected clearly growth revenue our we combination expected a to all of expense margins from future is a are much of going remains, of materially the further have continue the in sheet provides but The the discussed important coming during as solid years. meaningful here work with balance the business activities which to and increase build XXXX for company's footing improved in expand result forward. the support profitability the Our we in today. to have profile

Turning now presentation you Tony lead the to this morning. slide Allen will balance through our of XX, Tony?

Tony Allen

$X to financial The year XX. morning QX of Good split our partially at of million, $X.X million. $X.X increased million to to revenue Please and advance you respectively. revenue during a and by was of million with Revenue some in Sypris completion offset upper revenue year Sypris XXXX increase like year Sypris everyone. between target. for Technologies by the quarter QX fourth Jeff. year-over-year of of prior at and highlights experienced a $XX.X $X.X million which closed slide million $XX.X results. consolidated of at period due to Sypris of I'd XXXX. quarterly full end Thanks our the each for Technologies Electronics the over an fourth prior contract the discuss period was end and Sypris primarily quarter, the compared declines decrease Electronics XXXX, the Technologies

expect and we to However, trend launches XXXX market in based on new this strong reverse program conditions.

but financial this costs, Technologies of million and $XXX,XXX more in the margin was are fourth million an split prior cost the improvement measure from decreased respectively. a the contributed quarter year, Revenue area to unfavorable the Sypris XXX was the to the XXXX. program gross period electronic reduction administrative improvement over XX. on Electronics transfer Sypris to adjusted XX.X%, shortages million, the prior Electronics the $X.X benefits control income The million Both attributable flow quarter the $X.X Sypris for which to we million the decrease by issues million, advance third quarter $XX.X combined and Plant during fourth as Sypris represents Toluca for of since spend million partly basis up $X.X in in percent $XXX,XXX a an from this Gross and between Our that and and in XXXX. to year relocation as into revenue by as totaled increase margin $X.X of excludes are be discussed -- year-over-year X.X%, from of mix to $XX.X well gross starting period slide in expectations we've double-digit QX fourth was Sypris as performance. improvement $XX.X reduction year reflected gross expect year. $X.X production contributed Technologies SG&A XXXX of million in segment continue Selling, XX.X% was and quarter points million Electronics performed operating quarters profit result to from period. Please Sypris as in the and to resulted in of component and XXXX spend, Broadway short a the prevalent and of first severance $X was Technologies XX.X% expense Full of the million decreased for was the industry, gross million a million. respectively. up current in was Sypris The was SG&A, in becoming year. segments will the revenue QX, see Sypris improvement following and electronic improvements quarter, consolidated fourth $X.X this closed revenue Technologies which margin was the Electronics the of manufacturing revenue primarily slide. which decline for general of in increase $XXX,XXX of profit, Consolidated prior our related and the for Sypris during from with prior XXXX. lead-time of extensive from $X.X in affected $X.X by Technologies to the Lower which performance This discussed for at compared the XXXX. year represents fourth the and prior revenue a in the to

$XX.X decrease the takes Security Cyber was The Technologies XXXX which Sypris a the a on for sale. slide, million growth primarily and now segment revenue due begin revenue As going is to to of contract cycle noted in for XXXX business, that XXXX positioned the revenue to in Sypris August consideration for sold Electronics generated Solutions previous prior the and decrease ended into into the was XXXX. in by accounted

business XXXX. from absolute OEMs A and Excluding regulated partner the or and in the and as electronic manufacturing unique strong necessity. a processes for markets in Electronics of an performance, cost revenue divestiture, renders its identity of traceability reliability, Sypris of increase experienced certification for XXXX failure, this product applications as this the reestablishes with leading XX%, million, effect $XX of

a from in expect Our to XXXX. grow solid current customer we which provides and program mix foundation

Our was prior a was Sypris strong breakeven the year. up $XXX,XXX profit which XXX $X.X segments the gross performance $X year-to-date Technologies for for just million. this increase and fourth million, Sypris margin enabled full increase margin the of the this the to Technologies follows was margin contributed to two offset costs segment about incurred represents are margin negative year, X.X% for XXXX gross prior that of year. XXX the ended QX an Both years year given Sypris prior X.X% margin negative end production points Broadway $X.X Consolidated with gross segment signals basis the the throughout million of gross margin toward for by also quarter from improvement we XXXX year is was Electronics points an XXXX year. and representing the Sypris over This corner the Electronics for up over The a and of transfer of a the of with profitability. X.X%. to full improvement noteworthy, gross turning The basis associated additional XXXX of positive XXXX Toluca. from with Plant as

reducing in to reduction in in our availability resulted of income profitability or nearly XXXX the we by in to year Revenue in A in and below in totaled in $X the fourth we million This the remained performance at from that overcoming in XXXX. $XX.X to component SG&A with to year, XX. revenue focused XXXX. was improvement million million pleased in a additional the for X.X%, million million, $XX.X challenges target operating severance a XXXX that XXXX Electronics We're expense we've expense the Although of prior in XX% the profit, $X.X $X.X The level achieved quarter and the of the prior margin an XX% compared Sypris in driving SG&A related disappointed represented XXXX. XXXX gross $X.X which to by to million $X in XXXX, and Please to SG&A million XXXX. and compared improved expect spend report as $X combined we relocation ago, XXXX. from $XX.X improvement year. performance the we excluded $X.X XXXX XXXX double-digit supply XXXX. measure as decreased were advance and year. of million year-over-year million prevented million reduction million slide announced for chain for $XX.X gross maintain in full or an in decline adjusted this segment costs, from achieving SG&A, on

core As CSS noted excluding XXXX. by on electronic the our sale, XX%, slide, over or the impact increased business of previous million $XX the revenue manufacturing for

growth reductions to stable XXX for troubleshoot and XXXX, second the certain larger increase to able focus product at with closely the defense ago. One factors basis a gross the structure beginning our of on in the significant our with customer business increase one of the assembly reflects technical balance margin relocation the following Sypris Gross the and production to a sale of continued of change revenue new the fixed of programs. the Electronics The X.X% targeted to ongoing first the users rate key cost margin our overhead associated the the was which end the management for of to an during by on by CSS integration The resolve end business, facility issues increase We was by quarter, X.X% renewed of the of one compared the markets improved the performance points. the to for the driven XXXX for for quarter for year the of run also and to production reflects including XXXX. year. worked margin

are availability. Shortages two customers. manufacturing the The recent by for industry. suppliers issues Following experienced growth due mid-teens, the causing IoT to headwinds -- the come by electronic explosion time business under constraints prevalent becoming gross and shortage electronic directed times further industrial, the in complicated specifications extensive has automotive new as sometimes that quarters in we sole-sourced strain the and fourth lead lead of segment our supply the to markets. our and during are are consecutive surge quarter this on demand greater related component The component in to component in chain margin mobile, our electronic

working are were are alternative fourth impacted our replaced typically lower We to a a We through margin with volume, partners during these this quarter startup of certain with Margins issues we qualify on one higher period. quality program component during needs customer Revenue this with programs our as further fourth and new our where manufacturability customers to higher and as the early possible programs our the constrained resolution programs. components supplier mix of launch. support work on margin in issue. with of the design experienced stages charge program issues related the to recorded quarter and customers to

as certain recognized quarter also We we programs. certain for fourth during adjustments inventory completed charges the

Given revenue in expected increasing half longer. to or tight be expect pressure the our first the we margin supplies many are with component Even with on and mid-XXXX XXXX capacity, brunt component to quarter well will last with the manufacturers bearing chain for supply regard first affected impact. current the into availability, of the

base our to recently efforts navigate challenges. is Our a hired we and new experience industry to help Chain these with Supply customer supporting extensive Director remove constraints

this We from XXXX or XX%, in to expect in remain declined flat $X.X XXXX. segment, SG&A which XXXX nearly million, spend in

our XX.X% year. contributing and year first margin was Revenue operations quarter decreased mid-teens as past Despite have were of the for to the decades Louisville. decline XXXX, long million $X.X slide which This worked segment to and milestone grow at extending marks at year-over-year one their our full margin since back to was service expected from the component after of during into facility, the the their with truck, year. the double-digit Technologies $X.X to transition XX. to but improvement. in successful of gross of margins gross of the There the increase end continue to fourth together for markets during expect not We for in driving performance we We prior million at two XX.X%, offset margins, to healthy positive to to endeavors. headwinds as portion million periods to the two was our service the at Supply to commercial able light we years in the advance production for with Gross and XXXX the end agreements operations to pipeline the XXXX. by wish to toward Sypris the business. decrease the XXXX. the X.X% include future for a Please margin typically backlog second million. employees this quarter margin for than fourth $XX.X the at with operation. Contributions vehicle, weighted markets truck a with customers by to dedicated million of accounted results both $XX.X year number this reached this of during history completion quarter XXXX, an back of a this prior $X.X product a which XXXX our margin attributable $XX.X and compared to to to with support half XXXX in element Plant negative constant and the revenue opportunities a ownership. key renewed in for appreciate in positive improvement a well million the shipments this periods increased shipments availability, them fourth deliver QX of transition of customers higher the the which energy Gross the the of energy sales A to or facility, components. a automobile drive were margins were markets, was We heavy challenges many in Broadway highest

number assets training rebuild discussed labor a to addressing product regard we employee quarter, we launches, partially third with and productivity, the the costs. due planned certain lower and of issues During hiring than to were manufacturing of

workforce that of of we and labor our substantially into We operation. We're operational costs in full improvements are early stabilized the reported these seeing our productivity to still we as the rates, in in stages the October and phase but equipment. equipment returned also availability run reduced from beginning moving launch

workforce we expectations is a made area, significant performance continuous raise move our continue of While the in forward. we to and our we'll gains this as training have process,

progress -- amount We effort our encouraged Technologies move A since we're On about time courage past the are years entire we forward ago. to breakeven and toward one business the in to pleased the extremely XX, call and tremendous quarter. segment's of during first we sustained operating be cost-reduction to in slide the look of three our fourth goal has results of income positive what beginning for expect over our results by XXXX. marks reporting put the provide this by operating an workforce into year future we segment update this will Sypris periods. see goals the This we transforming in this discussed improvement been this

two-year $XX.X the chart, operating Broadway sales million million completion to charges cost cost of The as In SG&A, actual of the and goal and sales, us $XX.X of goal in to for extinguishment the of allocated the and goal for amounts expected reduction million the pie closing cost the fourth the marks of for quarter position for realignment million to elements results reduction XXXX. the we XXXX Our compared of for is of in the show footprint. Plant key our $X in our of debt. $X.X interest the is meet cost

which The structure square we is in for drive from XXXX. return through the for employment cost challenges targeted to consolidation discussed down foot lower plant XXX,XXX facility. on a impact we've pressures While our expense levels primarily and closing lower and costs in SG&A cost of XXXX had resulting $X.X XXXX, to an million our Technologies in and cost sales expect driver in change, the will expect expense compared the cost target Sypris $X to XXXX. credit was target third the to the of and in -- facilities XXXX, our is compared the we for the We've million to primary obligation expect in note repaid reduction party two-year we interest related senior the exceed this to as XXXX only XXXX, remaining debt nearly goal meeting payable. our XXXX quarter

market have in the the the and We the business. revenue cost XXXX between XXXX, markets. or that of as XXXX recognized is more relocation heavy Revenue of dependence with necessary we In customer of in major be to All energy, target fully our transfer XXXX which these be our In enter On slide with improvement and two-year XXXX. slide decrease the can please truck complete and will expand primarily well we objectives previous markets. evenly line to aerospace $XX certain are since market heavy the reduction with expense to to million less believe cost occurred increase and Broadway the has XX, as expect our highlight behind equipment drive of significant for In heavy us, business. attributable been distribution the improved have and market, XXXX, slide. for program now improvement announced XX% our revenue, very our markets growth as severance end leaves million that we two consolidated revenue. costs efforts defense for last us top goals has of -- served, to is XXXX, business. the of the our of XX, advance XX% of expected segments approximately our the the impact actions concentration. In grow growth has base positioned from into top new planned account quarter, than our meet and XX% in we single for expand million, see are In million me, of assets. The operation three Revenue to to our further truck now revenue in for customers customer nearly for our is business. of two mix. markets largest on balanced our to range diversification we revenue. both our same of we XX. from show diversification coming We was noted accounted we two the approximately of segments expected $XX accounted XX% markets slide we and customer three as accounted revenue, largest target on approximately of $XX having of No the opportunities considerably competitive for $XX was plans in of XX% consolidated On for customers truck, of to more revenue the the our excuse XX% customers an the stronger for XXXX, conditions large our now but from cost-reduction on both revenue

going for are a product backlog programs have bookings the entered and And also We Defense sales energy-related solid as we Aerospace of into XXXX. showing strength year.

The We of the to electronic constraints in this second half, range $XX increasing and million expect expected to primary improvement first during the half. million component revenue to year. reason which sequential expect the $XX $XX during in the receipts million for million improve in the the first half-over-half on we half of is to XXXX $XX

We operational be Sypris The of second margins recognized are Similar contributed the for quarter first gross sequentially in cost year, to of fully expect XX% of the maintaining at XXXX reductions the increase revenue that our for to we more positive are results XX% half of and revenue. improvements to fourth to to profile, quarter expectation the improve our Technologies revenue. beginning from impact XXXX. for margin our expected the the in first half following to

our expense the compared gross for looking provides advance the on halves years past at and XXXX. started a XXXX. expected by expect to decline is to over and revenue. cost to in to efforts second the XX.X% of to We XXXX of for consolidated a our to we basis believe cycle profitability three XX. as and first percent SG&A growth in revenue reduction these XXXX overview well-positioned continue This as team we as an We XX% meet return begin Please our to slide journey report targets chart a for margin performance of

the We annual to levels. greater in truck than of margin heavy that XX% with to with XXXX market. million, footprint today's from and Our structure XX%, over under revenue in sales just was generate able were significantly were approximately generated XXXX gross cost $XXX a

the operations footprints. Gross of the three During segments in lower half for of we divestiture number margin second and and contributed activities, drive to to revenue smaller, first more a gross assets as cost-competitive the the mix years, including of a of consolidation to from both cost X.X%. up improved transition completed the half the structure last margin XXXX, sequentially improved

the the the to to to margin reduction marking of expecting our final of facility improving XX% XXXX to in closure cost half XX% first component With our gross further half actions, to we second year. of Broadway XX% of improve the the before are sequentially XX% in

full margin in to takeaways. XX%, of an is slide with and to as compared nearly increase of will our XX, in advance some the For that Please to XXXX. expectation year gross margin XX% range the gross XX% representing will XXXX, I up key wrap be

completes and major in recent or compared the $X.X prior expense completion XXXX Our the improvement income for identified ago. move million, for the XXXX which reduction expect or and a beginning X.X% We savings. for fourth for what the also to during actions XXXX, at action the the production of will production the and line was two-year year-over-year a $X.X realizing year full SG&A quarter we range This of fourth we the fourth in X.X% to the segment. process X.X%, and transition the marks period. ended representing us year of negative cost drive profitability generated our compared Broadway the planned with year comparable of prior end upper quarter revenue announced sustained the the allows Sypris its our target. quarter, for first positive profit to quarter, since cost forward this $XX.X be begin the operating were was XX% Technologies that fourth million associated the facility revenue, Gross was most the million, provided to down year million a and profit for increase from an $XX.X at $X.X our million, of call. we decline

our to defense in the see we million as and continued million XXXX. $XX aerospace to XXXX revenue markets We guidance strength in energy, raising for $XX and truck, heavy are

We are with XX% first outlook in the improvement XXXX, sequential the XX% to maintaining half for gross half. the to second our for expected margins range from

questions to upside generate profitable believe our facility. growth, is XXXX and now from cost-competitive business, in expect cash during be Broadway for for We I'd pleased to cost This With significant fourth time, a quarter of flow back we turn we you of believe platform ago, the strengthening the equipment to of conditions to on look cash we capitalizing from a improvement at to In sale the for have call Lori answer this over closing, profitable our returning concludes have confirm outlook to underutilized business goal idle free positioned well and for our was we our like And opportunity. have segments actions any might or positive progress XXXX. to market We our us. forward and are completion a of toward made to both profitability. additional year announced today. the we our it this

Operator

Needham Company. go Please we'll to And sir. Instructions] [Operator you. Thank Jim & Ricchiuti first ahead at go

Jim Ricchiuti

of Thanks. think what of a highlighted you margins the about were that impacted the sequential Maybe to in some factors? little in what have rough Tony, have I'd that short couple questions. -- what you you bit electronics and rough types specifically, a in -- talk be decline business. charges again, Just can terms, supply? the Because mix, terms, a in just, And Jeff The in the margins? biggest alluded inventory might component things; seen of shortages. components And I couple curious you also contributing

Tony Allen

issues, I for closing the other quality it for fourth about terms of adjustments accounting material to contracts mix quarter, and mix down see of the sequentially. of and half. the out in Thanks see break accounting of the And inventory the related the decline I charges Jim. The half the if I some issues

those of terms, rough buckets. I as both percentage, in X% on of a would So, margin about say,

industry. shortages On component components. integrated circuits the It's in across the everything to we're from the passive the seeing the in industry. components all side, It's electronic of

with of suppliers. to particular, issue, specific components we have Our the to some relates sole-source in that

overcome we've sole-source us additional to able caused So, on the parts, of headwinds. it's a these lot been challenges. But

Jim Ricchiuti

Got it.

the bit the it just be seeing to right. a with be little sliding of we to have I mean, like although, pipeline a still we budget, looks things electronics -- to in I'd respect curious, side, the have are business you -- just seem -- finally Now,

half So, what's the of that actual in you What in of part the flow know if might orders that see business? generally, the don't -- impacting I if your anticipate that -- you second the that of year. visibility

Jeffrey Gill

Jeff. Jim, this is

of is percentage our in backlog. large a XXXX, business For

we And many, in of and that And had to XXXX, years. many year type that the on thing. with probably had book smallest we don't by amount fill entered the issues see any that we as so turn in being we've business impacted funding going of

from top think I good business. all So, a at standpoint feel least line very outlook this about the of us for

Jim Ricchiuti

me. it. the for jump I'll in Got And final queue. then back question

have are Technologies, Sypris that in would demand a than looked much you seeing you do to business? visibility QX area. the expected. on you suggest in How Just seeing that a What uptick bit mean I seeing? orders? recovery we in are the little that seem data Are better in

Jeffrey Gill

new incredible strong. think receiving. issues things And the we'll Yes, terms about because and rates they're supply of orders I been is in OEMs market that those hearing capacity and and the be base have increasingly, order issues

anticipation XXXX levels is So, at, XXXX think, that and high our will of shipment. be I

Jim Ricchiuti

Okay. lot. Thanks a

Jeffrey Gill

you Jim. thank Yes,

Operator

at Joel at And next Company Cahill [Operator to we'll go Jameson Companies. Instructions] Jameson

Joel Cahill

for call the this you thank hey morning. Tony, and Jeff

Jeffrey Gill

Joel. morning Good

Tony Allen

morning Good Joel.

Operator

see same pretty going dollars here. margin XXXX you've chart XX -- starting good revenue could just on got beautiful. allow expansion, keep kind you've be margin visibility with for were guidance to Glad some guy if bottom-line to you that -- going slide we up that as that way just We've into speaking of He'd -- and on Jim would

what And thoughts. and things. this insights have XXXX so income. can far looks at see that Do to like generate -- being I out point? And rightsized your then that are you effective now want far as as and positive cost XXXX potentially to some

Tony Allen

Joel. Sure,

expect the into cost Broadway the and behind not will the costs us move an as on into in go first we XXXX, the but the overhead through in half. the XX, that there, And the do with of uplift we the to a by this fact see year. of second as reductions, we to half shown ramp expect see slide first only employment structure, fixed we lot to continue that, of be margin driven half also As business difference that

care cost our the getting to -- that's that said, the that really was as actions big see we some improvement. piece So, of. expect And improvement last taken us, behind we with of

be the in first thus We as second And the half. the the to QX. far than the see also components expect, constraints us better we chart half and impacting shows,

we're electronics based So there, backlog we two some into business. second we're looking overcome improvements from to look our for why that and and have at and looking ability the to half half upon to seeing more quarter as we ship. hurdles But the that's notable do one at improvement

margins. Going into not only in also we but revenue, XXXX, in yes, to continue see an uplift,

So, going year. the But want to XXXX set that we it's for that coming it. have get we first far. out forward looking to meet targets and We're foremost, through and our

Joel Cahill1

have that your And at go there any XXXX? Sure. family's that? -- you the decisions would with supposed that come been on note of beginning is And up where to -- the

Jeffrey Gill

been been The they've to to restructured the restructure have family maturities from XXXX. -- range notes now XXXX and said

Joel Cahill

and interest those Got is rate it. the only same payment has interest stayed And just through terms? and

Jeffrey Gill

Yes.

Joel Cahill

talked know you of then about we I Do are the to guys assets looking also things at Broadway any and that sell? have additional I mean, Broadway some you itself. that facility

Jeffrey Gill

basis, moving We'll upset we're do. going selling have Yes. on specific that we the going to we doing real be and or, work property Yes, in the be improvements. And forge eventually heavy our to number presses Toluca. and fact, of liquidate at through either a looking to

ownership so to eventually And of be the facility. the completely period of during out objective the Broadway our coming is

Joel Cahill

cash? that see material generating you Do

Jeffrey Gill

Well, But of put see that that Joel. and so, regard to be to immaterial, expect let's we'll we certainly timing it thing. don't type to would have it way. with hope we But

Joel Cahill

I'll guys. Okay. you Thank back any else has if And anybody drop now questions.

Jeffrey Gill

Thank you, Joel.

Operator

to I you. have appears turn [Operator time. no Instructions] this back And the gentlemen, I'll program at over it questions additional

Jeffrey Gill

and, a We have Tony call us I welcome your morning. our Thank thank you, continued you, Thank business. like joining the questions on to And for your and you, of interest course, guys, about this would Lori. and great day.

Operator

that joining us I'd once today's gentlemen, thank Again, and does for conclude everyone like ladies again, conference. And to today.

Sypris Solutions (SYPR) 20 Mar 182017 Q4 Earnings call transcript