Sypris Solutions, Inc. (NASDAQ:SYPR) Q4 2022 Results Conference Call March 16, 2023 9:00 AM ET Company Participants Jeffrey Gill - President and CEO Rich Davis - VP and CFO Operator Good day and welcome to the Sypris Solutions Incorporated Conference Call. Today's call is being recorded. At this time, for opening remarks, I'd like to turn the call over the President and Chief Executive Officer, Mr. Jeffrey Gill. Please go ahead, sir. Jeffrey Gill Thank you, and good morning, everyone. Rich Davis and I would ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Sypris Solutions provides components for trucks, oil & gas, and aerospace & defense, operating through two segments with customer concentration - The company is organized into two business segments: **Sypris Technologies** (truck and energy components) and **Sypris Electronics** (aerospace and defense electronics)[19](index=19&type=chunk) Segment Revenue Contribution (2022) | Segment | 2022 Net Revenue Contribution | | :--- | :--- | | Sypris Technologies | ~63% | | Sypris Electronics | ~37% | - The business strategy focuses on core markets, strategic partnerships, potential acquisitions, and expanding value-added manufacturing capabilities[39](index=39&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk) Customer Concentration | Year | Top 5 Customers' Share of Net Revenue | | :--- | :--- | | 2022 | 70% | | 2021 | 68% | - Operations in Mexico accounted for **47% of consolidated net revenues** in both 2022 (**$51.2 million**) and 2021 (**$45.4 million**)[46](index=46&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from customer concentration, cyclical industries, fixed-price contracts, supply chain, and cybersecurity - The company reported a **net loss of $2.5 million** in 2022 and needs to increase revenues to achieve and maintain profitability[71](index=71&type=chunk) - High customer concentration risk: The top five customers accounted for **70% of 2022 net revenue**, where the loss of any would have a material adverse impact[73](index=73&type=chunk) - The aerospace and defense business, representing approximately **28% of 2022 net revenue**, is subject to risks from congressional budgetary constraints and shifts in defense spending priorities[80](index=80&type=chunk)[81](index=81&type=chunk) - The company is experiencing inflationary pressures on operating costs, including labor, raw materials, and transportation, which may not be fully offset by price increases[85](index=85&type=chunk) - As a U.S. defense subcontractor, the company faces significant cyber security threats, including ransomware attacks, which could disrupt operations and lead to misuse of sensitive information[95](index=95&type=chunk)[96](index=96&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[124](index=124&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) Principal manufacturing facilities are in Kentucky, Florida, and Mexico, holding key industry certifications Principal Facilities | Location | Segment | Ownership | Approx. Sq. Feet | | :--- | :--- | :--- | :--- | | Louisville, KY | Sypris Technologies | Own | 57,000 | | Tampa, FL | Sypris Electronics | Lease (2027) | 50,000 | | Toluca, Mexico | Sypris Technologies | Lease (2026) | 215,000 | | Louisville, KY | Corporate Office | Lease (2024) | 13,800 | [Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, with no material adverse effect expected - The company is involved in litigation arising in the normal course of business, but management does not anticipate a material adverse effect from these matters[131](index=131&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[132](index=132&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Common stock trades on Nasdaq under SYPR; no cash dividends were paid in 2022 or 2021 - Common stock is traded on the Nasdaq Global Market under the symbol "**SYPR**"[136](index=136&type=chunk) - No cash dividends were paid in 2022 or 2021, and none are anticipated in 2023[136](index=136&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net revenue increased 13.0% to $110.1 million in 2022, resulting in a net loss, but cash improved Consolidated Results of Operations (2022 vs. 2021, in thousands) | Metric | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Net Revenue | $110,121 | $97,434 | 13.0% | | Total Gross Profit | $14,853 | $14,506 | 2.4% | | Operating Income | $364 | $1,910 | -80.9% | | Net (Loss) Income | $(2,494) | $2,923 | NM | - Sypris Technologies' revenue increased **12.2% to $69.3 million**, partly due to **$4.1 million** in contractual steel price pass-throughs and higher shipment volumes[170](index=170&type=chunk) - Sypris Electronics' revenue grew **14.5% to $40.9 million**, driven by the ramp-up of two follow-on programs, though results were impacted by material availability issues[171](index=171&type=chunk) - The 2021 net income included a **$3.6 million gain** from the forgiveness of a PPP Loan and related interest, which was not present in 2022[176](index=176&type=chunk) - Cash and cash equivalents increased to **$21.6 million** at year-end 2022 from **$11.6 million** in 2021, with net cash from operating activities at **$13.8 million** primarily from customer prepayments funding inventory growth[180](index=180&type=chunk)[184](index=184&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Sypris Solutions, Inc. is not required to provide market risk disclosures - The company is not required to provide these disclosures as it qualifies as a smaller reporting company[188](index=188&type=chunk) [Financial Statements and Supplementary Data](index=34&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited financial statements with an unqualified auditor's opinion are presented, noting revenue recognition as a critical audit matter - The independent auditor, Crowe LLP, issued an **unqualified opinion** on the financial statements[193](index=193&type=chunk) - The auditor identified "Net revenue and gross profit recognized over time" for aerospace and defense contracts as a **critical audit matter** due to significant judgment in estimating percentage of completion[197](index=197&type=chunk)[198](index=198&type=chunk) Key Financial Highlights (in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Operations** | | | | Net Revenue | $110,121 | $97,434 | | Gross Profit | $14,853 | $14,506 | | Net (Loss) Income | $(2,494) | $2,923 | | **Financial Position** | | | | Total Assets | $104,144 | $79,505 | | Total Liabilities | $84,569 | $60,219 | | Cash & Equivalents | $21,648 | $11,620 | - As of December 31, 2022, the company had **$97.1 million** in remaining performance obligations for long-term Sypris Electronics contracts, with **57% expected to be recognized as revenue in 2023**[251](index=251&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=68&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[325](index=325&type=chunk) [Controls and Procedures](index=68&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2022[326](index=326&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2022, based on the criteria set forth by COSO[330](index=330&type=chunk) [Other Information](index=68&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[332](index=332&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=68&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[333](index=333&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=69&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference - Information is incorporated by reference from the company's Proxy Statement[336](index=336&type=chunk) [Executive Compensation](index=69&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive and director compensation is incorporated by reference from the Proxy Statement - Information is incorporated by reference from the company's Proxy Statement[338](index=338&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=69&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by beneficial owners and management is incorporated by reference - Information regarding security ownership is incorporated by reference from the company's Proxy Statement[339](index=339&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to be Issued Upon Exercise | Weighted Avg. Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by Stockholders | 2,031,850 | $1.31 | 2,895,771 | [Certain Relationships and Related Transactions, and Director Independence](index=69&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference - Information is incorporated by reference from the company's Proxy Statement[343](index=343&type=chunk) [Principal Accounting Fees and Services](index=69&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the Proxy Statement - Information is incorporated by reference from the company's Proxy Statement[344](index=344&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=70&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements from Item 8 and all exhibits filed with the Form 10-K - This section contains the financial statements from Item 8 and a list of exhibits filed with the report[346](index=346&type=chunk) [Form 10-K Summary](index=72&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a Form 10-K summary - None provided[353](index=353&type=chunk)

Sypris Solutions, Inc. (NASDAQ:SYPR) Q3 2022 Earnings Conference Call November 16, 2022 9:00 AM ET Company Participants Jeffrey Gill - President and Chief Executive Officer Richard Davis - VP & Chief Financial Officer Conference Call Participants 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 the President and Chief Executive Officer, Mr. Jeffrey Gill. Please go ahead, sir. ...

Sypris Solutions, Inc. (NASDAQ:SYPR) Q2 2022 Earnings Conference Call August 16, 2022 9:00 AM ET CompanyParticipants Jeffrey Gill - President & CEO Tony Allen - VP & CFO Conference Call Participants 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'd like to turn the call over to President and Chief Executive Officer, Mr. Jeffrey Gill. Please go ahead, sir. Jeffrey Gill Thank you, Nick, and good morning, everyon ...

Sypris Solutions, Inc. (NASDAQ:SYPR) Q1 2022 Earnings Conference Call May 18, 2022 9:00 AM ET Company Participants Jeffrey Gill - President and Chief Executive Officer Tony Allen - Vice President and Chief Financial Officer Conference Call Participants 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 now like to turn the call over to President and Chief Executive Officer, Mr. Jeffrey Gill. Please go ahead ...

2022 First Quarter Earnings Conference Call May 18, 2022 Jeffrey T. Gill President & CEO Anthony C. Allen Vice President & CFO Safe Harbor Disclosure Non-GAAP Financial Measures Any non-GAAP measures, and their related reconciliation to GAAP measures, are provided and available on the company's website: www.sypris.com Each forward-looking statement herein is subject to risks and uncertainties, as detailed in our most recent Form 10-K and Form 10-Q and other SEC filings. Briefly, we currently believe that su ...

Financial Data and Key Metrics Changes - Revenue for Q4 2021 increased by 25% year-over-year, reaching $25.8 million, with a 30% increase for Sypris Electronics and a 21.7% increase for Sypris Technologies [5][32] - Gross profit for Q4 rose by 65% year-over-year to $4.4 million, with gross margin expanding by 420 basis points to 17.1% [6][33][56] - Earnings per share for Q4 improved to $0.02 from a loss of $0.06 per share in the prior year, marking a 133% increase [7][38] - For the full year, revenue was $97.4 million, an 18.3% increase, and earnings per share increased by 62.5% to $0.13 [39][49] Business Line Data and Key Metrics Changes - Sypris Electronics experienced a 30% revenue increase, driven by defense program shipments transitioning to full-rate production [32][33] - Sypris Technologies saw a 21.7% revenue growth, primarily from demand for heavy truck components and additional volumes from automotive and off-highway markets [32][40] - Gross margin for Sypris Electronics improved to 18.7%, a 540 basis point increase, while Sypris Technologies' gross margin was 15.8%, up 310 basis points [34][35] Market Data and Key Metrics Changes - The demand for Class 8 heavy vehicles is projected to increase by 11.9% in 2022 and 21.6% in 2023, supported by a strong U.S. economy and increased freight demand [21][57] - Oil prices have risen significantly, with West Texas Intermediate up 60% year-over-year, which is expected to positively impact capital projects in the energy sector [23][24] - The backlog for defense spending is up 62%, indicating a positive outlook for future business in this segment [25][28] Company Strategy and Development Direction - The company aims to diversify its business further and expects continued momentum in new contract wins throughout 2022 [19][26] - The focus will be on execution and managing supply chain challenges while anticipating better results once these issues subside [20][30] - The company is optimistic about future program and revenue growth, particularly in defense-related markets [28][29] Management's Comments on Operating Environment and Future Outlook - Management noted that supply chain challenges are ongoing but expressed confidence in achieving better results once these issues are resolved [20][30] - The outlook for 2022 has been raised, with revenue expected to grow by 25% to 30% and gross margin to expand by 200 to 250 basis points [29][58] - Management highlighted the importance of maintaining flexibility and responsiveness to customer needs amid supply chain constraints [20] Other Important Information - The company reported a significant increase in backlog, up 57% year-over-year, with strong orders for Sypris Electronics and continued demand for Sypris Technologies [7][25] - Cash flow from operations for 2021 was $4.2 million, an increase from $3.6 million in 2020, supported by strong earnings growth [50][51] Q&A Session Summary Question: What is the outlook for revenue growth in 2022? - The company expects revenue to increase by 25% to 30% year-over-year, driven by strong demand in defense-related markets and commercial vehicles [29][58] Question: How is the company addressing supply chain challenges? - Management acknowledged the ongoing supply chain issues but emphasized the need for persistence and flexibility in operations to navigate these challenges [20][30] Question: What are the expectations for gross margin improvement? - Gross margin is anticipated to expand by 200 to 250 basis points in 2022, reflecting improved operational efficiency and favorable market conditions [29][58]

2021 Fourth Quarter and Full Year Earnings Conference Call March 17, 2022 Jeffrey T. Gill President & CEO Anthony C. Allen Vice President & CFO Safe Harbor Disclosure Non-GAAP Financial Measures Any non-GAAP measures, and their related reconciliation to GAAP measures, are provided and available on the company's website: www.sypris.com Each forward-looking statement herein is subject to risks and uncertainties, as detailed in our most recent Form 10-K and Form 10-Q and other SEC filings. Briefly, we currentl ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) Commission file number 0-24020 SYPRIS SOLUTIONS, INC. (Exact name of registrant as specified in its charter) | Delaware | 61-1321992 | | --- | --- | | (State or other jurisdiction | (I.R.S. Employer | | of incorporation or organization) | Identification No.) | 101 Bullitt Lane, Suite 450 Louisville, Kentucky 40222 (502) 329-2000 (Address of principal executive (Registrant's telephone number, offices, including zip c ...

2021 Third Quarter Earnings Conference Call November 10, 2021 Jeffrey T. Gill President & CEO Anthony C. Allen Vice President & CFO Safe Harbor Disclosure Non-GAAP Financial Measures Any non-GAAP measures, and their related reconciliation to GAAP measures, are provided and available on the company ' s website: www.sypris.com Each forward-looking statement herein is subject to risks and uncertainties, as detailed in our most recent Form 10-K and Form 10-Q and other SEC filings. Briefly, we currently believe ...