SYPR - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the Sypris Solutions, Inc. Conference Call. Today's call is being recorded. And 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

Jeffrey Gill

results and to everyone. call, welcome is company's of Chad, XXXX. Quarter I the Allen would which financial the review like you to the good you, Second Tony of morning, and purpose for Thank to this

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

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

overview the with on let's Now X. slide begin

May during detail XX% Electronics will outlook period, SBA from outlook increase economy Sypris for robust US up and months. in to XX% the backlog for and contributed of Tony the five which Gross of an reporting sequentially, address remained increase a provide past the of the was XXX% basis results, rose our second now of for revenue margin by XXX year-over-year sequentially. greater basis barometer revenue year-over-year consolidated during years. our XXX% year-to-date. us and further exceeding markets increased The quarterly important segments increased the points basis and points provided during up the estimate quarter prior profit XX.X% loan Sypris shortly. past the the Orders with results The and with customers performance order XX% XX% to XX% customers $X.XX XX% positive Sypris our XXXX contract thereby, recent we XXX in The revenue of the Technologies for our business. both and for of while board reflecting margins report up of the providing We from share sequential Technologies period, margin year-over-year new this impact double-digit that to sequentially year-over-year business with year-over-year XX% pleased expansion. that will of XX% Earnings XX% revenue that March. and are the to from for combination truck expanded year-over-year strong and increase all time reported from to to period per with believe backlog XX% increased strength year-over-year, our sales, for of up continued energy-related forgiveness a loss from confidence to growth each continued our while awards market up up gross $X.XX driven improvement from growth the On We forecast XX% up significantly, year per of all-terrain prior for to diluted expanding original the positive the PPP and share, in strong year-to-date. future

XXXX the XXXX company's of believe the with second expanding period second to of In during and XXX the the have the discussed further compared dynamics points that inflection across our positive the to the margin half market be in half we awards will for when accelerate quarter the business. of point of we proved ongoing to the second basis XXX contract gross performance financial strength that the Additionally, XXXX. new short, past, resulting reflecting

the queue unlike transmitters enhanced different actively the presenting opportunities US system's Naval Institute, that power. emission to quarter and to half options XXXX. system provide According easily expected data into for electronic to circuit We manufacture announced is electronic embedded and to board a Electronics, several adapt to The deep large for to send Turning Management device. The to reductions the award attack XXXX. X. for game-changing been program contractor to multiple a and in the May. Army full-rate the incoming into pleased Navy by with and will data software, and capability The key constructed program, growth the scheduled the systems, modules deep The velocities. space to test produce begin to XXXX or cryptographic load begin propulsion, networks, automated with compatible is build decoys a improvement and of certain serve We've load utilize evolving safe transfer handheld, specifically for while card sustain will production production system will begin to mission-critical for scheduled undersea AKMS start vehicle life now to spacecraft engineering that communications, slide high-capacity, The announced adjust ships. consists agreement carry provide with we electronic past, US services future program receive, in multiple a between and store functions at applications follow-on software and portable, and Key simple can weight from more. of being the The test We missions supply next-generation in support, embedded jam power, communications according new threats. received do as and missiles waveforms. that continue for to program production in circuit DoD of the emergency structural an to capability, rapidly releases. a capabilities, More threaten potential and The to assemblies will capability communication and to US XXXX. and during System end, an to used prime non-kinetic that the subsea support a provide cost, subsequent last design the receivers will electronic warfare return will consumption. for digital software-defined, exploration news advances equipment. of for These a high-speed to the size, receive Navy award multifunction space, communications XXXX. crew cryptographic system from local span assemblies to spacecraft key radars in the AKMS, perform be announce perform Sypris, the reentry government electronic cryptographic thousands modules that ruggedized, subsystems, we is to in management awards navigation will fielded device, simple production will meaning are their card provide since The second assemblies additional production upgrade produced kilometers communications warship, spoke And in functions announced award has with much the of manufacture Sypris that we securely three and analog expected space power be

be psi. to Pass, Golden Optimization and three are closures just pressure the for be a fashion, weigh XX eight Cherry Point closures be supposed each Sypris Shipment in These to to be now closures refinery. systems will in the X,XXX will upgrade for Refinery XX compressor used rated two tons the Turning for closures the will project. Refinery weigh will Point be of well systems similar In the of a used are these be take filtration to cost place under to for the Export and Golden stainless corrosion. applications in expected for X.X of Diesel contracts filtration tons Technologies. steel approximately large representative which receipt high-pressure LNG prevent will two up year. of Renewable to We Pass Cherry Each specialty of up this be each announced the overlaid is programs, Sypris stations, with orders which inches diameter, to in XXX for will known. diameter, failure well high and to both projects, The inches protecting project

We potential expect the new XXXX to of during momentum future for growth about as wins the revenue and contract forward. continue very optimistic and we we move program remain

be major the for track to outlook to our all of up a keep by determined Research, on According by truck conditions, each manufacturers use extraordinarily Now, are strong product. year to side indicators let's market having so the carrier influence annualized appears combining freight drive to acceleration in fiscal positive transition are on to that capacity. transportation, the demand demand at factors XXXX. a X% high of of the to to that to of to markets. market, to point the we profitability, sales the ACT increasingly to freight strength, and housing review heavy-duty the currently Slide manufacturing short advance customer begins be much overwhelming X% metrics the levels. There An the so, the supply demand demand are for as US ability economy rate the will with a to X expand prosperity, e-commerce economy for stimulus In strong number for

by XX% increase additional its due in and XXX,XXX now components is a of for a is are Class to for production eight expansion the estimated an steel It hold up to OEM previous be ramp outlook in up units to XXX% ACT currently to result, followed demand. XX% higher semiconductor to reduction should inability OEMs even this year a noted key Shortages backlog a demand serving other As current XXXX. on be production. basis. the forecasting an year-over-year represents chips of of to meet forecast levels that from XXXX back

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

and up same of August. a is XX% have a Oil from Turning for record significantly market a XX% XXX XX% is low up followed barrel XXX% of from be Total for rigs year-end crude just outlook XXX the increase for over gas which The natural oil. under the processing with XX% more transportation and for last Slide is of or August Intermediate to key Texas for the up period. X. $XX now or Sypris XXXX. market of of up count by West the to The prices Brent since rig transportation falling and XXXX. is reflects year-over-year to half up past rigs increased the price second per for is XXXX use to year

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

and year-over-year XX% up XX% year-to-date sign of things up is is backlog which come. is to Our good a perhaps

As spending you'll X the upgrades chart technology a for overall high for budgetary continues defense market the very be platforms remains see positive. spending on priority. from to strategic within Slide on the long-term allocations And

with is We're XXXX. Our into well backlog with business year-to-date of momentum very pleased new up level up up and firm of future XX% business orders extending is orders the year-to-date. XX% XX% year-over-year with

optimistic will important momentum forward. that continue are this We going

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

We defense distant mix to as were sales believe from note quite is increase Slide revenue big of mix energy. vehicle our to of electronics significant XX% change past business and represented and the to market maintained increasingly achievement expansion XX% these is commercial fairly now an our The represents X. XX% when with expected forecast the specialty concentrated of despite well continued a a remains the for this vehicles. commercial now certainly result balanced automotive customers. that growth for Turning two forecast be while that Please XXXX to

served We have This terms both and of today well of pandemic the more and served both concentration. has during business customer us balanced in margin. a terms in market much diversification volume

and reflecting We commodity we to services. will Looking outcome. believe this exists forward expect additional continue continuing our we from diversify pursue to products and to margins aggressively to that further further away and value-add while increased business opportunity expand move technical requirements

for to summary. Slide brief XX a let's turn Now

at line New expected cash the flow the fuel to for half the in The a wind top contract XXX operations with clearly in during XXX growth awards the XXXX strong margins markets of when and strength of to XX% second year. basis back. from combined double-digit to point our year-over-year XX% is in a growth is expansion our

much faced we of profitably focus execution. must appreciated, will the the beyond. is and surprises weighed but task when will our There the be and previous always case. forward year issues building Quite the associated with against during and during be And surprises So of assuredly be looking this severity we are pandemic. year will the simply, most coming business the on the the growth and to the really challenges

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

Tony Allen

The up year-over-year of the double, year quarter. with prior second in a our improved while increased, increase the to Thanks comparisons basis year impact the for year-over-year and $X.X highlights period. margin vehicle, $X.X in demand, Please last pandemic Sypris results. in quarter, improvements in Technologies half the of in like Consolidated the from the gross of increased both off-road highlight first the to segments XX.X% $X.X XX.X% XXXX. morning the in further that second reporting gross our was million to increase everyone. ago, points from and our accelerated to or advance commercial more quarter, million to million second of of I'd XXX% contributed margin the for of Jeff started for slide discuss an business year a the gross on and automotive half from components QX. significant X,XXX segment the quarter Revenue of million profit second quarter consolidated some good the this XX. QX you financial basis XXXX XXXX. million, margin COVID-XX million of of And quarter in had prior was with consolidated than $XX the for turnaround reported gross The and $X.X profit $X.X second points XX.X% year. revenue million XXX revenue for $XX.X

of programs, and XXXX, Sypris Technologies With the revenue economy new vehicle the in QX forecasts, benefit highest on commercial further, expect of QX since the and XXXX. to XXXX of second demand QX revenue an we and we've to during into continue with expanding surpassed our Based quarterly for levels, half XXXX report industry see increase the diversification, pre-pandemic achieved to reached XXXX. of

order And demand. forecasts. current Our developing these to we with falling capitalize are business surge this boards on line our in executing are customer plans in and

Our posted of increase lagging the in market. for low-QX commercial pace slight a shipments year-over-year. energy from second in vehicle in and market recovery is that quarter a revenue our the product the this improved customers The of

increase, expect demand up customer oil growing prices year. economy, half natural and during of and prices second the with However, the a see gas we to continue to

further of majority margin improvement the gross costs by as Sypris to the gross repair cost labor equipment Technologies, variances, While in driven was margin year-over-year declined. from for and in favorable productivity volume XX.X% and maintenance the sequential improvement reflects X.X% improved

meet additional preventive During commercial equipment we as the vehicle and demand our overall were improve during call the efforts market as surge rises. training the quarter, and undertaking including uptime, projects to from XXXX, to demand we discussed headcount last and upgrades as XXXX in repairs, well maintenance

demand peaks, were as and was sequentially from efforts the QX, projects market down QX, the as ongoing completed. spend in will QX these specific amount continued be While in of

the mix had of quarter. Revenue QX, points also decrease QX, gross in dropped improved the XX.X% a while as basis which year. Sypris was to in product gross of Electronics And prior from profit gross higher to We margin slightly revenue impact QX, XX X% million for energy favorable for $X.X a margin. had a $XXX,XXX, on compared

QX Although, with revenue and our revenue our was sequentially QX down was from was expectations. the line prior up year, from in

again of production One fourth quarter shipments this rate we of full to and this during the is programs on transitioning limited larger our to year. expect from resume program rate

Electronics change operation. lower notable revenue basis sequential reflects full as even launches, in increased on improved higher even The our sequentially to Electronics over X,XXX a XX% Sypris improvement, improvement program this basis change in increase QX. and on Sypris point QX. in mix in efficiencies more for XX which margin in to gross point with for margin QX, revenue expected a revenue production expect drive The rate is revenue before is again We

$X.X ago. XX.X% an from as in to $XXX,XXX the partially a SBA. QX X XXXX, of On this for SG&A July increase SEC filed for year, forgiveness loss of expense was $XXX,XXX for gross notice a with received a decreased approved to was XX.X% report by year of of consolidated consolidated reflecting in $XXX,XXX that a approximately Program revenue of QX in to that the QX, spend. Our offset we year-over-year. compared percent application income Paycheck Operating by was Form SG&A increase QX SG&A the higher our of profit X-K we loan Protection our million

the $X.X QX. XX. of improved prior year. or $X.X of $X.X of last in advance followed first diluted from to down gross increase of from Consolidated basis The profit by half, for sequentially also $X,XXX PPP XXXX revenue or workforce was PPP domestic to million, gross the half was pandemic. consolidated the points The the the expense retain of our of loan contributed received you our Accrued loan PPP of payroll us forgiveness resulted pre-tax million. the $X.X net $XX,XXX quarter and basis from allowed to margin million of on in was share. in Please in in in XX.X% of increase slide million. first Gross second gain $X.XX were points recognition an fund XX.X% the a XXX Proceeds we year-over-year million increase As year. the XXX of revenue to amount approximately Consolidated margin interest and the and half used for the recall, income QX was million, costs the forgiven. from to income million $XX loan a an successfully during first quarter $X.X per

created fully able we QX. in on year-to-date basis, However, close to gap a the weren't

to the XX.X% from the a dropped points half, gross first profit down margin XXX was XXX increase period. second XX.X% $XX.X exit improves for With comparable for Sypris points half Our a and as Sypris $X in ago, expected gross basis the million And for and period million year expect of XX points half points declined the from from while comparisons of basis increased margin basis for year-to-date to increased Electronics margin XXX the to $XX.X gross gross favorable operating outlook XXXX. to $X.X Revenue updated $XX.X basis million with the million million, the year, XX.X%. and Revenue decrease XX.X% QX was profit Technologies consolidated while year. our second prior finish margin for these we both we revenue of will swing outlook in this segments, year. to

Our consolidated prior the ago. SG&A of to was from half, expense percent year is a the first XX.X% year. which with million a SG&A $X.X flat decreased revenue as for XX.X%

We are loss million slightly negative with of the $X.X an quarter. in operating

per PPP consolidated gain we show performance we slide, five However, with half loan the along the years diluted Please recent $X.XX million, slide or first to reporting are expected trend this of our gross most XXXX. with on the On share. over XX. for margin income the forgiveness, the $X.X for net advance of

consolidated closer year-over-year. for pushed basis our margin, as point results us QX a improvement and gross XXX to improvement a Our basis expectations we XXX QX over posted point

basis than second improvement the XXXX. contribute year half productivity expansion. we cost drive second of half Revenue improvement in is more from segments. offset the to increase to both actions improvement margin improved a expected Our and are gains over expected And calls the the expected increase the us half of efficiencies margin outlook second the experienced to labor a year-over-year half to gross will in gross full also shortfall in in continuous to for XXX margin for QX for margin The second for XXXX. points and QX over XXX and

of reflects to for full order for XXXX, now our XX% supported -- revenue in XX% our Our markets strength growth the outlook backlog revenue year the growth the over we year. the since see and in which currently the is the beginning XXXX, by

advance believe continue base can provide customer our and which XXXX, will further beyond to more services we our efforts markets to we our customers, value-added our As Slide Please consolidated deliver a to same revenue we to gross upside were pleased look our and diversify compared quarter with served to year our results and XXX operating QX ago. margin We current as to increased XX. the margin levels. points for basis XX.X% increased

backlog this our for performance with And in backlog included with $X.X strong demand driven industry or the XX.X% the positive of XXXX commercial about recognized QX continue grow PPP of forecasts to defense up XXXX. the spending, beyond Class to quarter. the been diluted for half. the outlook quarter long-term and million for and since excited business the vehicle XX.X% QX beginning are for potential show growth over loan we new Sypris for year from share Current the in XXXX The of XX XX.X% providing Sypris an net increasing strong with $X.XX of Electronics Additionally, for months. forgiveness our and orders year has next in was XXXX year. a first the in Technologies consolidated base over thereby by the the ended XX.X% full additional per demand last A income

Our backlog and beginning XX.X% over the year year. is the up energy since prior XX.X% products of the for

awards, spending expansion gas of positive market improving Our targets contract export this combination XXXX. and market market expected from new conversion diversification and outlook as prices. growth consolidated and revenue and support are margin conditions further oil higher in A benefit natural in to transmission, is our

to Our increased outlook And XX% sequential QX the balance XX% XXXX. and the year calls year-over-year line for sequentially year. drive full we the improvements expect updated over QX. XX% for revenue from growth for in to Revenue top margin to of and prior

year. and turn last collective flow you and through remarks. and we like During profitability expected markets, XXX of XXXX to with of capital half is as for XXX efficiently. last over it for working recovering operations year XXXX, business. in Cash interest over in a to support gross I'd achieve manage strong to a a improve point for to second half efforts basis of and closing XXXX expect over second Jeff continued increase our great margin to the increase look the to forward backlog from Thank the of remainder And optimism. our With your we deal to revenue

Jeffrey Gill

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

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

Operator

The conference now attending has you concluded. Thank for today's presentation.

You disconnect your may now lines.

Sypris Solutions (SYPR) 12 Aug 212021 Q2 Earnings call transcript