Sypris Solutions, Inc. Q3 FY2022 earnings call

• New Order Flow: Strength in defense and secured communications markets with Sypris Electronics orders up 75% Q3 2022 and proprietary energy products orders up 33% Q3. Backlog for defense segment exceeded $100 million, up 99% year-over-year.
• Key Announcements: In September, award for Permian Highway Expansion Project, acquisition of IP for rapid opening closure line; in October, amendment to supply agreement for Navy program; in November, follow-on award for Army Key Management System.
• Market Outlooks: Defense spending positive with future business backlog exceeding $100 million; energy sector受益于LNG出口潜力; transportation market production expected to increase 17.5% in 2022 then soften in 2023.

Sypris Electronics: Q3 orders increased 75% compared to 2021, driving backlog up over $100 million (99% increase year-over-year). Q3 revenue was $8.2 million, a decrease of 8.7% from the prior year, with gross margin at 11% (down 980 basis points). Year-to-date, revenue was $28.3 million, an increase of 15% from the prior year, though gross margin declined 360 basis points to 13.9%. Sypris Technologies: Q3 revenue was $17 million, an increase of 1.8% from the prior year, with gross margin at 6.3% (down 630 basis points). Year-to-date, revenue was $52.1 million, an increase of 10.8% from the prior year, with gross margin down 10 basis points to 12.2%.

• 2023 revenue expected to increase 20%-25% year-over-year.
• Gross margin expected to accrete 150-200 basis points in 2023 compared to current outlook.
• Cash flow from operations forecast strong supported by earnings growth and working capital improvements.

• Supply chain shortages and late deliveries impacted revenue and gross profit in Q3.
• Continued supply chain trials and potential surprises/challenges in execution.