Sypris Solutions, Inc.
Q2 2020 Earnings Call Transcript

Published: 13 Aug 2020

[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.

[Jeffrey Gill:]

Thank you, Alyssa, and good morning, everyone. Tony Allen and I would like to welcome you to this call, the purpose of which is to review the company's financial results for the second quarter of 2020. For those of you who have access to our PowerPoint presentation this morning, please advance to Slide 2 now. We always begin these calls with a note that some of what we might discuss here today may include projections and other forward-looking statements. No assurance can be given that these projections and statements will be achieved and actual results could differ materially from those projected as a result of several factors. These factors are included in the company's filings with the Securities and Exchange Commission. And in compliance with Regulation G, you can access our website at sypris.com to review the definitions of any non-GAAP financial measures that may be discussed during this call.

[Tony Allen:]

Thanks, Jeff, and good morning, everyone. I'd like to discuss with you some of the highlights of our second quarter financial results. Please advance to Slide 10. Q2 consolidated revenue was $17.2 million, a decrease of 29.8% from the second quarter of last year, and a decrease of 23.5% sequentially. The comparative numbers for both periods reflect the impact COVID-19 had on demand during Q2, with the favorable results of Sypris Electronics being offset by a considerably lower revenue for Sypris Technologies. Consolidated gross profit dropped $2 million from the prior year, as the lower demand for Sypris Technologies adversely impacted our profitability for the quarter. Conversely, Sypris Electronics reported a $750,000 increase in gross profit, with gross margin expanding 470 basis points to 18.3% in Q2. While consolidated gross margin of 11.7% was down compared to the previous year and Q1, the upside achieved by Sypris Electronics in Q2, coupled with a rather impressive effort by the entire team at Sypris Technologies to manage cost during a severe economic downturn, gives us confidence we will get back on track for returned profitability as the economy begins to recover. Our consolidated SG&A expense was $2.8 million for Q2, a decrease of approximately $400,000 sequentially, and $800,000 from the prior year. The decrease in Q2 SG&A primarily reflects actions by management to reduce discretionary spend in response to the COVID-19 pandemic. Cost reduction actions include reducing hiring activities, reduced compensation for our CEO and certain other senior leadership and corporate personnel, suspended fees paid to our Board of Directors, lower travel related spend, and reductions in other areas of controllable costs. The spending measures are expected to remain in place until we see the economy moving in the right direction and have better visibility to customer demand.

[Operator:]

Thank you. We will now begin the question-and-answer session. Showing no further questions at this time. This does conclude our question-and-answer session. I would like to turn the conference back over to Mr. Jeffrey Gill for any closing remarks.

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[Jeffrey Gill:]

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

[Operator:]

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