Sypris Solutions, Inc.
Q3 2020 Earnings Call Transcript

Published: 13 Nov 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, Kate, and good morning, everyone. Tony Allen and I would like to welcome you to this call. Purpose of which is to review the company's financial results for the third 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 can 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. 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 third quarter financial results. Please advance to Slide 10. Q3 consolidated revenue was $22.2 million, an increase of 29.2% sequentially from Q2 and in line with the third quarter of last year. The recovery in the third quarter was driven by Sypris Technologies, which increased 62.1% over Q2 to $12.1 million as customer demand improved following the low demand months of April and May. Revenue for Sypris Electronics broke the $10 million level and was favorable on both a year-over-year and sequential basis, up 52.6% from Q3 2019 and 3.9% from Q2 2020. Consolidated gross profit improved $1.4 million sequentially to $3.4 million, primarily driven by the revenue increase and the related contribution margin for Sypris Technologies. Consolidated gross margin for Q3 was 15.4%, an increase of 490 basis points from a year ago. Gross margin for Sypris Technologies rebounded from Q2 to 15.8% and was in line with the 15.9% margin reported for the full year 2019. Gross margin for Sypris Electronics of 15% was up significantly from the negative margin for Q3 of 2019 and was just below the 15.6% reported for the first half of 2020. Our consolidated SG&A expense was $2.6 million for Q3, a decrease of approximately $300,000 sequentially and $600,000 from the prior year. The decrease in Q3 SG&A primarily reflects actions by management to reduce discretionary spend in response to the COVID-19 pandemic. Cost reduction actions included 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 cost. We also recognized a credit of approximately $200,000 in Q3 related to favorable claim performance on one of our casualty insurance programs.

[Operator:]

[Jeffrey Gill:]

Thank you, Kate. Tony and I would like to thank you all for joining us on this 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.