Earnings call transcript Q1 2023

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Operator

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 like to turn the call over to President and Chief Executive Officer, Mr. Jeffrey Gill. sir. ahead, go Please

Jeffrey Gill

for good welcome Rich the you to financial which and of would purpose and like is results company's the to to review first morning, you, quarter Davis XXXX. everyone. I of the Thank this call,

of access to you morning, presentation our now. have Slide to advance X who those PowerPoint this For please

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

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

Slide overview with an begin let's on Now X.

our Technologies year-over-year continued and for year-over-year report strength for XX.X% revenue rising Electronics and reflecting XX% sequentially, basis. increased business for to quarter with revenue XX.X% We pleased Sypris a that segments are across on each of Sypris X.X% the

Sypris XX.X% Sypris energy of increase Orders year-over-year, for and by increase XX.X% the quarter XX.X% Electronics products in for Technologies. a were a driven up the

a the million XXX% Electronics XX% Sypris energy accordingly, of basis. Our for end prior up $XX for segment's engineered Backlog consolidated year-over-year, similar Sypris In $XXX.X backlog the raising increased quarter, to for positive of million products. the the at fashion, increased reflecting XXX% increased demand global the period. highly backlog Technologies from a on products year

now quarters year-over-year a an XX%. XX consolidated increased quarterly on for a has increase basis, average consecutive backlog basis, with On of

over fact, the than of pandemic. back In all has which years, of the in second the second past XXXX, of XX impact X of the the onslaught periods, the a of quarters, was more going reflected increased which decline the of shutdowns X for quarter customer X.X% backlog

we availability conversion we of we many as you material. point were may full up As the of into that to demand accelerate previously will rate backlog production. mentioned our pace continue inflection of where believe to revenue of the ramp intersecting new was with increasing remember, that programs rising We now entering rapidly the

Turning now to Slide X.

modernization strategic ongoing been specifically modules several Defense test announce is program announced to quarter, is on additional awards of Electronics. will to increase award and new the We capabilities contract for to be the DoD's have in and electronic expected effort. the of The begin we Production this the February, variety weapon system. at part pleased a important Sypris an produce interface of In Department an late platforms. aircraft for XXXX. result of That tactical program to during more

U.S. manufacture And Department of contractor. assemblies and first multiyear a releases receipt was Defense of shortly to we that test an be additional The production of award provides under announced for additional quarter the X the electronic end in contract XXXX. April, supplied for after systems announced in to a

threaten this to will this begin scheduled with Sypris a actively sources, warship, provide XXXX. later program. an the missiles decoys upgrade warfare is to new According be produced integrated capability will adapt on that to Production quickly late electronic to to threats. year into evolving in by cue expected modules the deliveries begin program The be jam and improvement incoming to

Technologies into supply in largest agreement announced an Daimler Daimler March America AG, it X. Turning its now subsidiary world's subsidiary Diesel a manufacturers. current commercial entered of Truck America. to has Daimler that amendment to with vehicle a Holding itself Corporation, one North is Truck Truck Slide the North Sypris of Detroit of

components of vehicles. performance used these be produced drive of a of The part numbers agreement Detroit amended will commence essential contract the heavy-duty adds branded to of for DDC in drive axles Sypris XXXX. amendment expected numbers the the part new under to to by Production Freightliner's axles. series components in The the to with DDC's drivetrain are be additional

further Sypris shortly The into exacting side-by-side all-terrain by vehicles. burgeoning after will XXXX. The use this be to we components the a growth the produced components rate at Technavio Production to April, the begin research. compound and forecast market new differentials drivetrain of Sypris provides opportunity to expected end a growth all-terrain annual of XX.X% market. a announced according to XXXX, of the to incorporated The is vehicles. award supply these XXXX in expand in finished of And in in program quarter of is specifications vehicle between program new for production for model with award new

failure applications contracts known. cost well of the Sypris for of these is which are Each high representative of

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

are chain continuing the with clearly demand on progress substantial our of is and meeting The abate In the summary then, focus our continues across growing are to customers. made we that to supply be business. pleased challenges our

elevated the the According for the flat continued X transportation. on advance Unfilled major each in to are to XX% of carrier demand let's factors chain, ACT for the this demand Class Slide increased is outlook during e-commerce, the a remain to elevated Now in Research, at shortfalls level and to many capacity XXXX. vehicles having other positive from factors. profitability are XXXX, to demand transition There heavy the our XXXX supply of markets. among that influence expected for and essentially review X production

semiconductor chips, of The levels second and to XXXX. have served OEM down, production at of ACT key levels into for before half other components heavy-duty pushing to truck production elevated outlook Shortages somewhat medium XXXX. the remain and current backlog calls hold well in easing steel

past and Turning XXXX now and over countries by from is for key European X. to market LNG pipeline imports gas become year. dynamic for XX% transportation shipments Russia. to of increasingly Slide has in The this use declining boosted offset natural Sypris

the embarked upon an to dependency gas, campaign natural has reliable elsewhere. of the part former to their Europe of strategic As response supply its aggressive needs Russia source on for

The the XX% its IEEFA see LNG import LNG of end forecast projects and wave that The that capacity tidal by outlook a of Europe will mid-XXXX. come market XXXX global the online projects in will tons plans that increase starting U.S. in added more largest of liquefaction will capacity do to became in XXXX. XX be the a of metric the is XXXX world's provider major million by annual future. exporter even with The LNG by and

U.S. backlog for programs. the positive demand XX% Europe, in growing some The those and various maps to growth remain approved outlook will operational, effect infrastructure right year-over-year time these proposed. come. identifying construction, are to the energy that in that The projects this and products underway to support in our remain the and We under reflects cautiously depict strong the optimistic

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

extending at into stands now million business future is XXX% $XXX.X of backlog XXXX. up $XX.X or Our firm million with orders and year-over-year,

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

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

Slide our expected for that with XX% Please Turning forecast revenues XX. increase to markets to increased customers now significantly. to in XXXX shipments to note XX% defense-related

to Defense this XX% believe result, and diversify business, to of consolidated exists from to pursue up we in As sales will a further aggressively XXXX, XX% our outcome. We XXXX. represent forecast opportunity additional continue in that Electronics

the growth brief XXXX. to Now at Revenue strong summary. quarter by support a for increased in providing let's XX.X%, XX a XXX%, platform to backlog while future turn Slide grew Backlog for million, year-end. for our now In products similar backlog is XX% year-over-year. stands reflecting $XXX.X prior million more fashion, or energy $XX.X Sypris a from increase than up XXX% the at Electronics

Our year-over-year forecasted wins revenue, the for And income. XX a consolidated combined on improved and with corresponding basis. levels consecutive support program material availability, now higher quarters for backlog our margin has increased when of and the new provide important launch we'll of

our Our markets outcome yet feel may to continues additional future are upon spending Defense increase, current depending and good global geopolitical situation. the some we of tailwind shape. in

year-over-year. outlook for expected we to result, is a XX% XX% pleased are As to XXXX. confirm our increase Revenue to

to Quite operations outlook the expanding suit, cash follow margin business in looking by strong, remain XXX points our task supported year are simply, from we gross to coming the expect forecast flow profitably growth. earnings and while during the basis of to building We forward XXX beyond. XXXX, is for

through Rich our turn presentation lead balance will you Rich? let's the Slide Now morning. to XX, of this Davis

Richard Davis

morning, everyone. to first quarter results. like discuss Thanks, our financial you of some I'd Jeff. Good highlights our with of

Electronics. of revenue benefit increased XX.X% of issues consolidated X.X% supply of sequentially in facilitating chain Slide increase from increase first an we abatement XXXX, continue million, last was year particularly XX. the and to to Sypris at an from advance Please as the $XX.X QX production, of the quarter experienced

was to margin margin at the the material production in pass-throughs gross the over compared profit unfavorable XXX X.X% despite million foreign quarter the exchange to revenue from price an year growth $X.X shift for unfavorable quarter. of rates. was prior due off Consolidated costs, in year decrease a mix, points basis X and quarter, ramp-up year the raw prior prior Gross

million XX.X% without for raw points XXX due exchange and to quarter. increased Technologies customer year the through rates. from margin year-over-year Sypris to down material the for foreign basis prior price was increases $XX.X passed to Gross unfavorable Revenue markup the

basis was increased margin QX on XX However, points from gross shipments. up

down XXXX increase to a high demand QX subsequently XXXX and to inventory decline normal second levels went in level half. XX.X% for the While that volume from our shipment increase year-end, X.X% at in with finished Class commercial returned as expected at vehicle Sypris our some over X is rebalanced shipments their in levels QX. customers with XXXX Technologies

in and XXXX. XX% products into First respectively, increased from which products energy these revenue backlog for XX%, we will expect quarter translate year-over-year, higher and orders

the side, experience of increased of On and continue some have consumable are economy. the the felt cost being rates. have pressures that as across utility tooling we Prices supplies inflationary to

with control our working and are areas. these cost-effective internally solutions to We suppliers both on in spend

of year price increased through is goods adjustment sold. price certain based on steel our cost price The terms the to and flows provide increased over the market This adjustments to on for of material additional of sales cost and pass prior customers. has contract revenue our as and prices

adjustments reduce While the price our the margin profit, percentage. gross impact steel adjustments of do our preserves gross

and Our underway engineering in have machining product steel our to deliver processes development our and to also reduce to have customers. improve cost our savings margins forging initiatives teams and both consumption

for chain issues XX% supply Revenue X.X% communication million for up in was an ramped that Sypris and XXXX for impeded the increase customers Electronics the sequentially abated, defense quarter. year-over-year we and $XX.X the production throughout and of as quarter, shipments

shipments year-over-year to Gross points production quarterly higher team's costs basis continue implementing reinforce margin significant an certain programs. was and at mix material in and unfavorable of costs to to sequential Sypris we XX.X%, efforts approach execute planned its on to a improved increases XXXX. the lean ramp-up and the manufacturing workforce decrease We're XXX in of expand Electronics on

of We manufacturing production efficiency. automated further also equipment process our additional to improve the inspection and are in implementing

expect efforts to boost capacity manufacturing to increase. We planned the these meet

improvements, in As resulting process and manufacturing we and to anticipate margins. continue productivity overhead an we make improvement production labor absorption, in improvement an in increase

by have unit. suppliers cost As we our the our qualify programs costs customers with material to that to mature, components and working reduce lower together also opportunity per

QX for $XXX,XXX, rates prior to mix was the as and income unfavorable XX% costs, foreign down year production from previously due operating Consolidated exchange principally ramp-up discussed.

place provides for of volume our to also unit. Our levels The remainder cost operations backlog expanded on objectives and XXXX. meeting a service the while through solid execution reducing and foundation customer focused this growth in support strong are teams per

with Slide the chain Please challenges the trend margin price year pass-throughs a XXX our markup. to advance material XXXX. supply from On expected the for basis production induced this on of inefficiencies consolidated XXXX, for along prior XXXX without slide, and by XXXX decreased XX. points show performance we gross and by

our by the With growth the expect anticipated XX% we range shipment supported increases, revenue of volume to record in XX% XXXX. backlog, in

midpoint the us margin margin volumes, We placing range expect in of at to this points at these higher XXX on deliver year-over-year XXXX. XXX improvement of the XX.X% a in to basis range

and a recognize also pushing our reinforced of to want We teammates record and want efforts in our all involved to backlog the recognize to again level, of we focused the our Electronics Sypris intense for rising improve efforts team similar meet for Sypris new in expectations to to existing team its for Technologies its programs shipments customers' efforts for customers. XXXX and thank

-- which continue continue efforts our to diversify we upside believe further our markets served will also provide levels. our customers, to and our more to services deliver current base customer We our to value-added margin can

increasing orders Slide for increase to advance the backlog XXth Backlog of in both of Electronics XX for $XX.X were consecutive in A segments. year-over-year, million quarter its was QX, the million. Please period, backlog increased quick to up quarter the for for key $XXX.X our XXX% a year-over-year summary marking highlight orders XX% Sypris significant comments. and growth. the

each the XXXX in and production backlog of significantly in increased rise quarter function to shipments increase a expect of as efficiency. We

energy up energy also to supporting near-term Technologies the resources Sypris and prior Technologies continued East. line energy Asia the its products over and augmented revenue XX% Middle period, were in distribution expansion. presence year expand product Sypris Europe, its has

The for X forecast basically current Class in by for Sypris and XXXX high existing further with with customers. even increases level of supported remains XXXX, a in with planned programs the new outlook favorable, Technologies demand

will both record in with double-digit backlog growth our in we top gross outlook on segments are orders, XX% momentum margin holding near in the XXXX, increasing generate also expect have the year. a XXXX. basis we XXX and We for line Based our the a adjusted rates point prior in revenue. growth margin to over gross impacting in guidance XX% unfavorable to currency margins term, foreign exchange to XXX improvement With year-over-year

our interest you Thank for in support and continued your business.

to to Jeff it for like I'd turn Now remarks. closing over

Jeffrey Gill

Thank call joining thank you you, Rich. this the morning. us We would on like for to

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

Operator

now for participation. has your conference The concluded. Thank you

You disconnect. may now

Sypris Solutions (SYPR) 16 May 232023 Q1 Earnings call transcript